When Patrick Doyle announced his retirement from Domino’s Pizza in 2018, many wondered where he would ultimately land. The former CEO of the pizza chain just came off one of the best runs for a chief executive in industry history, and plenty of brands would clearly be willing to pay a hefty sum for his talents.
It would take a few years, but this week we got our answer in Restaurant Brands International. Doyle was named executive chairman of the owner of Burger King, Popeyes, Firehouse Subs and Tim Hortons. While he is investing $30 million of his own money into the company, he stands to make a lot more, with stock and options potentially worth hundreds of millions.
The company made no bones about why it hired Doyle: It is not satisfied with its overall rate of growth thus far.
“This is part of our long-term strategy to accelerate growth in our restaurant brands and profitability for our franchisees and drive shareholder returns that we believe this company is very capable of delivering,” board members and now-former co-Chairmen of the RBI board Daniel Schwartz and Alex Behring said in a statement announcing the move.
RBI has been built for aggressive growth. The company was formed in December 2014 when Burger King merged with Tim Hortons. Burger King had enjoyed a renaissance in the previous four years after it was sold to 3G Capital. And the company felt it could translate that success into other brands. It ended up taking on Canada’s biggest restaurant chain.
In the years since, RBI acquired Popeyes Louisiana Kitchen and then Firehouse Subs. It focused on international growth, with success at Burger King and more recently with Tim Hortons and Popeyes, the latter of which was also transformed by the introduction of a chicken sandwich in 2019.
Yet its stock price has not kept pace with other large restaurant companies in the years since its formation.
Since the merger, RBI’s stock price rose 73% by the time the company named Doyle its executive chairman. By contrast, the stock price of KFC owner Yum Brands is up 143% over that same period, while McDonald’s stock is up 198%.
When Schwartz and Behring talk about RBI’s ability to improve shareholder returns, this is precisely what they are talking about.
Two issues have kept a lid on RBI’s stock price: Tim Hortons and Burger King U.S.
Tim Hortons generated $6.6 billion in system sales in 2014, the year of the merger. That grew to just $6.7 billion by 2019, before the pandemic sapped sales in 2020 and 2021. The company struggled in Canada, enough that it overhauled management in 2019 and parent company RBI invested in marketing and remodels.
Its U.S. business has been little help, down by more than a quarter over the past five years, even though company executives promised to finally find the right combination for the brand to work south of the U.S.-Canada border.
Burger King U.S., meanwhile, has largely struggled since 2018, but those problems grew worse coming out of the pandemic. It is one of just two of the 10 largest brands that have not yet recovered from the pandemic. System sales grew 3.9% in 2021, according to Restaurant Business sister company Technomic, well below that of its top competitors McDonald's and Wendy’s. Those struggles prompted the company to invest $400 million into remodels and marketing.
And thus, RBI is tapping into one of the most accomplished restaurant executives available. Domino’s under Doyle’s watch had just one negative quarter of same-store sales. It helped push restaurants into a technology future, operating as much like a technology company as it does a restaurant. If you had invested $1,000 in the company on the day he took over you’d have had $33,000 when he left eight years later.
Along the way, the company remodeled just about all its domestic locations to attract more carryout business. And franchisees generated strong cashflow.
RBI now hopes that it has a foundation in place to get its top two brand markets on the right track, and that Doyle as executive chairman can build off that to generate the kind of growth executives envisioned when the company was created.