Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tim Hortons in Canada delivered a 2.7% increase in comparable sales, driven by traffic growth and strong value offerings.
- International segments saw a 1.8% increase in comparable sales and 7.6% net restaurant growth, outperforming many global peers.
- Burger King International markets like Australia, Spain, Korea, the UK, and Japan showed strong performance, contributing to system-wide sales growth.
- Digital sales growth is strong, with Burger King and Popeyes seeing significant increases in digital sales as a percentage of total sales.
- Franchisee profitability has improved significantly, with Burger King U.S. achieving $205,000 in 4-wall EBITDA by the end of last year, surpassing targets.
Negative Points
- Comparable sales were relatively flat, up only 0.3% year over year, indicating challenges in driving sales growth.
- Burger King U.S. saw a 0.4% decline in comparable sales and a 1.6% decline in net restaurants, reflecting a tough consumer environment.
- Popeyes U.S. experienced a 3.8% decline in comparable sales, attributed to a lack of value offerings in a value-sensitive market.
- System-wide sales growth for the full year 2024 is expected to be slightly below previous expectations, in the 5% to 5.5% range.
- Challenges in China, particularly with Burger King, are impacting overall unit growth, with ongoing disputes with the master franchisee.
Q & A Highlights
Q: Can you unpack the outperformance of Burger King International compared to global peers? Is it due to market mix or are you taking market share?
A: Joshua Kobza, CEO: Our Burger King teams are doing a fantastic job, leading us to take market share in many markets. For example, in Australia and Japan, we've focused on quality enhancements and operations, which has led to outperforming by a healthy margin. This focus on fundamentals and product quality is key to our success.
Q: How are you planning to grow the Burger King franchisee base from 300 to 500 franchisees?
A: Joshua Kobza, CEO: We expect new franchisees to come from various sources, including current team members and Carrol's employees. We're having discussions with those interested in owning smaller portfolios. Local ownership at the restaurant level is key to outsized performance and market share growth.
Q: What are the key considerations for unit growth beyond BK China, and how do you plan to offset pressures from BK China?
A: Joshua Kobza, CEO: We're seeing progress in Burger King US, Firehouse Subs, and Tim Hortons in Canada and the US. Internationally, markets like India, Mexico, and Japan are strong growth drivers. We're focusing on these areas to offset any pressures from BK China.
Q: What is the outlook for Burger King China, and how does it impact your growth targets?
A: Sami Siddiqui, CFO: China represents about 100 basis points of our unit growth shortfall. We're working on an amicable solution and remain committed to long-term growth in China. We believe in the market's potential and are making decisions to support that growth.
Q: Can you discuss the competitive environment for Burger King US and your strategy for value offerings?
A: Joshua Kobza, CEO: We perform best with a balance of value offerings and relevant innovation, focusing on the Whopper. Our current value offerings are working well, and we plan to maintain this balance into 2025. Franchise profitability is improving, and we're focused on maintaining healthy unit economics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
