Restaurant Brands International(US:QSR)2023-08-08 16:25Financial Data and Key Metrics Changes - The company reported a year-over-year consolidated system-wide sales growth of 14%, driven by 9.6% comparable sales and 4.1% net restaurant growth [32][43] - Adjusted EBITDA grew 10.3% organically, and adjusted EPS was up 6.6% organically, with the difference attributed to $12 million in Fuel the Flame investments at Burger King U.S. [52][63] - The company ended the quarter with available liquidity of approximately $2.2 billion, including $1.2 billion in cash, and an adjusted EBITDA net leverage ratio of 4.9x [42] Business Line Data and Key Metrics Changes - Tim Hortons in Canada achieved comparable sales growth of 12.5% and system-wide sales growth of 12.8%, driven by core offerings and cold beverage expansion [34] - Burger King U.S. traffic showed sequential improvement, although it remained slightly negative, with a goal to turn it flat and then positive over time [12][14] - Popeyes experienced a system-wide sales growth of 47.9% year-over-year in the second quarter, indicating strong performance outside the U.S. [82] Market Data and Key Metrics Changes - The company noted that international growth is ramping up, with 27% year-on-year growth outside the U.S. [81] - Cold beverage sales at Tim Hortons grew 16.6% year-over-year, reflecting a successful expansion into this high-growth category [35] - The company is gaining market share in higher growth categories, such as cold beverages and PM food [126] Company Strategy and Development Direction - The company aims to achieve 5% unit growth in 2024 and beyond, with a focus on improving operations and advertising quality [6][7] - The Reclaim the Flame plan is set to focus on generating consistent returns through remodels and operational improvements [70] - The company is committed to enhancing franchisee profitability and driving traffic back to the system [51][138] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of inflation on growth expectations and emphasized the need for a normalized view on growth statistics as inflation evolves [9][74] - The company is optimistic about the trajectory of the brand, citing improvements in operations and franchisee engagement [51][100] - Management highlighted the importance of continuous improvement in operations to enhance guest experience and drive traffic [38][126] Other Important Information - The company returned $249 million of capital to shareholders through dividends, with a full-year target of $2.20 per share [42] - The Smile Cookie campaign at Tim Hortons raised a record-breaking amount for local charities, showcasing the brand's community engagement [48] - The company is focused on modernizing its restaurants and enhancing digital capabilities to improve customer experience [60][133] Q&A Session Summary Question: What will drive the implied acceleration in the Burger King business? - Management indicated that significant improvements in operations and advertising quality are essential to drive traffic and achieve growth targets [12][14] Question: How do you feel about the full slate of targets set in 2019? - Management believes that the targets remain relevant, but inflation has changed expectations for comparable sales growth [6][74] Question: Can you elaborate on Burger King U.S. traffic momentum? - Management confirmed that traffic is a focus area, with sequential improvements noted, although it remains slightly negative [12][14] Question: What are the key drivers for Tim Hortons in Canada? - Management highlighted the importance of cold beverage sales and PM food initiatives as significant contributors to growth [35][19] Question: How is the supply chain situation evolving? - Management noted that supply chain volatility is normalizing, with margins remaining flat sequentially [90] Question: What is the strategy for advertising investments in Burger King? - Management emphasized a focus on the quality of advertisements and a measured approach to spending [78][92]