Restaurant Brands International (RBI) was founded in part on the idea that it could drive global growth through its now-four restaurant chains Burger King, Tim Hortons, Popeyes and Firehouse Subs. And for the most part it has done that.
But it’s encountered a few hurdles more recently, notably the performance of Burger King in the two largest restaurant markets in the world.
The Miami-based fast-food chain appears to have found some stable footing domestically after shedding hundreds of restaurants in recent years. But it still has some work to do in the second-largest restaurant market, China.
“The big variance is China,” Patrick Doyle, executive chairman of RBI, told analysts at the Deutsche Bank Access Global Consumer Conference Thursday, according to a transcript on the financial services site AlphaSense. “We had a number of years, five years in a row, where we had 300-plus in China. We need to get back to that.”
RBI has vowed to get to 5% annual unit count growth by 2028. And it has plans for many of its brands to speed up unit growth.
For instance, the company believes there’s more unit growth to squeeze out of Tim Hortons in Canada, where it is dominant. “We actually think we can penetrate more deeply in areas of Canada where we are underpenetrated,” Doyle said. “As remarkable as that seems for a business that already has 4,000 restaurants up there, but there is actually an opportunity.”
Tim Hortons has not added new locations in Canada in years and, in fact, has about 200 fewer restaurants than it did in 2019, according to data from Restaurant Business sister company Technomic.
Getting some unit growth out of that brand is key for RBI, which wants to add a net 400 new locations in North America as an important part of that 5% equation.
Much of that will come from its unit-growth brands, Popeyes and Firehouse Subs. Popeyes has added an average of 134 locations in the U.S. every year for the past five, according to Technomic data. Firehouse added nearly 100 domestic locations last year and could be expected to speed that up under RBI, which acquired the chain in 2021.
Burger King is another matter. The fast-food chain closed about 77 locations in the U.S. last year and about 400 over the past three, as bankruptcies, weak sales and profitability created problems.
It will need to get at least some of that back. Since 2019, Burger King has represented about 90% of RBI’s unit growth, so the brand’s expansion performance is key for RBI to meet its corporate goals.
The company believes the chain is on the right track. “At some point we’ll get back to growth,” Doyle said. “But right now just getting it solid would be good, and an improvement from where we’ve been.”
Internationally, meanwhile, many of the brands have some real momentum. Firehouse, for instance, just signed a big deal in Mexico. Popeyes added 282 net new international locations last year and Tim Hortons added 196 international locations. Burger King added 410 restaurants, or 46% of the number of units RBI added outside the U.S. and Canada.
Five years ago, Burger King accounted for 87% of the company’s international unit growth.
But Burger King’s China challenges have hampered that international growth effort. In 2019, for instance, Burger King added 285 restaurants in the country. Last year it added 113. Unit growth is everything in China, helping to drive performance by KFC, McDonald’s and other chains.
Burger King operates just under 1,500 locations in the country.
At the same time, the company also wants to gets its other brands developing more aggressively there, too. Tim Hortons has 815 locations there. But RBI invested $45 million in that business last year, in part to demand more growth. It also bought Popeyes from Tims China last year, too.
And then earlier this year, RBI acquired Burger King China for $158 million. The company is working with Morgan Stanley to find another local operator of that business. But it’s clear RBI is intent on a more aggressive set of unit growth in that country with each of its brands than it’s seen in recent years.
“We’ve never had all three of the brands that are currently in China clicking at the same time,” Doyle said. “We’ve got to get that fixed.
Doyle said the company could easily make that unit-growth goal if not exceed it, with 400 locations from North America, 300 in China and 1,100 in the rest of the world.
“We’ve just got to get China back to where it was,” he said. “And if we can get all the brands clicking, it can probably do better than that.”
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