Restaurant Brands International (QSR) Morgan Stanley Global Consumer & Retail Conference summary

Industry trends and performance

• Consumer spending softened in Q2 and summer 2024 due to confidence and interest rate pressures, leading to a focus on value and fundamentals like quality and experience.

• Consumer confidence has improved since July, with four consecutive months of better industry sales trends.

• Geopolitical tensions and lapping prior-year disruptions are aiding comps, especially internationally.

• Tim Hortons Canada outperformed, driven by strong fundamentals and best-in-industry brand scores.

• Delivery channel remains strong for most brands except Tims Canada, with ongoing improvements in efficiency and order accuracy.

Store development and growth outlook

• Store growth fell short of the 5%+ target due to geopolitical events and softness in China, especially impacting BK China.

• Dispute with the BK China partner is ongoing, with hopes for resolution.

• U.S. brands like Burger King and Firehouse are showing improved unit growth and profitability, with Firehouse up 40%+ in NRG year-to-date.

• International growth is led by high-revenue markets like France and the UK, while Asia contributes less to system-wide sales.

• Tim Hortons Canada plans more freestanding drive-throughs to match population growth; U.S. expansion depends on consistent unit economics.

Brand and product strategy

• Tim Hortons Canada leads in sales and traffic among QSRs, with ongoing menu innovation and a strong pipeline for PM food and cold beverages.

• Burger King U.S. is focusing on core equities like the Whopper, remodeling 400 stores in 2024, and transitioning to more small, hands-on franchisees.

• Popeyes is rapidly expanding internationally, with system-wide sales growing over 40% year-on-year and significant potential in Europe.

• Popeyes faces increased U.S. competition in chicken, focusing on product quality and improving service consistency through the Easy-to-Run initiative.