Restaurant Brands International Inc. (QSR) Last Update 9/3/21
Related: CMG KO MCD PEP
% of Stock Price
Revenue
Gross Profits
Free Cash Flow
Restaurant Brands International Inc.
STOCK PRICE
DIVISION
% of STOCK PRICE
BK Restaurants
44.4%
$50.87
TH Restaurants
43.9%
$50.26
PLK Restaurants
11.6%
$13.33
Net Debt
34.0% $38.92
TOTAL
100%
$114.47
$75.55
Yours
Trefis Price
N/A
$60.98
Market
 
Top Drivers for Period
Key Drivers
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RECENT NEWS AND ANALYSIS

Potential upside & downside to trefis price

Restaurant Brands International Inc. Company

VALUATION HIGHLIGHTS

  1. BK Restaurants constitute 44% of the Trefis price estimate for Restaurant Brands International Inc.'s stock.
  2. TH Restaurants constitute 44% of the Trefis price estimate for Restaurant Brands International Inc.'s stock.
  3. PLK Restaurants constitute 12% of the Trefis price estimate for Restaurant Brands International Inc.'s stock.

WHAT HAS CHANGED?

Latest Earnings

For Q2 2020 The company saw a positive growth in system-wide sales for Popeyes Louisiana Kitchen (PLK) by 10.5% y-o-y, Burger King (BK) by 37.9% y-o-y and Tim Hortons (TM) by 33% y-o-y. Overall the system-wide sales were up 31.9% y-o-y. Revenue was recorded at $1.4billion, up 37% y-o-y, while diluted earnings were recorded at $0.77 up from $0.33 from the previous period.

New Management

The company in a release in the second half of January 2020 announced leadership changes to help move the company in the right direction. Daniel Schwartz was promoted to Executive chairman after serving as a CFO and CEO for the last eight years, while Jose Cil was promoted to CEO after being with Burger King for 18 years. Also, Josh Kobza was promoted to COO of RBI to oversee the global development, technology, and operational teams responsible for supporting the growth of RBI's brands.

Impact of Coronavirus

QSR stock has suffered as states and countries are on lockdown. People are not meeting friends and colleagues or going out with family for breakfast, drinks, lunch, or dinner. Restaurants and food outlets are operating in the take-out-only mode, and many are closed. Besides lower demand, the supply chain across the world is suffering, which has also weighed on sales.

BUSINESS SUMMARY

Restaurant Brands International is a Canadian Fast Food chain and serves as a parent company for Tim Hortons and Burger King. The company owns and franchises its restaurants all over the world. As of March 31, 2021, Burger King had 18,691 stores, Popeye's Louisiana Kitchen had 3,495 restaurants whereas Tim Hortons had 4,987 restaurants.

Burger King’s restaurants fall into the quick service restaurants category that features flame-grilled hamburgers, fish and chicken combos, french fries, soft drinks, and other affordable food items. Burger King restaurants appeal to a wide range of consumers, with multiple dayparts and product platforms appealing to varied customer groups.

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, bagels, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups, and more.

Popeyes Louisiana Kitchen is a chain of quick-service restaurants that distinguish themselves with a unique “Louisiana” style menu that features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. Popeyes is a highly differentiated QSR brand with a passion for its Louisiana heritage and flavorful, authentic food. Restaurant Brands International acquired Popeyes Louisiana Kitchen (PLK) in March 2017.

The fast-food chain competes with McDonald’s and Wendy’s in the Fast Food Hamburger Restaurant (FFHR) category.

SOURCES OF VALUE

Franchises' profit margins are four times that of company-operated restaurants

Company-operated restaurants are low margin businesses (~10-15% operating margin) as compared to franchised restaurants (~70% operating margin). The difference in margins is mainly because of the extra costs involved with company-operated restaurants, such as employees and operational costs, which are absent from franchised restaurants.

As Restaurant Brands International looks to become a 100% franchised model, it will mean lower revenues but higher margins for the company.

KEY TRENDS

Rising popularity of fast casual restaurants

The fast-food industry faces strong competition from “Fast Casual Restaurants.” Restaurants such as Chipotle Mexican Grill and Panera Bread are more likely to appeal to health-conscious customers. They claim to offer fresher, healthier, and better quality food.

Aggressive international growth as the U.S. market saturates

More than 50% of Burger King restaurants are in the U.S. This figure is expected to remain stagnant in the next few years, owing to saturation of the fast-food industry in the country.

Burger King has entered into joint venture agreements in various parts of the world to expand its business. In countries like China, Russia, Australia, Colombia, and South Africa, the company is set to open numerous new restaurants without deploying its own capital. Going forward, most of the expansion will come from international markets where the company is expected to earn only royalties. Thus, the growth of the company in the next few years depends on its performance in the international markets.