Restaurant Brands International Inc. Third Quarter 2026 Earnings Call - RESTAURANT BRANDS INTERNATIONAL INC

Explicit Guidance:

• FY2026 Financials: Maintained segment G&A (excl. RH) at $600–$620M; net adjusted interest expense flat at $500–$520M; CapEx and cash inducements at ~$400M; total RH AOI at $10–$20M (implying Q4 loss due to Carroll's re-franchising and international startup investments).
• Tax Rate: Full-year adjusted effective tax rate expected at 18–19%, likely toward the lower end.
• Supply Chain: Tim Hortons supply chain margins expected to be roughly in line with 2025 levels.
• Capital Allocation: Full-year share repurchases on track for ~$500M (YTD $444M); committed to returning over $1.6B capital to shareholders for FY2026.
• Long-term Financial Targets: Path established to achieve investment-grade corporate leverage (low-to-mid three-times net leverage) by 2028.

Business-Segment Outlook:

• Burger King (US): Reclaimed #2 US burger category share; AUVs currently $1.7–$1.8M with potential to rise as core menu items (Whopper, King Jr., Nuggets) see double-digit AUV growth. Remodels (currently 60% complete) expected to drive further uplifts; 85%+ completion anticipated to be a significant driver. Menu elevations sequenced through 2028 and beyond.
• Burger King (International): China partners (CPE) delivered third consecutive quarter of double-digit same-store sales; accelerating development and returning to positive net restaurant growth in 2026. Japan (6 consecutive quarters of double-digit SSS), Korea, Germany, and Scandinavia performing strongly. Popeyes International surpassed 2,000 restaurants, $2B system sales, and is on track to become the #1 global chicken QSR.
• Tim Hortons (Canada): Improved to 1.8% SSS in Q3; cold beverages (Matcha, Monster energy infusers) and PM food (Melt platform, seasonal items) driving growth. Loyalty partnerships with Canadian Tire and WestJet expanding reach. Targeting growth >2% over time via PM day parts and US expansion.
• Popeyes: Q3 SSS -1.8%; positive SSS return expected to take longer than previously guided due to $6 big box promotion performance and wings menu simplification. Focus on core menu (bone-in chicken, tenders, sandwich) and operational execution to drive sustainable growth. North American unit growth expected to be softer than 2025.
• Firehouse Subs: 7.8% net restaurant growth; 1,500 restaurants in North America (200 in Canada) reached; significant white space remains in domestic and international markets.
• Restaurant Holdings: Re-franchising pace accelerated (135 YTD through Oct 2026); expects 2027 as the primary year for re-franchising activity to sunset the segment by end of 2027. Remaining ~300–500 units to be absorbed into Burger King US/Canada P&L in 2028.

Market and Competitive Outlook:

• Share Gains: Burger King US widened gap to peers by ~10 points; taking share in France, Japan, and Korea despite macro headwinds in some Western European markets.
• Operational Trends: Shift from "victory lap" to continuous execution; franchisees increasingly investing in restaurant image and operations.
• Category Performance: Popeyes leads the chicken category in year-over-year service satisfaction improvements (3 consecutive quarters); Tim Hortons' Matcha and cold beverage categories capturing younger demographics and PM day part demand.
• Global Scale: International business represents 29% of operating profit with 22 consecutive quarters of positive SSS; nearly 45% of sales from outside top 10 markets.

Macro / Industry Outlook:

• Rates & FX: Net leverage 4.0x with investment grade target by 2028; majority of debt swapped to fixed ( <10% floating); cross-currency swaps utilized to reduce cost of debt in Canada/Europe.
• Inflation/Costs: Beef inflation remains a headwind for franchisee profitability; relief expected in 2027 to accelerate remodels.
• Canada Macro: Stable employment/inflation; slight negative impact from rising gas prices on rural drive-through traffic.
• International Macro: Asia markets perceived as marginally better; some Western Europe headwinds.
• Regulatory/Tariffs: Tariff refunds of ~$11M included in Tim Hortons US CPG margins for Q3.

Strategic Initiatives:

• Menu Innovation: BK China, Japan, and Korea innovations (e.g., Dragon Ball Z, localized chicken) being shared globally. BK US elevating core menu (nuggets, Whopper variations) through 2028. Tim Hortons launching new matcha variants, cold beverages, and PM food innovations through 2027.
• Collaborations: Sustained IP partnerships (Harry Potter, Hello Kitty, SpongeBob) focusing on multi-generational appeal and family engagement to drive retention and visit frequency.
• Real Estate: Tim Hortons CapEx allocation of ~50% toward real estate; strong ROA/ROIs on head leases and CPG businesses.
• International Expansion: Popeyes International accelerating in UK, India, Brazil, Central Europe, and China (recently acquired ownership); targeting 5% system unit growth rate.
• Re-franchising: Accelerating BK re-franchises in Q3; pipeline developing for hundreds in 2026, accelerating further in 2027.

Risks and Headwinds to Outlook:

• Popeyes Performance: Positive SSS return delayed beyond H2 2026; North American unit growth may lag 2025.
• Macroeconomic Pressures: Inflation (specifically beef) affecting franchisee remodel pacing; gas prices impacting Canadian traffic.
• Cannibalization: New unit growth in Tim Hortons Canada carefully modeled to avoid excessive cannibalization; expansion in new residential developments requires rigorous returns analysis.
• One-time Costs: International G&A increased ~$10M (half due to non-recurring legal expenses); Q4 projected RH AOI loss includes incremental investments in international startups.
• External Volatility: FX headwinds noted in recent quarters; potential for further volatility in global markets.

Management Tone on the Future:

• Confidence: High confidence in consistency of results (5th consecutive quarter of >3% SSS; 22 quarters of positive SSS for Tim's and International).
• Momentum: Described as "accelerating" and "exceptional," particularly in Burger King US and International markets.
• Long-term Vision: Clear path to investment grade and a simpler, highly franchised business by end of 2027.
• Strategic Focus: "No appetite for a victory lap"; emphasis on continuous improvement, operational execution, and balancing innovation with core menu strength.

Miscellaneous:

• Q4 Planning: Preliminary Q4 earnings call scheduled for February 11, 2027.
• Leadership Changes: Remembrance of Chris Sorenson (Firehouse Subs co-founder); condolences extended to family.
• Credit Rating: Moody's upgraded corporate rating to BA2 and first lien debt to BA1 (early September).
• Investor Day Progress: On track for 8% long-term organic AOI growth target; re-franchising dilution expected to be ~2 cents EPS impact in FY2026, excluding core segment growth.