Core Insights - The restructuring of Burger King's operations in China has been finalized, with CPE Yuanfeng acquiring approximately 83% of Burger King China, while RBI retains about 17% [1][2]. Group 1: Strategic Partnership and Investment - CPE Yuanfeng will inject an initial capital of $350 million (approximately 2.5 billion RMB) into Burger King China to support expansion, marketing, menu innovation, and operational improvements [2]. - A 20-year master development agreement will be signed, granting exclusive rights for Burger King brand development in China [2]. - The plan aims to expand the number of Burger King stores in China from around 1,250 to over 4,000 by 2035, with a focus on sustainable same-store sales growth [2]. Group 2: Performance and Market Position - In 2024, Burger King China ranked eighth in RBI's international market revenue, with system sales of approximately $700 million and an average annual sales per store of about $400,000, significantly lower than markets like France and South Korea [4]. - Following the acquisition of full ownership of Burger King China, RBI has been actively seeking a new partner to better align with local market needs [4][5]. Group 3: Market Trends and Future Outlook - The transaction reflects a broader trend of foreign restaurant brands accelerating localization in response to increasing competition in the Chinese market [6]. - The success of this partnership will be evaluated based on store expansion rates and same-store sales growth from 2026 to 2028, with a focus on balancing brand value and local innovation [7].

Group 1 - CPE Yuanfeng will acquire a majority stake in Burger King China, holding approximately 83% of the shares, while RBI will retain about 17% [1][3] - The transaction includes a 20-year master development agreement granting exclusive rights to develop the Burger King brand in China [3] - Burger King China's system sales for Q3 reached $172 million, with a same-store sales growth of 10.5%, despite a reduction of 196 restaurants in the past six months [4] Group 2 - The deal is expected to be completed by Q1 2026, with CPE Yuanfeng injecting $350 million (approximately 2.5 billion RMB) to support expansion and operational improvements [1][3] - Currently, Burger King China ranks eighth in international market revenue for RBI, with system sales of approximately $700 million and average annual sales per store of $400,000 [3] - The plan aims to expand the number of Burger King locations in China from around 1,250 to over 4,000 by 2035, focusing on sustainable same-store growth [4]

Core Insights - CPE Yuanfeng has reached an agreement with Restaurant Brands International (RBI) to establish a joint venture for Burger King's operations in China, marking a significant step after eight months of seeking buyers [1][4] - The initial investment of $350 million will support expansion, marketing, menu innovation, and operational improvements in the rapidly growing Chinese consumer market [1][2] - The joint venture will grant exclusive rights to develop the Burger King brand in China for 20 years, with CPE Yuanfeng holding approximately 83% and RBI retaining about 17% of the equity [1][2] Company Strategy - CPE Yuanfeng plans to enhance Burger King China's operations through product upgrades, brand marketing, store expansion, online channel restructuring, digital system development, and financial optimization [2] - The goal is to increase the number of Burger King stores in China from approximately 1,250 to over 4,000 by 2035, while achieving sustainable same-store sales growth [2] Market Context - The previous operator, Turkey's TFI Group, expanded Burger King to 1,000 stores in six years, but performance declined after 2019, leading to dissatisfaction from RBI [5] - As of the end of 2024, Burger King China had 1,474 stores, which recently decreased to 1,250 due to closures of unprofitable locations [7] - The average annual sales per store in China were reported at $400,000, significantly lower than other markets like France, which had $3.8 million [5][9] Financial Performance - The recent changes in Burger King China's operations resulted in an $8 million year-over-year decline in revenue, but the company remains optimistic about future performance [9] - In the third quarter, same-store sales grew by 10.5%, driven by marketing upgrades and successful product launches [9]

Core Insights - Restaurant Brands International Inc. (RBI) has taken over Burger King's operations in China and is implementing a new strategic plan to optimize its business [1][2] Management Changes - Burger King China has appointed two new executives: Chen Wenrui as Chief Supply Chain Officer and Deputy CEO, and Xue Bing as Chief Transformation Officer [1] - Chen previously served as Chief Supply Chain Officer at Yum China, while Xue worked at McDonald's China [1] Store Closures and Openings - As part of its optimization strategy, Burger King China plans to close underperforming stores while opening 40 to 60 new locations, resulting in a net decrease in total store count by 113 stores by the end of 2024 [2][4] - The total number of stores is expected to decline from 1,587 in 2023 to 1,474 in 2024 [2] Sales Performance - The average annual sales for underperforming stores are reported to be below $300,000 (approximately 2.16 million RMB), indicating limited impact on overall sales [5] - Burger King China's system sales are approximately $700 million, with an average annual sales per store of about $400,000, significantly lower than other markets like France and South Korea [5] Future Growth Projections - RBI anticipates that the total number of stores across all its brands in China will grow by about 300 by 2027 or 2028, despite current challenges faced by Burger King China [7] - The company believes in the long-term potential of the Chinese market, despite the need for short-term adjustments [7] Competitive Landscape - Burger King China is facing stiff competition from other fast-food brands, which continue to expand rapidly, with significant gaps in store numbers compared to competitors like KFC and McDonald's [9] - The previous franchise agreement with the Turkish restaurant group was terminated early, with RBI acquiring Burger King China for $158 million (approximately 1.15 billion RMB) [9] Marketing and Promotions - Burger King China is enhancing its promotional strategies, including launching a 9.9 RMB discount campaign and other promotional events to attract customers [12] - The company is focusing on localizing its menu and marketing efforts to better connect with Chinese consumers [13]

Financial Data and Key Metrics Changes - The company is on track to deliver over 8% adjusted operating income growth for the year, which is a fundamental part of its long-term algorithm [15][16] - Franchise profitability for Tim Hortons exceeded $300,000 annually per unit last year, increasing by $25,000 [70] Business Line Data and Key Metrics Changes - The acquisition of Carrols was a significant step for the Burger King brand, aimed at changing the franchise landscape to more local owner-operators [9] - The company has taken over its Burger King business in China, which had been struggling, and is now focused on improving operations and ramping up advertising [10][11] Market Data and Key Metrics Changes - In the U.S., stable employment levels are seen as a positive driver for QSR usage, while Canada has experienced a slight uptick in unemployment, presenting a tougher environment [30][31] - The company sees stabilization in consumer spending in China, with plans to open 300 restaurants there as part of its growth strategy [38][39] Company Strategy and Development Direction - The company aims to build compelling business models for franchise partners globally, focusing on sustainable unit economics [18] - The strategy includes refranchising Carol's restaurants and Burger King China to local operators, simplifying the business model over time [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about addressing fundamental challenges in the business, including turning around the Burger King brand and improving operations in China [16][17] - The management believes that the investments made will yield high returns and strengthen the business foundation by 2028-2029 [21] Other Important Information - The company has added a new segment called Restaurant Holdings, which includes Carol's, Popeyes China, and Firehouse Brazil, to provide clearer financial disclosure [20] - The company plans to maintain a high level of capital expenditures in 2025 and 2026, with expectations to stabilize around $300 million thereafter [25][27] Q&A Session Summary Question: What has changed in the past year for Restaurant Brands International? - Management highlighted the acquisition of Carrols and taking over Burger King in China as significant changes [9][10] Question: What are the top three takeaways for investors? - The company is on track for 8% adjusted operating income growth, addressing fundamental challenges, and building sustainable business models for franchisees [15][16][18] Question: What is the path to improve ROIC? - The focus is on refranchising Carol's and Burger King China, with a long-term view of simplifying the business model [24][25] Question: How is the macro environment affecting different markets? - The U.S. shows stable employment, while Canada faces challenges; China is stabilizing, and Western Europe has mixed performance [30][31][33] Question: How is Tim Hortons performing in Canada? - Tim Hortons has maintained strong performance due to its value proposition, despite macro challenges [35][36] Question: What is the strategy for Popeyes in China? - The company is optimistic about Popeyes in China, focusing on building a strong local management team and improving operations [41][42] Question: How does the company manage coffee price pressures? - The company hedges coffee prices by buying forward, which helps mitigate volatility, and coffee costs represent a small portion of COGS [70][71][72] Question: What is the outlook for Tim Hortons' same-store sales growth? - Management expects continued outperformance beyond the long-term algorithm of 2% due to consistent improvements in product quality and service [76][80]