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Restaurant Brands CEO talks earnings, Justin Bieber collaboration, and inflation

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Restaurant Brands International CEO Jose Cil joins Yahoo Finance Live to discuss the success of the company's collaboration with Justin Bieber, earnings, Burger King pulling the Whopper sandwich off of its discount menu, product innovation, and rising prices amid inflation.

Video Transcript

JULIE HYMAN: Restaurant Brands reported results earlier in the week. And the company coming out ahead of estimates on pretty much firing on all cylinders here across its different chains, but especially when it comes to recovery in Tim Hortons, as well as Burger King. I want to bring in José Cil now, Restaurant Brands International CEO. José, it's always good to see you. Talk to me about Tim Hortons--

JOSE CIL: Hi, Julie. How are you? Good morning.

JULIE HYMAN: I'm doing well. OK, I'm going to start in a funny place here. And that's with Justin Bieber, José, because I know that the promotion that you guys did with him for Tim Hortons was particularly successful. How successful was it? And would you attribute-- I mean, how much of the gain that you saw in the quarter can you attribute to that promotion?

JOSE CIL: Well, it's great to be here, as always, Thanks so much for the opportunity. We were really excited about the performance at the end of the year. We saw-- I'll come back to Tim's in a second, but we saw sequential acceleration in our comp sales for all brands. We saw good momentum from a development standpoint. We had more commitments for new development and new markets for Popeyes and Tims than ever before in 2021. We saw good good growth in systemwide sales in the neighborhood of 14%.

And we saw really good momentum from a digital sales standpoint, so we grew almost 70% year over year in digital sales and got to $10 billion for the full year of 2021. And that cut across all brands, actually, internationally, as well as domestically. And then we had a really good capital return to shareholders in the quarter and for the full year. So it was an exciting finish to 2021, lots of work to do still.

And Tims was a really important part of it. We saw really good sales momentum in the quarter. Obviously, I shared during the call on Tuesday that the Bieber promotion, that Tim Biebs promotion was really quite powerful and helped us engage with a younger audience. But what was exciting about the performance is that it was really based on kind of the underlying core business growing.

So we had an espresso-based relaunch in the quarter, and that did really well, introducing-- or reintroducing Canadians to our great lattes. We had our core-- our breakfast offering continue to do well, our lunch offering and dinner offering beginning to gain some momentum. We've made a lot of progress on innovating for growth around the core with beverages, as well as food.

So-- and our digital business has become really powerful. It's a third of our sales in Canada, going through our loyalty program. So a lot of good momentum, and the Tim Biebs promotion was basically icing on the cake. And that's why I was happy to share that I'm a Belieber and really looking forward to-- kind of really looking forward to additional collaborations with Justin in the coming coming year.

BRIAN SOZZI: Well, José, the world is, indeed, filled with the Beliebers, and I'm going to contain myself not to ask you another one here. But I want to know what you talked about on the call regarding reclaiming the flame. What is going on with the Whopper? Is it still going to be put and plaster all over coupons? What's your strategy to revive that burger?

JOSE CIL: Yeah, look, we have a new leader in the business. Tom Curtis joined. He's been with the company for a bit of time, but he joined as president for Burger King. And he was on the earnings call on Tuesday. So I had a chance to-- and he had a chance to introduce himself to investors and analysts all around the world.

Lots of experience, comes with nearly 35 years of experience in the space as a franchisee, in addition to being a senior leader in the QSR space and tons of operational experience, which is really critical. And the view-- and Tom and I worked together with the Burger King leadership team, as well as the franchisees.

The focus-- there's a lot of excitement. The focus is all around the customer and making sure that we do a great job delivering our great-tasting products, our flagship being the Whopper, and doing it exceptionally well and doing it through the different channels that we've been expanding upon over the last couple of years.

Digital becoming more important. Drive-thru obviously has been an important part of our business for a long time. It's gotten even stronger over the last two years. We're investing behind it. We have outdoor digital menu boards and technology that's enhancing that experience.

And so the team is really focused on the guest experience. And Whopper being at the center of that, we felt it was important to invest behind it, to elevate an already flagship and iconic product and make sure that it becomes the centerpiece of our game plan going forward.

BRIAN SOZZI: José, why isn't there a Whopper chicken sandwich? When I think Whopper, I just think huge. I would sign up for buying a Whopper chicken sandwich with three pieces of chicken on it. I'm OK with paying a little bit more. But it makes sense to me.

JOSE CIL: Look, I think if you weren't so good at what you do, you'd probably be in marketing or in product innovation, Brian. But look, we have a very strong chicken business. We've been in the chicken business for-- you know, since the late '70s with the original chicken sandwich. And we think it's an important part of our business. We've got the chicken fries as well, which is a very unique and innovative handheld chicken product. We've got the nuggets.

And so we believe in chicken at Burger King. We think it's going to be an important part of the business going forward. And the team is taking time to evaluate the entire portfolio, make sure we've got the best products and the best offering for the customers and make sure we can deliver that exceptionally well through our drive-thrus, through digital and other platforms and service modes as well.

JULIE HYMAN: Oh, Brian Sozzi, come on now. A Whopper is a burger. Everybody knows a Whopper is a burger.

BRIAN SOZZI: Whopper's big! You could still flame grill anything. Come on.

JULIE HYMAN: Mm, you can. True-- true enough. José, I want to ask you about pricing. You talked a little bit about the call-- on the call, you raised prices last year and your franchisees did. You expect some more price increases to come through this year. Now, of course, it's a very diverse set of different types of restaurants, but what kind of insight can you give us into magnitude here? How big are price increases going to be? Where potentially are those increases going to be?

JOSE CIL: Look, our focus is making sure we manage the difficulties and challenges that you may face from time to time with these commodity inflation. And we're certainly in a very unique moment. But at this-- and making sure we've got the right margins for the franchisees, but at the same time, ensuring that we address consumer demands, and we don't get too far ahead of the consumer from a pricing standpoint.

So we work closely with the franchisees. They have access to third party consultants, so they can really analyze locally what's happening, make sure they understand the impact on their P&L, but understand as well what's happening with the competition, as well as what's happening on the consumer side. And then we take a very cautious and measured approach in terms of taking pricing at the right levels to ensure we manage both sides of the equation and don't get too far ahead of the consumer.

So the demand piece is really important for us. We don't have any-- we haven't communicated any plans in terms of additional price increases, but we look at it very, very regularly. And we're working closely with the owners to make sure they have the right information to make those decisions.

BRIAN SOZZI: In this type of inflationary environment, José, if it persists-- and it does look like it's going to persist this year-- do you have to do away with the value menu? Can the franchisee support a menu like that when we're seeing 10% plus inflation?

JOSE CIL: Yeah, that's one of the areas we look at. We ensure that we have the full basket of offerings to our guest. It's what drives the overall margin in the business. And so you may have some products that have a lower margin, but you may have others that have a higher margin. And the contribution when you look at product mix and different promotional activities, all of that is what drives the overall margin. And that's what we look at. And that's where we work on alongside our franchisees.

Sometimes it can become overwhelming. If you focus on one item, you need to look at the full offering and make sure that you understand the mix and the contribution of each of those to the overall restaurant margin. And that's how we look at it, and that's how we work with our franchisees. There's a lot of data that goes into it. And I think we're managing that carefully and staying close to CPI and ensuring we don't get too far ahead of the consumer.

BRIAN SOZZI: Last time we talked to you, José, that was on the day you purchased Firehouse Subs. That brand put out 15.2% comp, if I'm correct. And that is a very major number. Why do you think that brand is completely dusting Subway?

JOSE CIL: Look, it's an awesome brand. We talked about it back in November when I shared the great news that we were acquiring the brand. We were really excited when we got to learn more about Firehouse Subs, the purpose-driven brand that it is. Its Public Safety Foundation is super powerful and connects well locally. The franchise owners in that business are doing a fantastic job operationally. One of the better brands that I've seen in terms of overall satisfaction on the consumer side. And they've done a great job with digital. They're now in 27% of their business is digital.

And the comp wasn't-- it was 14 and change, almost 15 for the quarter, but for the full year, it was 21%, Brian. So it's really strong growth. I think they're doing it based on great-tasting products and having great service, as well as having a purpose that is meaningful to the local communities in which they operate. And so we feel really excited to be part of that brand.

The team is doing a wonderful job, and we're looking forward to accelerating growth in the US. We think there's a great opportunity in Canada. And we're super excited about being able to plug Firehouse Subs into the development machine we have internationally, which we think will be a key driver for growth over the long-term.

JULIE HYMAN: Great to catch up with you, as you continue that expansion and report those numbers. José, we love talking to you. The hazard, of course, as always, is, when we show the video of the food, it makes me really hungry. José Cil, Restaurant Brands International CEO, thanks for being here. We appreciate it.