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Popeyes chicken sandwich has ‘helped tremendously’ to bring in new customers: Restaurant Brands CEO

Jose Cil, Restaurant Brands CEO, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss the company’s quarterly earnings report, Popeye’s rise in sales, the future of off-premise dining and much more.

Video Transcript

ALEXIS CHRISTFOROUS: Restaurant Brands International posted a beat on both its top and bottom lines in the second quarter, but same store sales did take a hit at both Burger King and Tim Hortons. Meanwhile, it was a very strong quarter for Popeyes, where sales climbed 25% thanks to that coveted chicken sandwich. Here to discuss is Restaurant Brands CEO, Jose Cil. Jose, good to see you again. The chicken sandwich-- what's going on? A real bright spot, big demand across the globe. How do you hope to bring momentum-- that kind of momentum to your other Restaurant Brands like Burger King and Tim Hortons?

JOSE CIL: Hi, Alexis. Thanks for having me. Yeah, we had a really good quarter at Popeyes. And the good news is that it's not just a chicken sandwich. The chicken sandwich obviously, has helped tremendously. It's brought in new customers through our lunch daypart and drive-thrus. The single quick service restaurant or QSR customer that's coming in for a lunch meal.

But we also saw tremendous growth in the quarter through our delivery business. We saw tremendous growth through our family bundles. We had a lot of momentum on being able to communicate directly with consumers on unbundling bone-in chicken, ancillaries, and side items, plus the chicken sandwich. We did a lot of different delivery promotions through aggregators as well as our own app. And we saw good momentum in the quarter, which gives us confidence that when you try the product, whether it's the bone-in chicken or the sandwich or any of our delicious side items, people love the product and want to come back.

And one of the challenges we have with Popeyes, which is one of the opportunities, is that we only have 2,500 locations. So we need to give access to more people in the US so they can try the great product. And we think it's a great opportunity for growth long term for the brand.

BRIAN SOZZI: Jose, so many executives I talk to in the restaurant space, they're now sitting down with their teams and thinking about the restaurant of the future. Lots of redesign activity going on. What does the restaurant-- what's the Burger King of the future, what does the Popeyes the future look like to you after COVID-19?

JOSE CIL: Thanks for the question, Brian. Look, we've been working on this for quite some time, and we felt that there was a big shift taking place in the restaurant business to off premise. And so we doubled down on technology. We've built up a team of engineers here in Miami as well as in Toronto and across the globe to be able to help us build best in class products, digital products, and assets that consumers can engage with.

So we saw improvements in our app and our app ratings, as well as engagement with consumers. And we think off premise is going to be a huge part of the business going forward. And so we're investing and looking at different ways of providing off premise experiences to our guests in traditional drive-thru locations, freestanding drive-thrus, as well as in line locations. And also, less traditional locations. We've seen dark kitchens and ghost Kitchens be opportunities for us to continue to deliver product and opportunities to our guests.

So we have a team working on that, a skunkworks team that's working on this, and has been working on this for quite some time. And we think we're going to be able to continue to deliver our great products for Popeyes, BK, and Tim Hortons off premise and on premise across the globe for years and years to come.

BRIAN SOZZI: There's also, I would say, Jose, a real rethink in the restaurant industry on how many stores need to be open. Some chains have start to now announce they're taking a hard look at their overall store portfolio. Do you anticipate any mass store closures on your end?

JOSE CIL: Our company, Restaurant Brands International, is fundamentally a growth company. We've seen tremendous growth with our three brands over the last couple of years. And obviously, the current pandemic and the reaction by both governments and consumers has had a short term impact on that.

But we think long term, there's a tremendous opportunity for us to continue to grow. There's a lot of white space. There's a lot of demand. We see opportunities internationally as well as here in North America in the US and Canada to grow our brands and traditional drive-thru locations as well as, as I mentioned earlier, non-traditional sites. So we see growth. Growth in terms of same store sales or like for like sales, as well as unit growth as being a big part of our business for the long term at RBI.

ALEXIS CHRISTFOROUS: Jose, you reopened, I think, about 93% of your restaurants globally. What has the dine in experience been like? Are you seeing demand? Are people willing to sit? Or is it more happening with the to go sort of drive-thru delivery business? And you spoke to this a bit but, how is that informing the way you do things going forward?

JOSE CIL: Well, off premise continues to be the fastest growing part of the business. Drive-thru in North America, for example-- our drive-thru business and our three branches is way up versus last year. Delivery is up for fourfold, almost fivefold at Popeyes and threefold at BK. And we've gone from 200 locations in Tim Hortons in Canada to 1,200 locations with delivery. So off premise continues to be the principal part of the business today.

But we're seeing dining rooms open in many markets and we continue to see consumers coming in. We're doing it in a limited fashion-- that we're reducing capacity in our restaurants to ensure people are able to enjoy the products and enjoy the experience in a safe way, respecting social distancing. So we think that's going to continue to be the case for a bit of time. And we're working closely with our local operators and our teams as well as the local municipalities to make sure we do that safely.

But we think long term, our focus has always been, and I think the industry's benefits has always been around convenience and serving guests when they want to have a great meal or a great beverage, snack, or a meal. And so whether that's off premise, drive-thru, delivery, curbside pickup, or a dine in experience, we're going to focus on being able to be there for our guests every day all around the world. And our teams and our franchisees are working closely to get there.

BRIAN SOZZI: Jose, the pizza delivery category is on fire right now. I know you don't play in that space, but do you have any plans on dabbling in serving pizza at a Burger King? I can't imagine it would fit at Popeyes, but the category is so hot right now.

JOSE CIL: Yeah, we actually are playing in the pizza category with Popeyes. We launched a pizza crashers campaign earlier this month. Actually, it was in July. And what we felt was there was a tremendous insight through what we were seeing in the pizza category that we were able to, with chicken, provide the same experience or even better, given the product quality. So we were able to bundle and provide offers to consumers and families through the Popeyes app.

And we're excited and we're learning a bunch about the shift in consumer behavior through delivery. And we've seen a lot of improvements in our business, both at Burger King and Popeyes, as well as in Tim Hortons in Canada, being able to serve large quantities of food and beverages through our delivery platform. So we see that as an opportunity for our three brands and continue to-- to invest behind that.

ALEXIS CHRISTFOROUS: Continuing to innovate. Jose Cil, CEO of Restaurant Brands. Thanks so much. Good to see you.

JOSE CIL: Thank you so much.