QSR - Earnings call transcript Q3 2018 | Restaurant Brands International Inc.

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Operator

Good morning and welcome to the Restaurant Brands International Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Markus Sturm, Head of Investor Relations. ahead. go Please

Markus Sturm

be Good available International's operator. September and to a call welcome XXXX. webpage Investor Thank investor.rbi.com replay. at call morning for Brands and may this of earnings live will ended through the Restaurant the A Relations be you, recording broadcast everyone accessed for third XXth, quarter

answer Q&A The Brands release in our Schwartz; and and Daniel of me the SEC team be Today's contains Joining will CEO, earnings on the the various morning call are forward-looking International's today set questions available call. today's statements, press filings. to Matt forth this in portion subject are Dunnigan. during risks Restaurant call issued CFO, to which

measures. included website. measures Reconciliations of In this addition, non-GAAP in on our press financial are release available earnings call non-GAAP the financial includes

Let's the today's call. quickly agenda review for

for Matt by then Louisiana Burger the will Kitchen. start open review First, quarter turn for up review I'd like the Daniel. following which performance call the to discussing King at our over will we call now Daniel third Hortons, will will financial consolidated Tim to highlights Q&A. quarter results for and Popeyes then and the

Daniel Schwartz

which I'm Good a or third $XXX Thanks joining Markus. EBITDA pleased an million $XXX quarter, under year-on-year adjusted on represents to basis, for organic roughly Thanks, X%. we update million to revenue this quarter us everyone. an consolidated today. provide increase On standards, recognition morning, our results. of grew prior our

under standards both XXXX constant basis, both a reminder, for currency accounting organic presenting comparability in as growth well a purposes, figures the As we're periods. as on previous

X% of $X.XX share EBITDA growth year shares the driven increase to offset prior driven comparable sales. period. sales net quarter, redemption with per by restaurant our up and year. adjusted $X.XX Our adjusted in preferred was tax diluted of compared share X%, grew combined XXXX, by by Hortons, last as December accretive by per Tim was slightly partially of the positive This from higher rate a growth, for EPS At systemwide the in

reflect results systemwide offset of in X%, by in sequential growth of improvement Burger we restaurant reflecting X%. achieved comparable of sales nearly quarter's sales This of net the nearly X% and sales a U.S. X%, King, to sales continuation At partially softer Canada comparable growth

softer Our global quarter systemwide grew comparable slightly our Popeyes, driven the of of and X% by sales. X%, sales growth At roughly this negative in reflect X.X%. positive U.S. results net comparable sales restaurant nearly by we

sales confident many momentum a comparable markets. the profitability in long-term sales sales all We our iconic years and for Our come. drive to brands strategies sustainable for international reflect continuation and results softer comparable of U.S. growth our of strong remain in in three our to

which year, of we in fourth Our earlier XXXX already focus some against, outlined we good quarter. priorities the this most progress remains have to but improve the which made of in hope

for which Let's prior Hortons. was of year-on-year X%. or represents start EBITDA our adjusted under the a organic quarter, third by million $XXX reviewing now million accounting In results $XXX increase standards, Tim

this important Hortons in plan Winning sequentially, do coming reflects but Canada yet not to and initiatives the quarter Tim sales Our months our Together several plan continue we at comparable quarters. through launch that improve to in they

softer were nearly sales by This quarter the offset comparable in partially global results comparable X.X%, Canada sales of X%, reflecting U.S.

our offset goods, strength in results weaker coffee foods, partially sales softer launch, driven reflect by Anytime breakfast foods in Canada driven in baked sales Breakfast Our growth and of and by the by were U.S. while improving in brewed cold comparable breakfast beverages.

plan, satisfaction three against product quality which focus industry profitability, in product commitment for and on our we main restaurant excellence, our centers around Winning menu. product improved continued guest Canada on excellence, that pillars, through progress the to experience made best Our reflect franchisee results Under in and Together our guests offer we've communications. item brand with several our single absolute the to a elevate every have underway product initiatives a

are will time near to in this it take more nature, term bit Some we to whereas more right. others little of our a perfect, committed in are efforts regard getting but

One was of Canada. within initiatives our launched the nationally immediate Anytime, product more we which pillar excellence Breakfast across

both from have We of sales incrementality healthy and profitability. level levels seen program this for restaurant

are Anytime taking While only we results the many steps Breakfast are of comparable the program, in first Canada. sales is to pleased of with improve the we

Another under more excellence exploring pillar a initiative our product immediate we is menu. are kids

current visited our menu Tim despite families, has by heavily dedicated and restaurants Our offering. no are virtually that kids Hortons already

As across do better communities to and is that than a opportunity responsibility believe we have local that business Canada, a highly we that. engrained an in

loyalty kids making Our also for in that with short offer anticipate coming each roughly a to additional to renovations market now on hundreds exciting our about offering we products months. have a several the Image, completing few XXX nutrition months under to Welcome of launch program in test experience Canada are serving new across restaurant the goal is that in menu but different the also plan testing our good markets We renovations announcing for structure. the kids a loyalty also good new to We're pillar. children. kids them menu quarter. feel both have Only progress right image their parents completed We're a fourth different our after with currently and we

high potential markets, loyalty the We giving in confidence rates us adoption very these in card the test program. of seen have

goal good launch loyalty improved integrating analog digital brand is current most more our media. using the with communication into then mechanism, program we've to the established made establishing channel, app. initially we've a through also progress broadly, and over Our Under pillar, Once proactive translating including time narrative into cards Canadian initiatives on focus effective the the our the our offer. best the mobile loyalty in much is

owners of annual their Smile which the to members team from things exciting we was with working an drive One for positive stories our to more proactively guests. our have has share of enhanced our Cookie media, spent in the team week, key example impressions. particularly been Our this time with that millions experience and received media restaurant quarter Canada on

campaign Cookie in with chip of Tim donated sale faces, are of members of smiley charities by Smile and cookies Horton's our which team with proceeds of week local raised. CADX involves $X the restaurants to our of total fundraising guest’s, and to generosity was decorated are roughly Our our members Cookie it handmade proceeds and Canada. each sale their successful ever, the chocolate the million organizations across team Smile Thanks donation franchisees most our XXX%

media a the marketing Horton’s MacKinnon. ice cards hockey including this uplifting initiatives, quality of and secured with million hockey with overall several We visits our in sponsored promotional million Tim We hockey and video and including a Canada, recent over also for on to Canada nearly launch continue to in YouTube. views only video Facebook our team X.X the improve surprise the XXX on million and Nate program. supported trip views The viral Kenya's Sidney over already US Stars, with of has a documenting Canada from Crosby impressions All has launch

brand our and imagery involves component Another communication brand packaging. of enhancing our pillar

quarter new coming months. last in this plan addition Timbits other quarter, In improved Box launch themed packaging coffee new we significantly a the a and Doughnut and to to launching hockey lids Box updates

more quarter, in relates approach selective As to maintain international to restaurant this our Canada site by in accelerated continue we it a new markets. to development offset development, development

growth increase adjusted of net $XXX X%. Now resulted Burger of continued X%. Growth organic $XXX restaurant prior million results EBITDA which quarter the in a Systemwide momentum BK let's the represents growth top and the at sales during both by third accounting sales year-on-year for million our in line nearly driven turn standards, under in of third X% or comparable to of was King. X% of quarter over

softer the offset in Our by global comparable offset quarter partially in Russia, negative comparable the Brazil comparable by of markets continued reflect markets, of sales our in Australia. U.S. a growth this continuation X.X%. softer and were sales like Internationally, reflecting in Germany comparable sales sales strength and international X%, by up

fourth less offers we a balanced compelling move already the promotional with seen in to value US October us direction Our this softer for lapping and in the approach of quarter return $X last to you've results recent strong our more into likely quarter, the in this and activity. X Heading launch year. intend reflect

growth We innovation product continue further a to comparable including believe sustainable over that current and of sales through the menu drive long run, we have opportunities several pipeline to good to a gaps. address

Burger operations drive and the around at focusing sustainable these, marketing, long opportunities image, restaurant will strategy to the center believe comparable we following technology, each focusing menu such King priorities, of run. our to addition which continues help over In on related sales as on

image restaurant the the our this image, roll restaurant to modern of relates to quarter it our Burger new image unveiled Tomorrow King we out plans across U.S. As and

made image back have remodeling progress new restaurant positively significant experience. restaurants impact in in have refine place we and our elements continued to the guest to our design XXXX, the greatest While test and relative to standards on emphasis that modernizing most to we U.S.

comparable our of dine guest sales. King upgrading recent Tomorrow Burger and our Our design, in strong has Garden which and image contemplates satisfaction most to restaurants Grove demonstrated benefits

drive the experience service. generated thru of is Outdoor signage. improved for boards digitally kiosks. level with drive digital on menu technologies digital like integrated cost of boards. exterior This the other allow significantly media increased Double includes guests, and check, boards [ph] implementation With lanes restaurant building and for outdoor franchisees also savings of outdoor printed like for through, double mobile including also focused in-restaurants digital menu the facing sales and and majority new guests speed drive in image provide our construction menu and allow drive enhancements, of integration throughput the menu our and our apps sell for a image does

Burger progress also quarter. related made good at initiatives on have this King technology other We

delivery We around size North and nearly restaurants world. with in to over restaurants now XXXX in delivery program America continue available of the the expand XXXX our

fully and launching thirds U.S. launched our of approximately, we experienced quarter. roughly the also already mobile We a downloads. app The roughly order this short Burger weeks in the million app already restaurants is two our the have with few within pay in King of and integrated X U.S.

app We guest effort to enhance to will guests over seamless other technologies integrations experience. digital continue with an in also pursue based on and feedback time a our we'll

occurs U.S. operations, our improving continue drive the to sales speed through it majority place our on service. the since relates to in further of emphasis we As for through, drive of the

to Brazil by be it the of examples year. While and intelligence recognized fourth our as and the the we And still QSR in U.S., improve, third through times highly have In to continue among peers initiatives. edgy to have the relates some been proud US. last emoji having we room place recently on QSR to in as drive Magazine marketing, are successful ballot focused and lots the up from quarter, blank in marketing the creative artificial and campaign viral we campaigns ad unique, fastest include

continue be being Our best world. as accomplishments this party advertising agencies, recognized regard by in third in among the to the

our modest fourth quarter. sequential just year-on-year, terms grew pipeline development, and restaurant new In Burger outlook deceleration, we full have in of count of a openings while our over planned a year we X% represents we confident robust the by this King remain for

reminder, franchisees manage development in development rather are on quarterly, in which our a the basis pipeline than As we with consistent the which an our targets manner agreements. is annual structured

doubled who a strength milestone is in a almost quarter. the of market. our in This strength since King America and a our having in brand since of our XXXX this back in in the opened This our first XXXX. of the celebrated net accomplishment and Latin crossed the highlights America also restaurants Brazil acquired of quarter testament has in the partner particular development region footprint means we brand over In restaurants Burger XXX XXXX in to it that partners the country we have we Latin

Now our Popeyes. for let's results review

quarter Third X.X% the $XX up EBITDA X%, into prior strong or growth year was million net sales XX% growth X.X%. sales topline adjusted million quarter for comparable of of by sales by very Comparable prior other accounting comparable versus the and resulted the systemwide in $XX in This Popeyes relatively offset of Canada. period. comparable driven in roughly flat restaurant including reflect in U.S., the markets, standards, organically sales sales growth

this and our U.S. softer time rebalancing year. products. our a as toward results in spend we which offers results address media plan half time impacted going value, reflect Our the first from impactful of to we spend the limited compared quarter media in and value plan launch negatively forward, shift the To to limited and between away more offers this on

experience months. guest improvements metrics, operations we within focused on feedback in months, been few a initiatives. last have material These the five have XX% highly last of translated increase including our into initiatives Popeyes several in at a variety already improving through Over satisfaction guest also the restaurants operational focused

we restaurant reflecting to accelerated quarter, development, nearly this As growth primarily count it U.S. relates restaurant the grew in Popeyes by our X%

to what signed even that in in also size we of build. We the growth, restaurant restaurant. Popeyes support we quarter, the Popeye's more have acceleration XXXX even the footprint have of agreements of several In net our excites U.S. celebrated existing the opening us additional further pursuit restaurants will that this But more quarters. growth of in development which the thousands coming for than is yet our

strong of population major a an exciting XXX development master brand. agreement market, that represents We in for growing for franchise development brand chicken and the people also a announced million we opportunity agreement believe Asia. our Popeyes our for marking and and Philippines, the a first Popeyes in QSR development over With Philippines the

We and received early, are our in still encouraged guests. also restaurant we from first the recently Popeyes reception thus restaurant opened has that the Brazil positive very by

in to continue partner support months. additional openings closely in to We the with work coming our Brazil

actively have I'd fastest that set We over the that growing now will up brands the of agreements development with are combined QSR be call agreements geographies like to already strong global Matt. that additional one the signed, turn world. in in we Popeyes other have to the to we conviction pursuing

Matthew Dunnigan

Daniel. Thanks,

million %XXX approximately standards, This quarter million adjusted accounting up year-over-year. $XXX prior organically EBITDA X% or was under

net the the December adjusted eight accounting the preferred under offset and prior our increase $XXX from and to million is year to prior XXXX. This results adjusted in period. XXXX, by for the of of up or $X.XX, This approximately $X.XX quarter income deleted of quarter higher million compares partially EPS adjusted in year of was million third $XXX $XXX EBITDA attributable redemption prior Our to growth in accretive led standards. tax a shares rate year-over-year

factors As to wanted it new revenue some accounting we our this to the results influencing of impact standard, the relates out recognition quarter. point

As new then recognition the related over a of the under contract. deferred into recognized standard, fees the revenues, revenue amortize upfront reminder, as are revenue life which franchise underlying

of from revenue saw As to periods mentioned in Accordingly, to in the prior recognition we nature. and in that is also standard a have larger brands. even anticipate the larger standard quarter accounting impact in a the It prior new fourth fees fees standards at will new third on important pertaining fee be of impact non-cash the new in we quarters, more the in on mind larger periods we franchise occur. the quarter which our keep have this King openings franchise impact that than across is in franchise Burger each component

In and Hortons. our third mismatch due the a the related result Regarding continue. fund into we advertising expenses and primarily funds, the Tim quarter impact at reflect expenses recognition, of Prospectively, third fund revenues expenses. in [ph] timing may at anticipate the timing revenue revenues revenues of exceeded Hortons ad quarterly ad of benefit to Tim the from the net quarter

such However, total are ad in the these cumulative funds revenues that the cumulative expenses. equal long run total managed

a in of This certain related significantly QX the third comparable certain reserve stock year-to-date reform the quarter in releases. of to increase tax rate sequential XXXX a and impact was rate, non-recurrence intercompany income sequential was realignment from tax XXXX. period including XXXX effective tax option the reflects the lower impact and primarily U.S. from rate higher and adjusted tax this financing the basis. exercises of due corporate aspects The the are of year-over-year This certain in benefit primarily the on year-over-year audit quarter, benefits quarter versus of of in increase arrangements our accrual a

activities quarter. let's cash from approximately capital In activities. and quarter, operating million cash generation the cash third and sum we flows our flow as Now of of investing generated discuss allocation free the calculated $XXX for the

a partnership dividends quarter. paid distributions common total and in $XXX exchangeable unit this also approximately million We of

cash of September billion. balance our As XXXX, XXth ending $X.X was

debt announced was outstanding morning [ph] connection $XX exchangeable exchange balance which million using diluted requests This this of Our hand, billion exchange will we In on notice fully count. satisfy our $XX total an we for partnership net [ph] billion. with $XX.X our and was exchange, intend million we approximately debt received cash that to $XX.X these units. reduce share

remaining on the exchange through of one With requests delivery the satisfied for one shares basis. common a

revoked such after irrevocable. exchange can becomes our in unit terms XXth, the the agreement, holder be exchange and XXXX of the For part until notice time notice in [ph] limited or full the by October partnership

declared the XXXX, of Xth, to target common We our also share declared Board and RBI of total unit RBI consistent $X.XX this of is January that has announced morning on per announced with previously partnership in dividend payable $X.XX exchangeable dividends Directors in of a which LP be XXXX.

number announced in are dividends to increased XXXX a Our exchange of exchangeable units cash. intention for partnership significant

stakeholders and previously remodel for call in supply like years us further to for and our program chain and create illustrate all our the questions. come. open to I'd Operator? your everyone joining distribution ongoing this to of announced our look up on many for network delivering to now approach we Tim as for Hortons call allocation you the balanced morning value our for capital support. continued Our investments Thank

Operator

Please [Operator Instructions] question Patricia Baker go comes First ahead. from with Scotiabank.

Patricia Baker

morning, everyone. you much. good Thank very And

you with Just saw indicated on the and in of Hortons Anytime quick you that incrementality that had about initiative. Tim program question talked Daniel and opening remarks a your Breakfast levels healthy

you're I breakfast incrementally, you sales, you products just your talk I do little part. you about had that when beyond to day more what a clarify healthy about bit what not there that of sales rather would normally is incremental cannibalize would this the talking am like breakfast did but assuming that of in just saying and So that levels you're breakfast

Daniel Schwartz

thanks. Patricia, Hi, That's It’s Daniel. Yes. right.

for overall and know, - during the for restaurants incremental to enabled improve to Breakfast from comparable our it you incremental sales our it in direction. us the continue profitability our And impact you franchise when quarter owners. our we sales and You the resulted breakfast right profitability and Anytime, at to sales so drive saw Canada look incremental as moving in restaurant, they're

we're on know, think really when of are And is results. what sequential take and kind launching, initiatives plan coming with of you Winning you at you owners. innovation around in potentially sales we're quarter expect in including restaurant step of I Hortons, we Together this of improvement know, back, the we you that the to and as the doing it's initiatives, part the Tim franchise of and launch just see our a the this look excited kids our the about that program host the beverages many a pleased planning whole would We're months. loyalty first the other upcoming

So business, restaurant for Winning we're outlook a collaboratively Together plan Tim’s make excited sales. working reality with to the excited owners and our about same-store increased the very franchise and translate our to

Operator

go Glass Please comes John Morgan question next with ahead. from The Stanley.

John Glass

very much. Thanks

the U.S., On discussed Burger King business program. in remodel the the you

new and a there want is franchisee discuss a are getting a benefits there - And contribution it and or the you're funded So of timeframe, what's effort? what if now. system to - Thanks. you corporate is how or can many this stores the from discuss right are remodel reasonable image given this in kind sales

Daniel Schwartz

Thanks, John. Yeah.

modern out the Tomorrow system. officially to unveil we of the roll Burger plans So restaurant to image King our to today excited and the image new were

getting started We are just now.

Tomorrow this this the about a Miami we other giving of last and come kind upgraded know of franchise company renovation with really technology, restaurant image, of we significant would have and franchise what would to expect agreements of image and to going is, portion as the significant have you - the to pretty drive this a know eight we our you renovate outdoor the evolution midterms. years year agreements that we have know, say more or next restaurant internally over our in our restaurants. digital the system focus thru’s, double kiosks, we’re image and that exciting kitchen theater menu pilot is and some Burger King going and requirements their come on could is kitchen the have of midterms, And boards, the owners the open as full that a We due, each expire you we features. experience together as owners We, in

that forward restaurant In we've we've many of provide it's pull been kind officially addition, royalty kind years renovate historically due, before the we do as owners extent doing the want to incentives, renovation over past as and the to of restaurant been doing. the

know, and to as really about Hortons system far Tim those and a system, as As capital real that Burger capital as doing in do King the that system, contribution, you the we the cases control the renovated, are estate on unlike the extent been those we XX% historically. contribution, only of have XX% make we

Operator

Long The Piper Piper line Jaffray. open. comes is Joshua ahead. Jaffray go question Please Again, with Long of Joshua next from the with

Joshua Long

for from much value know, you're marketing what appetite so prepared are right the we might how and you're to importance strategic of the the messaging in of per shifting you of my specific et go for if consumer the and couple dynamics back a as to taking wanted just the across value question. kind and overall seeing messages, commentary back that. times you into there - cetera thinking half you're what so and XXXX? currently environment, about affordability, maybe out the we to circle back that and the of marketing A the thinking messaging, curious space how perspective year competitive the brands through came Thank see and about now Great. I for up

Daniel Schwartz

between of good openings and already. a And you back know, the globally, the all - that right so really bit the you we across still our, But by have last of of our less launch of plans comparable bit those, very for broadly, restaurant really the we're maybe quarter, a you think, on I relate BK had competitive, confident in into of to coming in right - what that strong place around restaurant the having I’d as particularly and you good with topline US is say, mean, We've I know, strong in think competitive the sales driven operate we has more to at reflected piece kind don't year. It the in kind offers that $X our the how being a - I historically, we've results between mean, world value. outlook seen Yeah. not our when driven and you for had I when kind I compelling look than and kind the of more kind , quarter, still historically. see for during you think the little a we've $XX we comments if And right the question balanced results. drive stepping environment we results we size at more think I making of balance lapping look nearly the we the And value and quarters. balance outlook think X% and we X this approach the Burger good we're premium had business value nuggets us King spite systemwide that of for the zoom growth know, I balance Thanks this progress for little growing that to brands that brand, of premium. sales, more probably this shifted particularly already kind promotion quarter as three how

Operator

ahead. comes question from Geiger next with UBS. Please The go Dennis

Dennis Geiger

Great, thanks.

plan business, plan. else it to cetera. satisfaction ‘XX wanted touch of we confidence have what saw Tim's Just results the scores, improved, as and this really we that give launch you momentum perceptions quarter improved improving customer through quarter, et quarter recently that things brand couple the and at of of in months quarter, Anytime months beyond Thanks. can accelerating into with the this Are on maybe was Together into launched quarters? two know just you you say indicators Winning you the specifically to some and improving Anything following very of relates better seeing go that of the next for momentum communication you the as or are Breakfast two Breakfast momentum kind just as leading seemingly other the that

Daniel Schwartz

Thanks the question. for Yeah.

I today beginning and relationships with broadly stronger way think with than we're restaurant working their more even it's the of the it the was, much year. back our this just franchisees, at stepping owners

I the feedback, working the Duncan and Alex executing direct with were Together the on team think really travelling them. getting country, Macedo, that We've with brand a now leadership the the and doing working team, them, owners job plan we're their restaurant good our around Fulton built plan, collaboratively. Winning with together plan

loyalty, different than we different a markets something look a on seeing the our prospectively, results of kid’s of running. positive And when kind incidence have think momentum. out look seeing any didn't dedicated quarter with have quite already at I of that launch, know, families more like things the coming we're just when the country. this we we're you kind other in Kid's the we And already we start that the Meals of test we're Anytime, on for to testing high mechanisms about. really chain excited that's We're restaurants few despite so that meal, Breakfast

guests there way to our Hortons get growth. So we their to our the to it something contribute positively reward that frequency, great once and could would be a for right Tim mechanics

platform. a whole have beverage of host our around planned innovation We

And about little more some architecture over next of a whole past of that make think changes little - into bit and to lunch a plans overall to a I bunch to and summer this bit seen winter you've kind our year. come as this well.

with kind closely initiatives yet of but host the also be whole yet that restaurant quality reflected to very that initiatives we're of I think and is that a working to we kind of our of that And reality, better. the become owners. are So much have communications getting

already. seen this You've

much on company I and And of better. the think in with has that you're done the overall the we've that in function good plan to narrative see franchisees. been come and Hortons fourth has our Tim collaborative to a our And the quarter have more going place. work it's been we

the us about really business. is excited all that So this what above gets

Operator

question Petrie Mark with comes go next The from ahead. CIBC. Please

Mark Petrie

shift Good of whether morning. come the operating premium that the And QX, and and thinking that I guess about then more of and higher thinking behind costs US I I'd menu it balancing how around impacts related back franchisee just your costs be perhaps more was commodity and or And of wanted just if promotion? to BK value. timing generally interested that simply and the was construction to to hear in and sort just for business strategic? impact your your in

Daniel Schwartz

Sure.

think - bit of quarters others. it the plan our kind unfolded was think don't know, you and I bit how will quarter. some I We've our during that of said was always than timing of strategic, be it stronger

didn't does. in know, the mentioned, launch with X you think last between lapping As strong performance think the the $X quite - [ph] the we I coupled that you that of and we And year that know, for have I balance resulted that value. I right premium it

kind confident outlook. still are full the of in year the We

the in confident long Burger brand our this sales with in still you King run - same-store ability know, U.S. for the We with the to are grow

value invested better back that heavily better that. know results we've are seen both renovations partners premium the balance between kind franchise balance of from you and mix new Our and brand, in already of toward And and the development. have already shifted in terms

closely say you home commodity is of relates this environment it year-to-date know, of three our costs, Tim that you are all across what around what markets kind we know, can can the is BK - operating you the something we and of the our to say grown brands, is As know, follow in all all In and franchise profitability. Popeyes I US world. US the and Scana and [ph] markets I have three

that's guest that mind Our year-to-date something each top these always at last franchise driving And restaurant a of earning priority, more year. did are restaurant than owners the they always, three and both for us satisfaction. profitability in markets level always of driving that's money and top

Operator

and Cowen with Company. Go comes ahead. question The Charles next from Andrew

Andrew Charles

you. Thank you. Thank

and Over ‘XX openings can looking given pretty you XXXX. in have just quarters net I help all the and XQ major that step in and last trailed Global [indiscernible] geographies, But BK [ph] the XQ growth and mentioned a restaurant two across unit what to related ‘XX Hortons are U.S. know net the coffee back, accounts franchise this have you introduce to done international master follow has out be at we much how openings the [indiscernible] can to place success taking what as in This agreements I brew. And I an where Tim's of cold with then seen meals, have major shops wanted to with. sneak beyond? that the is offering tremendous in see decision up, just Tim prioritize been to quick plans offering? to Dan, XXXX a for kid’s look introduction if

Daniel Schwartz

Yes.

with actually the question So know, be - that's the you the We targets structured on the first quarter-to-quarter. consistent in agreements. franchisees of an basis in manage quarterly. historically, what the from pipeline can than development are manner that's said our development rather And annual which we've lumpy kind

You know, in King accelerating past the growing. of couple pace been each growth of been years. We've Burger of the we've

opportunity cycles. this beverage don't outlook to We and our year. mentioned, and dedicated world, year size we kids have pipeline the all the openings And all you kids as world opportunity, developing franchisees and the us excited to and our a we're next the plenty I still gap a doing partners of a different host whole and around than - for look we have do we and have relates different have I in host the know any a offering life robust doing. and fill fourth of in host operational think the of you that we outlook. for to work Tim feasibility innovation know, we some are menu. be launches whole different at I saw prioritizing to it at for know, it chain quarter, Hortons, and for the of in mentioned of our know, you stages to know, meals, of slated and - be big quarter we a other big And in around great as we're confident year look out we coming full a We quite for kind have saw fourth our kind of of other obviously But partners when you that, other factors as of restaurants terms in about families we more with whole confident

So stay tuned for more news on that.

Operator

question go Palmer ahead. Capital Okay. RBC David Markets. The from Please comes next with

David Palmer

that sales global here. I Last for coming the was unit said unit Daniel, big one percentage growth. from growth from the quarter outlook of system Thanks. acceleration and growth you of touched you the think on

lot - to that feel sense more sustain confidence the profitability. able of they oriented to The accelerate want of I longer term think to get of otherwise going be pipeline, you're a or a investors just a are in forward? don't international you'll growth anything us as us confident able pipeline metrics Thanks. that well. unit feel, be would accelerate even you make markets or that unit growth to feel What that know sustain these tell they going can for or

Daniel Schwartz

our on Yeah. that closely for is the we world follow something The around all return capital with. partners very

that here are these in we world, and close initiatives. businesses the around all how what very As confident franchises to I us master we're all in confidence in with partners many terms say and we've teams in with And marketing know, shareholders but franchiser, in we members of you master that - these work not year. are only these of outlook we and cases of initiatives both also companies and we you the the closely we're you initiatives for that not operational development only and franchise the up, set our are owners the board - know, gives know,

the are we and we working partners internationally have from are talking cases stage. our know, more where two you sustained And and we many other are you where that and We many, with new Popeye's that partners development you existing - years in go And agreements confident to are many faster. new partners when historically, least restaurants, would much thousand look grow basis, that you opportunity growing across that we pace agreements And in and smaller an an of three that's at with Tim’s. King existing aspire at see obviously we're we Burger LTM growing and Tim’s brands, Burger know its much for north you development at term prospective that or Popeye’s at we're and at on the King are the is from brands growth. And those about in the today. two we this - longer know, know, closely that we

the to new an existing restaurants working Philippines a pipeline the a goes year. our set the we time yet growth teams same Popeye's of up We're We job signed agreements when plenty the in partners mentioned with several to for know, have the of the open in and more structure Popeye's for rate, in to to start the at lead of a the and And the and growth I you having signed where excited Burger know Tim and the with we've of you this X%. our more first in is in up the the opening benefits for done for comps development we have toward Brazil, these accelerate recently with Tim Hortons, work quarter the nearly this agreement end in already China you Popeye's part we've where globe think on We've have growth where agreement our pace a all that know, of quarter a up, the I I reflecting accelerated to the look about Tim's development wide successfully for And quarter you Hortons, do. softer China. opened brand of we more I good U.S. potential already outlook Popeye's last visiting that the will - we of sales number know, Popeye's these signed the of more by next around U.S. in years agreements system come. restaurant we've you year. increased of set maybe operations some despite And the our brand in plan King we of think growth world. think know, you you that where grew know, not spent and to

sales you so Tim's something and and pace of as faster right in better world resumed growth achieve our And and you that. have think know, know, to that wrap to much to Popeye's the partnerships around the we in the up that's same-store in and would - be we we right And set number in the a aspire run. long that I the team grow right we the up

Operator

Please from comes go with Oppenheimer. question next The Bittner Brian ahead.

Brian Bittner

the question are with the be Thanks. guess big I there that Popeye’s closed number I one and is Daniel, player there they're [indiscernible] and up reasons to taking business, on follow a they're in just a so McDonald's now that two is Popeye’s, the taking something you've and taking a really between because Burger that were lot lesser when half, were realistic, want trajectory real out Thanks. that general at the and gap accounting color that there also U.S., quick closing for going a on about taking on of the better own at KFC mean, just [ph] a a like they in up And King why is was number now global now just you Popeye's. you then what's global gap how answer from that, really than Burger there perspective? the who's I a And lot, or some the King share chicken much should chicken Popeye's? a on follow just so share business, between it's player. gap year

Daniel Schwartz

a to have we on do we this We count Look view restaurants much have the XXXX pleased larger restaurant do Yeah. view this a crossed to quarter. - opportunity this future. Popeye's, were huge as in

world. the you first and the the Brazil, U.S. Philippines, started the the the Philippines and was all work look back, we Burger and you place working been our Popeye internationally, in around the sorry of XXX we're growing structures King you year you of to in know, both said of started to restaurants we've And a Popeye's kind has a new really to we've in know, playbook I and, so in there time King that massively lot now the both XXXX, bought the right franchise to you brand partners from we're as You that of and Popeye’s Look, have work the lot a brands pace at now really our And we hard. working know, over two partners. and then, I know, Canada, our some of a from grow of accelerate per as think existing or similar the hard system and our kind if growth demand know, brand first other planting we're hard in strike with Burger the and the you able brand. and - that hard partnerships accelerate first the with system growth. We're XXX fact teams at if seeds and lot when right in around to grow

teams, on of infrastructure, takes years about set to supply when have a you one So It able Popeye's. calls in these talk in chain. to faster few time, - growing much be we'll up

has good stand, made U.S. we have was it owners today. kind progress been we're the profitability we we've long-term a restaurant know, doing of per you brand is a involved you progress. to of lot of when bit softer, at restaurant of relates with We our where sales got industry lower competitive. think - King but know, been It's the to overall for the made has look we we Burger than much lot time the you a were and committed as it. quite And as the mentioned little it what been when I you'd then industry, I business So and think that in

at perform this environment think didn't the of expect I kind we already shift expecting our I and coming think would performance, made you know, the quarters to the I from quarter, we we were look look as when balance we're in quite at that think better. you when results the that right we We've for I that - have in. mentioned,

Operator

Baird. with The from Tarantino ahead. David go comes question Please next

David Tarantino

Hortons. Good Hi. to opportunity help the project morning. the on up frame could I for was Tim you if wondering remodeling

already or of so You completed renovations. you've mentioned, like those XXX

I you just system then of you've sales seeing to could first that you that a from you maybe the hundred XXXX. wanted you're feedback? about mentioned or what return think majority in done And and get have by So those the completed perspective talk

you Just the at wondering if there's an this? update on pace complete for which your outlook

Daniel Schwartz

We're you. the progress Thank making program. good on Yeah. Welcome Image

Just image completed XXX and nearly in more after fourth know, you renovations under already completing new a the quarter. few short would months after we've announcing we hundreds the anticipate

our feedback has from restaurant the owners and guests our been positive. far So quite

I think it’s about a little sales bit early to uplift. talk

image jump and of there are as the renovations, pillars our at receiving responses positive component term a we're you wouldn't one And an of along program, longer think you that driving that members look growth. Winning one when one component know initiatives - you with we really I its investment alike. know, our the expecting I our sales I more immediate of have, guest plan And three other franchisees sales Together of really team been very the image the our again, is and that three say in experience. restaurant from long-term toward for plan. we've mentioned, toward they're or of guests, already improving prong geared this

restaurant as it on You our excellence. main the know, communications this working also that we're and is but initiatives this is experience, our one improving product to of we're relates

Operator

with question Sachs. Please Okay. Holthouse from comes Karen ahead. The go Goldman next

Karen Holthouse

digit at Hi. pretty comment a would unique about Thanks and Burger year-over-year be question. which profitability for increase was franchise the low single in for King the stores, taking comp There of programs pressures? at store environment. sort there the cost been drive or still that labor happening current labor commodities outright offset that. Or are have Are level cost cuts to really helping a

Matthew Dunnigan

say driving restaurant the we with closely our is of kind we have I that without something the into grown month. partners Karen, of It's we very think mean, low I each P&L, comp our look still what year-on-year. at lines can on franchise Yeah, profitability specific the

we're to to our be find drive guest looking to know, also to to our their that that decisions profitability, with owners kind contributes efficient restaurant Something of you around driving ways always get while calendar more satisfaction. and

Operator

question Please McGinley with Evercore go ahead. Okay. next from Matt The comes ISI.

Matt McGinley

you. Thank

the underway, either few impact As is excitement a is remodels, follow that on you quarters? went the there construction have any into on getting would And Tim that occurring? of close Hortons those you accelerate renovations that number the as as But – you comp any a would expect you or projects, time underway. as there's quarter would the disruption in next revenue up any of I'm sure third around is there experienced lot

Matthew Dunnigan

time sales. renovations - there number any any you an there large and time At some you is - impact do is Yeah. know, there's of on a always downtime

ramp quantified Winning though. various system. even expect we're up haven't growth can on that to We Together in restaurants, renovating initiatives as really plan, would we say still drive positive if our what the we But is sales we the comparable that

Operator

next The question with BMO Please comes ahead. Markets. from Peter Sklar Capital go

Peter Sklar

noticed global units, than your that on lower net a I Hortons believe Daniel, which for quarter. is XX lot in a you do Tim I openings was basis any store typically

wondering openings you elaborate just deferral I'm see more So of of QX. there we're please? a a and Can going openings a to just closures is in whether timing lot or store lot

Daniel Schwartz

Yeah. Thanks, Peter.

kind nature many in given obviously openings. a As to the more there with growth would quarter, an of it brands, restaurant we across relates Tim of in at robust as the all do development. look we backend loaded future the And bit be profile of a in more I lumpy mentioned opportunity see to we as have Horan's, the expect the to it's from quarter-to-quarter, fourth the

We opportunities now the growth, the markets China new will that But see markets that onboard be the year. more come international in in would of Canada. we in we like of both selective next expect to accelerate to we continue still – pace some and to we're

Operator

The next Please question KeyBanc comes go ahead. from Eric Markets. Capital Gonzalez with

Eric Gonzalez

The your embracing those to Can seen be to an have on franchisee technologies that you from you Thanks. China, know branch to as to delivery or Dan, And update seems Thanks. what continue over develop? you as are any relates Good trends? I of benefit seeing significant your you there. your still you way, expand mentioned in were us to impact in markets, issues in a footprint morning. market, you digital the you give do in emerging market results believe macro it willingness position

Daniel Schwartz

Eric. Thanks,

We haven't seen markets. deceleration any in emerging

partners in Russia quite to Brazil in our healthy pace. fact, continue places restaurants In like at and develop

from to we sales has already and been percentage China. in is for some from Tim’s for our we've delivery quite Burger of expect high Popeye. benefited benefited quite a has know, for now already know both business time and King eventually for be China. - we delivery you been hopefully would in in You China our and It's restaurants would expect relevant - It

Operator

comes question next ahead. with Mizuho. Jeremy The Scott from go Please

Jeremy Scott

just or think the role has been the I XX technology CTO CTO Yeah, Thanks. more on for now. initiatives, Joshua months in than

franchisees of some on your urgency maybe of money by partnering above that real to I'm can precedent And some being indicative and to still being know in and relief image in to a it's estate. competitor higher And So are there lean on be XX% your what's decade. the upgrades stores on in terms John’s innings BK pipeline, guessing stores. launch you a set Is round technology those on there's early mentioned as expected? capital on issues arguably just the your new there Is beyond up you royalty of in set into the upgrades the contributions on on IN is these we follow accelerating a towards just and developing read will US, what's the point on here. but given their a of contributions, expected of big putting work precedent a this upgrades second

Daniel Schwartz

parts the your two maybe question. think to I And Yeah.

front, on this So I a I you the the digital know, of think progress year. lot made technology, think we

his role, strong team I head of of under new starts building think And other a really as lot and digital Joshua him. by a in made technology. it progress really a

different increase mobile great team Josh’s prepay we're see the the moving. So and recruit you've aggressive us app We've of that a really know, on indoor the over rolled that with Popeye's you and two we've at We're in guests much a King franchisees have you POS from had boards, our much And you been image folks to systems down probably kiosks. to thirds helped that to launched our tangible Burger seen I which has work at together delivery - the a launch that pace. know, able out two. outdoor pace to restaurants. have new results, system we've menu We're to XX that the more enables offers order able digital on to more converge path think

ramped year up Next piloting there. we've We're pace launched the loyalty app an there. delivery. kiosks also on We've working on delivery and Tim’s and of

we So to on right of do point. across interest know, come, of kind system terms I generous us I just do incentives kind we've just incentives provided our the to lot you months have think different this We Burger up know, a playing to royalty technology we've the as franchise years And have pace. of always up businesses enable that we've quite and more, of healthy its renovate brought in the and And leadership, tomorrow think brands under urgency estate. it relates and whole really catch a to where King lot ten catching upgrade. us contributed, shown new to you you seen already we because more to at hopefully whole enable in will team to a in have the and the renovations, Josh’s lot - shown of a know, having know, of real sense and in other at a done really own you and historically historically the franchisees we we we're the

Operator

Bank America. with of ahead. Please Francfort Gregory from comes question next go The

Gregory Francfort

guys. I questions. Hey, got two

how Tim’s, kind the today where in some seeing just higher, on that of over the for it of you helpful? take where business on maybe simplicity do was dayparts be question been be daypart you are you're wanted that will wanted anything menu breakfast had US, you to to hearing you. we've other for it you where the Burger where you first, trying The Are are low, that stand guys does softness your in I front versus And Thank be, and or King, measure you to on are industry. time? you generally or

Daniel Schwartz

on don't the King Burger I Yeah, daypart. call for comment, on there the think to out anything is specific us

our something and restaurant we owners efforts highest Tim, making looking more always franchise menu this at kind doing return it As sure restaurants. closely opportunities work of to and with the that we're the simplicity that putting is we on relates into with things have of our efficiently we're the

very to launching we out that, new kid's if platforms volume be profitability. it's having some meals, restaurants we Now have high increase of - it sales additional will and going will opportunities the said add additional we in and like cases those where we and but restaurants sales SKUs, it see only think will to generate

summer next expect year innovation Breakfast innovating the the more already really we've Anytime, of initiatives instances some And have. had what existing platforms, we just we're we just that we're already and of come where selling know, what some to so like beverage you over we're on really where and

you kind work we know, equation. we between and I sure balance find have and franchise that to and So that of always sales think right to incremental owners something closely with have generation always make right that you profitability complexity that's – will our restaurant

Operator

Jon from ahead. Fargo. Please question go with next Tower comes The Wells

Jon Tower

taking Great. for Thanks the questions.

US, remodels, what's thinking base, about Tim are required the with the then appetite willing investors the BK the franchise any targets year? an the the plans US? for expected what build in on high provide level, for you capital stores offer you do similar have say franchisees overall And you just then did lastly Hortons to of First this range earlier amongst remodel in longXterm to Thanks. the and financial the separately, to company? future new versus some to And

Daniel Schwartz

Yeah.

for one and most the is growing you brands the in Burger one increased fastest doing renovations know development. demand the the capital are - as know, the requirements, you we of current We both and on than now given the capital bit it of a on opens And that - new scope. renovation the would for little States. the new more and that see King restaurants for So United be

see So the the we're owners that. the historically doing run the of results long benefit good seeing formula for demand long-term the historically. across done. both us of It's we successful And something business, we've and of that's those. not We focus for long We business didn't run historically for been haven't driving provided guidance, on kind long-term we really of as run.

Operator

Please go Slabaugh comes next from The question Stephens Will with Inc. ahead.

Will Slabaugh

Canada, especially that Also a base where there, points? opportunity? a on Can and West of nice the basis, see Thanks. we've to it two guys. about remain more what might Thanks, past as the those a you talked had how curious Yes. an that obviously bit so daypart on Tim's broad from geographic on in basis to know, from relates and there rest I getting question being improvement there two I is softer year it's little a a a little the you're basis. about improvement and talk

Daniel Schwartz

comment to geographic on Yeah, nothing really basis. a

talked breakfast food, obviously to breakfast couple the across a a know, loyalty see opportunities of and did launch. We we know, dayparts Tim's. in benefit daypart both kind during we Anytime Breakfast We did see and - You earlier. during about benefit the selling of quarter you the other more see

opportunities know increase And more on lunch some we the some as launch on we lunch daypart. menu You out by the lunch on on menu. year day we be look the the over focused architecture expect the on to would changing to as we architecture, of next see the kids into -

entire day. innovation, opportunities multiple across dayparts beverage with of which across the there will kind So beverage we see sales drive coupled

Operator

the remarks. session. like to to This over I for back turn question-and-answer our closing Daniel would conference concludes Schwartz any

Daniel Schwartz

look everyone to again for our us Thanks. joining you we Thank next on year a day. great we full forward report and you speaking when Have quarter with results.

Operator

today's conference presentation. for attending you now concluded. The Thank has

may You disconnect. now

Restaurant Brands International (QSR) 24 Oct 182018 Q3 Earnings call transcript