Restaurant Brands International Stock

Restaurant Brands International Inc. (RBI) operates as a quick service restaurant, or QSR, company. The company serves as the sole general partner of Restaurant Brands International Limited Partnership.

The company franchises and operates quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons brand (‘Tim Hortons’ or ‘TH’), fast food hamburgers principally under the Burger King brand (‘Burger King’ or ‘BK’), chicken under the Popeyes brand (‘Popeyes’ or ‘PLK’) and sandwiches under the Firehouse Subs brand (‘Firehouse’ or ‘FHS’).

As of December 31, 2022, the company franchised or owned Tim Hortons restaurants, Burger King restaurants, Popeyes restaurants, and Firehouse restaurants, and operated in more than 100 countries. Approximately 100% of system-wide restaurants are franchised.

The company servess as the indirect holding company for Tim Hortons, Burger King, Popeyes and Firehouse Subs and their consolidated subsidiaries.

The company’s business generates revenues from the following sources: sales, consisting primarily of supply chain sales, which represent sales of products, supplies and restaurant equipment to franchisees, as well as sales to retailers and sales at company restaurants; franchise revenues, consisting primarily of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; property revenues from properties the company leases or subleases to franchisees; and advertising revenues and other services, consisting primarily of advertising fund contributions based on a percentage of sales reported by franchise restaurants.

Segments

The company operates through four segments: TH, BK, PLK, and FHS.

Tim Hortons Brand

TH is one of the largest donut/coffee/tea restaurant chains in North America and the largest in Canada. As of December 31, 2022, the company owned or franchised TH restaurants. TH 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, Timbits, bagels, muffins, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups and more.

Burger King Brand

Burger King (‘BK’) is the world’s second largest fast food hamburger restaurant chain. As of December 31, 2022, the company owned or franchised BK restaurants in more than 100 countries. BK restaurants are quick service restaurants that feature flame-grilled hamburgers, chicken and other specialty sandwiches, french fries, soft drinks and other food items.

Popeyes Brand

Popeyes (‘PLK’) is the world’s second largest quick service chicken concept. As of December 31, 2022, the company owned or franchised PLK restaurants. PLK restaurants are quick service restaurants that distinguish themselves with a unique ‘Louisiana’ style menu featuring fried chicken, chicken tenders, fried shrimp and other seafood, red beans and rice and other regional items.

Firehouse Subs Brand

Firehouse Subs (‘FHS’) is a leading player in the QSR sandwich category in North America. As of December 31, 2022, the company owned or franchised FHS restaurants. FHS restaurants are quick service restaurants featuring hot and hearty subs piled high with quality meats and cheese, as well as chopped salads, chili and soups, signature and other sides, soft drinks and local specialties.

Business Strategy

The company’s strategies include accelerating net restaurant growth; enhancing guest service and experience at the company’s restaurants through comprehensive training, improved restaurant operations, reimaged restaurants and appealing menu options; increasing restaurant sales and profitability, which are critical to the success of the company’s franchise partners and the company’s ability to grow its brands around the world; strengthening drive thru and delivery channels to provide guests convenient access to the company’s product offerings; utilizing technological and digital initiatives, including loyalty programs, to interact with the company’s guests and modernize the operations of the company’s restaurants; efficiently sharing best practices; and preserving the rich heritage of each of the company’s brands by managing them and their respective franchisee relationships independently and continuing to play a prominent role in local communities.

Restaurant Development

As part of the company’s international growth strategy for the company’s BK, TH and PLK brands, the company has established master franchise and development agreements in a number of markets, and the company expects to enter into similar arrangements for FHS. The company has also created strategic master franchise joint ventures in which the company received a meaningful minority equity stake in each joint venture.

Manufacturing, Supply and Distribution

In general, the company approves the manufacturers of the food, packaging, equipment and other products used in restaurants for each of the company’s brands. The company’s franchisees are required to purchase substantially all food and other products from approved suppliers and distributors.

TH products are sourced from a combination of third-party suppliers and the company’s own manufacturing facilities. To protect the company’s proprietary blends, the company operates two coffee roasting facilities in Ancaster, Ontario and Rochester, New York, where the company roasts the majority of the coffee for the company’s TH restaurants and blend the beans for the company’s take home, packaged coffee. The company’s fondant and fills manufacturing facility in Oakville, Ontario produces, and is the primary supplier of, the ready-to-use glaze, fondants, fills and syrups, which are used in a number of TH products in North America. As of December 31, 2022, the company typically had only one or a few suppliers to service each category of products sold at the company’s restaurants.

The company sells most raw materials and supplies, including coffee, sugar, paper goods and other restaurant supplies, to TH restaurants in Canada and the U.S.

The company’s TH business has significant supply chain operations, including procurement, warehousing and distribution, to supply paper, dry goods, frozen goods and refrigerated products to a substantial majority of the company’s Canadian restaurants. The company acts as a distributor to TH restaurants in Canada through nine distribution centers located in Canada, of which five are company-owned. The company owns or leases a significant number of trucks and trailers that regularly deliver to most of the company’s Canadian restaurants. In the U.S., the company supplies similar products to restaurants through third-party distributors.

All of the products used in the company’s BK, PLK and FHS restaurants are sourced from third-party suppliers.

The company has also entered into long-term beverage supply arrangements with certain major beverage vendors for the TH, PLK and FHS brands in the U.S. and Canada.

Franchise Agreements and Other Arrangements

The U.S. and Canada: TH franchisees in the U.S. and Canada operate under several types of license agreements, with a typical term for a standard restaurant of 10 years plus renewal period(s) of 10 years in the aggregate for Canada and a typical term of 20 years for the U.S. The typical BK and PLK franchise agreement in the U.S. and Canada has a 20-year term and the typical FHS agreement has a 10-year term, all of which contemplate a one-time franchise fee plus an additional fee upon renewal.

In an effort to improve the image of the company’s BK restaurants in the U.S., the company offered the U.S. franchisees matching funds with respect to certain restaurant upgrades and remodels. The company plans to continue to offer remodel incentives to U.S. franchisees during 2023. For PLK, the company offers development incentive programs pursuant to which the company encourages veterans, women or minorities to become PLK franchisees and develop and open new restaurants. For FHS, the company offers limited-term royalty reductions in connection with commitments to develop additional restaurants in specified territories.

International: As part of the international growth strategy for each of the company’s brands, the company has entered into master franchise agreements or development agreements that grant franchisees exclusive or non-exclusive development rights and, in some cases, allow them to sub-franchise or require them to provide support services to other franchisees in their markets. In 2022, the company entered into master franchise agreements for the PLK brand in Indonesia, New Zealand, Poland, the Czech Republic and Taiwan; for the BK brand in Poland, the Czech Republic and Romania; and for the TH brand in Pakistan, as well as development agreements for the PLK brand in Singapore, Dominican Republic, Puerto Rico, Kazakhstan and Honduras. The company expects to continue implementing similar arrangements for its brands in 2023 and beyond.

Franchise Restaurant Leases: The company leased or subleased properties to TH franchisees, to BK franchisees, and to PLK franchisees as of December 31, 2022 pursuant to separate lease agreements with these franchisees.

Government Regulations and Affairs

The company and its franchisees are subject to various laws and regulations, including licensing and regulation relating to health, food preparation, sanitation and safety standards, sustainability, and, for the company’s distribution business, traffic and transportation regulations; information security, privacy and consumer protection laws; and other laws regulating the design, accessibility and operation of facilities, such as the Americans with Disabilities Act of 1990, the Accessibility for Ontarians with Disabilities Act and similar Canadian federal and provincial legislation that can have a significant impact on the company’s franchisees and its performance. These regulations include food safety regulations, including supervision by the U.S. Food and Drug Administration and its international equivalents, which govern the manufacture, labeling, packaging and safety of food.

In addition, the company and its U.S. franchisees are subject to the Patient Protection and Affordable Care Act. The company is subject to federal franchising laws adopted by the U.S. Federal Trade Commission (the ‘FTC’) and state and provincial franchising laws.

Seasonal Operations

The company’s restaurant sales are typically higher in the spring and summer months when the weather is warmer and typically lowest during the winter months.

History

Restaurant Brands International Inc. was founded in 1954.