Today, Restaurant Brands International Inc. (RBI) released its third-quarter financial results for the period ending September 30, 2024. CEO Josh Kobza highlighted the strong performance, noting the resilience of RBI’s brands and the commitment of its teams and franchisees. Kobza emphasized the company’s focus on delivering value to customers, enhancing franchisee profitability, and investing in long-term brand growth. He added that the company observed an improvement in consolidated comparable sales in October and is confident in achieving its target of over 8% Adjusted Operating Income growth for 2024 and beyond.
Q3 2024 Key Highlights:
- Consolidated comparable sales rose by 0.3%, with a 3.8% increase in net restaurant count compared to the previous year.
- System-wide sales saw a 3.2% year-over-year rise.
- Income from Operations reached $577 million, slightly down from $582 million in Q3 2023.
- Adjusted Operating Income increased by 6.1% to $652 million, on an organic basis.
- Diluted EPS remained at $0.79, while Adjusted Diluted EPS rose by 4.6% to $0.93 organically.
Impact of Acquisitions and New Segment Structure
In 2024, RBI acquired Carrols Restaurant Group Inc. and Popeyes China, which led to the formation of a new segment called Restaurant Holdings (RH). RH includes results from Carrols’ Burger King locations and Popeyes China outlets. The company’s reporting now consists of six segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK), Firehouse Subs (FHS), International (INTL), and RH.
This new structure aligns with RBI’s strategy to maintain franchisee models across five core segments (TH, INTL, BK, PLK, FHS) while pursuing plans to refranchise most Carrols locations and explore a new partnership for Popeyes China.
Financial Performance Analysis
Revenue growth on an organic basis was primarily driven by the non-Carrols Burger King restaurants and Popeyes China, along with strong system-wide sales from the TH and INTL segments. Income from Operations declined year-over-year due to higher operating expenses, amortization of reacquired franchise rights, and unfavorable FX impacts, though partially offset by increased income from core segments and the RH inclusion.
Net Income also declined, influenced by higher income taxes and interest expenses, with some offset from reduced early debt extinguishment losses.
Burger King’s “Reclaim the Flame” Initiative
Burger King’s “Reclaim the Flame” plan, initiated in September 2022, continues to support franchisee profitability through strategic investments. The plan includes a $400 million commitment to advertising, digital, and restaurant improvements. As of Q3 2024, RBI has invested $93 million in advertising and $107 million in restaurant upgrades. In 2024, Burger King launched “Royal Reset 2.0” to invest an additional $300 million in remodels from 2025 to 2028, targeting 85-90% of locations to have a modern image by 2028.
