Restaurant Brands International ((TSE:QSR)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call from Restaurant Brands International (RBI) painted a picture of optimism and resilience amidst mixed results across its brands. The company demonstrated strong performance in several areas, particularly with Tim Hortons’ expansion and international growth, yet faced challenges with Burger King U.S., Firehouse Subs, and geopolitical issues. Despite these hurdles, RBI expressed confidence in achieving over 8% organic adjusted operating income growth by 2025.
Strong Overall System-Wide Sales Growth
In 2024, Restaurant Brands International showcased commendable system-wide sales growth of 5.4%, coupled with a notable 9% organic adjusted operating income increase. This reflects the company’s ability to maintain robust financial health and operational efficiency.
Tim Hortons Surpasses $1 Billion in Adjusted Operating Income
Tim Hortons delivered an impressive performance by surpassing $1 billion in adjusted operating income in 2024. This milestone marks Tim Hortons’ success in outperforming its major peers within the Canadian market, signifying strong brand loyalty and operational excellence.
International Segment Performance
RBI’s international segment exhibited significant growth, concluding the year with over 15,600 restaurants and generating over $18 billion in system-wide sales. The international comparable sales growth of 3.3% underlines the successful global expansion strategy.
Franchisee Profitability Improvements
The company reported improvements in franchisee profitability, with Tim Hortons Canada increasing average four-wall EBITDA to CAD305,000 and Popeyes U.S. achieving over $255,000. These figures underscore the positive trajectory of franchisee earnings across key brands.
Burger King U.S. and Firehouse Subs Challenges
Despite stability in Burger King U.S. with an average four-wall EBITDA of $205,000, Firehouse Subs experienced a downturn to approximately $90,000 due to broader market dynamics. These challenges indicate the need for strategic adjustments to bolster these segments.
Geopolitical and Market Headwinds
RBI’s net restaurant growth of 3.4% was hampered by development slowdowns in geopolitically impacted markets and net closures in Burger King China. These headwinds necessitate strategic pivots to mitigate their impact on growth.
Burger King China Financial Impact
The financial performance was further impacted by $20 million in net bad debt expenses related to Burger King China in Q4. This financial strain could potentially affect the anticipated AOI growth in 2025.
Forward-Looking Guidance
Looking forward, Restaurant Brands International remains optimistic about achieving over 8% organic adjusted operating income growth in 2025. Despite the challenges faced, the company foresees continued momentum, buoyed by Tim Hortons’ strong performance and operational improvements.
In conclusion, Restaurant Brands International’s earnings call highlighted a blend of robust growth and notable challenges across its segments. While the company has exhibited strong performance in international arenas and with Tim Hortons, it faces hurdles with Burger King U.S. and Firehouse Subs. Nevertheless, RBI’s confidence in achieving its growth targets in the coming years offers a positive outlook for stakeholders.
