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Megan Thee Stallion will have a long-term interest in Popeye’s: RBI CEO

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  • QSR

Yahoo Finance’s Brian Sozzi and Julie Hyman speak with Restaurant Brands International CEO José Cil about the company’s latest earnings, the U.S. labor shortage, outlook, and celebrity partnerships.

Video Transcript

BRIAN SOZZI: Investors are still chewing on the latest earnings out of Restaurant Brands. Tim Hortons continued its turnaround in the quarter after a menu overhaul, but Burger King and Popeyes saw some sales weakness as they dealt with effects from the pandemic. Jose Cil is Restaurant Brands CEO and joins us now. Jose, always good to see you. Happy Friday. Let's start on Burger King.

I think a lot of folks were surprised to see that US same store sales are down. On the conference call you talked about putting more focus on the Whopper. What are you doing there, specifically?

JOSE CIL: Hey, Brian. Good to see you. Great to be back. And happy Friday. Yeah, I spent some time talking about Burger King at the conference call. I think, just to take a step back, we were really encouraged by the progress we made in the third quarter. We saw sequential improvement in the business quarter over quarter from a system-wide sales growth standpoint.

We're seeing good progress internationally. We're seeing good progress with our development pipelines. We're seeing good progress with our kind of technology business and digital sales growing, both in the US and especially in Canada with Tim Hortons and also internationally. So there was a lot to be encouraged about. And we also had one of our most significant contributions back to shareholders from a capital standpoint, with over $425 million distributed back to shareholders with our dividend as well as our-- our share buybacks.

At Burger King, what I talked about was the importance of the changes that we're making there from a leadership standpoint. We put a plan in place around operations and really executing more consistently, simplifying the restaurant experience for our team members as well as for the guests and making it much more enjoyable and faster, as well as order accuracy that we're working on. Digital continues to be a big priority, as does image and improving the drive-thru experience.

And on menu, one of the things that I shared was the importance of staying focused on our core. I think we've been a bit too promotional for some time, a lot of price-pointed promotions. And we really haven't dug in deep and shined a light on our core product and our flagship product, the Whopper in particular. We think we have an opportunity to-- to bring a lot more focus to that great tasting burger and have that as a kind of an anchor on our plan going forward.

So the team is working on it. We've got a lot of exciting work in front of us at the BK US business working closely with our franchisees. And we're excited about our plans ahead. It's going to be a lot of work, but we're excited about it and looking forward to continuing to share the updates with all of you.

BRIAN SOZZI: Jose, you pulled back on coupons at Burger King in the quarter. Any-- any reason why you did that? And do you have any plans to bring them back?

JOSE CIL: Yeah, we have a-- we've had a big coupon business for some time. It's been a part of the business for quite some time, for many years and decades, in fact. We felt that it was important to start making a bigger transition to digital, being able to reward our loyal guests with our loyalty program. We launched it nationally last quarter, the Royal Perks, which we believe, over time, is going to be a real key driver of the business, rewarding customers, giving them the opportunity to engage with the brand through the app, have full access to the menu with rewards that they get from frequency and trial.

So we think that's the right pivot over time. We did see a bit of a drag in the quarter as a result of that reduction in paper coupons. But over time, we think that's the right investment. And we're continuing to evaluate that and make sure we do it in a way that continues to drive top line but also helps us make that transition to digital most effectively.

JULIE HYMAN: Jose, I want to ask about labor. I saw a statistic that almost 40% of your Popeyes locations had to curtail operations in some way because of the labor shortage. Are you seeing that at your other locations? And what are you guys doing about all of this?

I mean, I imagine wages are part of this, but, you know, I was just-- as we're talking, I'm just thinking about working in a fast food place. I worked at a bagel place when I was a teenager. You're on your feet. It's hot. You know, it's-- it's not the easiest job, right? But it's doable. What do you think the holdup is here?

JOSE CIL: Hey, Julie. How are you? Yeah, thanks for the question. It's-- it's obviously a challenging environment for everybody. It's not just something that our brands are addressing or dealing with. Our franchisees here in the US and Canada and around the world have been doing an amazing job over many years on-- on staffing and retention and creating a really good environment in the stores. We've seen obviously some-- some pressures in the near term.

In Popeyes, I called it out in our earnings call on Monday. Popeyes was most impacted throughout the quarter. And we saw some of that in late night, which is a big part of our business for Popeyes here in the US. We also saw some of it in our distribution business in the northeast which impacted our ability to get some products on a timely basis in the Northeast, which had a bit of a drag on the business.

So-- so there was pressure. There continues to be, I think, near-term challenges on the labor front. You're right. The restaurant business is a great business. It's a lot of fun. It's also a very intense business from-- but I think it's a positive thing.

We see-- we get a lot of really good feedback from our team members. And there's a tremendous path for growth in the restaurants. Our team members do an amazing job. And so our focus is not just, you know, creating really good products to deliver to customers, but more importantly creating a great environment for our team members. Our franchisees are working together with our teams and making sure we have good training and onboarding for team members that join, that we do a good job of-- of addressing simplification, which is a really important topic in our business to be able to make their jobs easier so they can focus on guest service.

And then we've got some work that we're doing in the near term to jazz up our recruiting and hiring efforts. We've done some tests with text applications and other programs to be able to bring in more applicants, bring them on board, make the training and onboarding really effective, and then get them into a restaurant where they can shine and do it in an environment that's friendly, fun, and exciting, and then see them grow and take on more and more responsibility. So it's certainly a challenge in the near term, but we think we have a good plan. And we're working closely with our amazing franchisees to address that.

BRIAN SOZZI: Fast food, Jose, is having a moment right now with the celebrity tie ups. You had McDonalds and BTS. Now, you are out with a new one-- Popeyes and Meghan Thee Stallion. How are these things created? And have you seen-- has Megan Thee Stallion lifted your business at Popeyes?

JOSE CIL: Yeah, Brian, we're-- we're excited about the partnership. In the case of Meghan Thee Stallion, it goes beyond product and the sauce that we've introduced for the sandwiches as well as for nuggets. She's actually going to become a franchisee. We're working through the details there. So she's going to have a long-term interest in Popeyes and some restaurants that-- that a team will operate on-- on her behalf as a partner.

She's a big fan of-- of Popeyes. And I think what's important about these types of collaborations with celebrities is that they need to believe in the brand. It's not just a marketing initiative. It has to be someone who believes in the brand, likes the brand or loves the brand, in the case of Meghan. And it has a natural synergy there to be able to bring her love for the brand to her-- her fans. And she's got a huge following.

I know that we hit on something really exciting when I started to get texts from my kids' saying, hey, that's awesome. We love Meghan Thee Stallion. That's going to be a great collaboration. And the product is fantastic. So we're really excited about it and looking forward to sharing more on that over time.