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Restaurant Brands International Inc QSR

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RBI Delivers Mediocre 2020 Results, but We Remain Optimistic About Longer-Term Opportunities

Analyst Note

| Rebecca Scheuneman, CFA |

Narrow-moat Restaurant Brands International reported fourth-quarter results that were just short of our expectations, with comps declining 11.0%, 7.9%, and 5.8% for Tim Hortons, Burger King, and Popeyes, respectively. Total reported revenue for the year fell 11.3%, with growth in Popeyes (17.7%) offset by sales declines at Tim Hortons (down 17.5%) and Burger King (down 11.1%). The firm posted a 36.9% adjusted EBITDA margin for the quarter, more than 400 basis points below our expectation due to higher operating costs from implementing strategic projects and fixed-cost deleveraging. We expect strong comparable sales results (mid- to high-single-digit growth across all three brands) in 2021 as the firm laps COVID-19 disruptions.

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Company Profile

Business Description

The consolidation of Burger King, Tim Hortons, and Popeyes Louisiana Kitchen as Restaurant Brands International represents the third- largest global quick-service restaurant chain, with $34 billion in pro forma system sales generated in 2019 and just over 27,200 units (99% franchised) as of September 2020. Revenue comes largely from franchise royalties and distribution sales to franchisees. As of September, there were 18,700 Burger King locations, more than 4,900 Tim Hortons locations, and almost 3,400 Popeyes locations across the globe.

Contact
130 King Street West, Suite 300, P.O. Box 339
Toronto, ON, M5X 1E1, Canada
T +1 905 339-5724
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type —
Employees 5,200

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