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Restaurant Brands International, Explained

Erika Adams
Restaurant Brands International, Explained

Skift Table Brand Explainers break down restaurant groups by their individual brands in order to better understand their respective parts as well as opportunities for groups to expand or consolidate.

Restaurant Brands International, as an entity, has only existed for roughly the past five years. The company was formed after Burger King merged with Tim Hortons in 2014, and then in 2017, RBI bought Popeyes Louisiana Kitchen for $1.8 billion to build out the three brands that it encompasses today.

Not one to go long without surprises, RBI then announced that founding CEO Daniel Schwartz would be stepping away from his role at the beginning of 2019. José Cil, a 19-year veteran of Burger King and most recently the president of that brand, was named the new CEO of RBI. Schwartz will still have a presence at RBI as executive chairman, but will also spend more time in his role as partner at 3G Capital, a major shareholder at RBI. (The firm is desperate need of the added attention, as outlined in a Wall Street Journal report describing its recent shortfalls.)

Essentially, Cil was put in place to replicate the success of Burger King, by far RBI’s biggest brand in the U.S. and internationally in both sales and footprint, with the company’s two much smaller chains, Popeyes and Tim Hortons. That’s going to come from success in two major areas: Securing the right franchise partners to grow these brands globally (Cil was instrumental in growing Burger King’s international footprint to the 10,466 units that it is today), and doubling down on smart technology investments, from delivery integrations to in-store ordering kiosks to digital loyalty programs.

“Three years ago, we were nowhere [on technology],” Cil said at Bank of America’s 2019 Consumer & Retail Technology Conference in March. “I think we were nowhere and falling behind. 18 months ago, we recognized that we had to do something more drastic on the digital front in terms of talent, investment, and focus as a company. […] And our dream, our aspiration from a digital standpoint is to be best in class for all three brands, both in terms of quality of the digital experience and the percentage of sales driven by that digital experience.”

If all goes according to plan, RBI could be positioning itself to make another acquisition in the future. The company stated that part of Schwartz’s role moving forward will be assessing merger and acquisition opportunities for RBI. “We’re always exploring ways that we can use our capital in the most efficient way, and I’m going to continue to be spending time thinking about that,” Schwartz said on a call with analysts announcing the CEO change in January.

RBI has scheduled its first-ever investor day in May 2019 to lay out the company’s future plans in more detail. Until then, Cil has his hands full managing results across all three brands, which we’ve further outlined below.

Burger King

Dining Sector: Quick-service dining

Percentage of Franchised Stores: 100 percent

Global Footprint: There are 7,330 Burger King restaurants operating in the U.S. and 10,466 units in the rest of the world as of December 31, 2018.

RBI Take: Burger King restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken and other specialty sandwiches, french fries, soft drinks and other affordably-priced food items.

Skift Take: Burger King has excelled in going toe-to-toe with McDonald’s with attention-grabbing marketing exploits that have performed well for the brand. But it’s not operating on the same level as its main competitors when it comes to the forward-looking technology integrations that leadership has admittedly dragged its feet on. Burger King launched delivery capabilities with various third-party systems at the beginning of 2018, and now has 3,000 units set up on delivery platforms. Comparatively, McDonald’s has over 9,000 restaurants in the U.S. currently offering delivery, and Wendy’s expects 80 percent of its North American restaurants to offer delivery by the end of the year. We’ll be expecting to see accelerated growth in digital innovations from the brand this year, as Cil has outlined. Plus, that $5 coffee subscription.

Popeyes Louisiana Kitchen

Dining Sector: Quick-service dining

Percentage of Franchised Stores: 100 percent

Global Footprint: There are 2,347 Popeyes restaurants operating in the U.S. and 755 restaurants in the rest of the world as of December 31, 2018.

RBI Take: Popeyes Louisiana Kitchen restaurants are quick service restaurants that distinguish themselves with a unique “Louisiana” style menu featuring spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice and other regional items.

Skift Take: The Popeyes acquisition was largely applauded by investors when it was first announced in 2017, but since then, the brand has yet to truly jumpstart growth. Cil acknowledged that there’s a lot of room for improvement on Popeyes yet, but first there was simply a lot of operational cleaning up that demanded immediate attention. The Popeyes restaurants were previously operating on more than 40 different point-of-sale systems, for example, which made streamlined data collection on day-to-day business operations nearly impossible. There was also the need for a change in executive leadership, which RBI announced a week ago. Once a clear operational backbone is in place, Cil promises future growth through both consumer-facing technology (app upgrades, more delivery coverage) and back-end simplification (more efficient labor and production management). It just can’t come fast enough for this brand, currently the smallest in RBI’s portfolio.

 Tim Hortons

Dining Sector: Quick-service dining

Percentage of Franchised Stores: 100 percent

Global Footprint: There are 3,955 Tim Hortons restaurants operating in Canada and 891 locations in the rest of the world as of December 31, 2018.

RBI Take: Tim Hortons restaurants are quick service restaurants with a menu that includes premium blend coffee, tea, espresso-based hot and cold specialty drinks, fresh baked goods, including donuts, Timbits®, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups and more.

Skift Take: Tim Hortons has a deep brand affinity with customers in its home base of Canada (7 out of every 10 cups of coffee sold in the country are from Tim Hortons, according to Cil), and leadership is now looking to the U.S. as a huge growth opportunity for the coffee company. However, it’s crowded here: Starbucks is a best-in-class chain, not just in the coffee sector, but in the industry overall, and Dunkin’ has poured millions into revamping its look to better compete for future generations. On the operations side, it doesn’t help that the overall impression of Tim Hortons has been clogged by months of Canadian franchisee unrest. Cil has been pushing hard on the importance of franchisee profitability every time he’s spoken publicly about RBI, which is the right way to get operators backing their brands. If the majority of people on the frontlines of daily operations aren’t making money, it grinds positive movement to a halt extremely quickly.

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