In planning for Patrick Doyle’s speech at their convention this week, the International Franchise Association asked the executive chairman of Burger King owner Restaurant Brands International for a copy to post on the teleprompter.
There was only one problem. Doyle didn’t have anything to give them.
The former Domino’s CEO doesn’t use a teleprompter because he doesn’t need it. He’s spent so much time talking about franchising—and the right way to franchise—that he has the whole thing down pat. It’s that strategy, and the success that’s followed it, that earned Doyle a spot in the IFA’s Hall of Fame, which was announced on Monday.
“When I look at it through the food we provide and the service and the value and the promotion of digital and all sorts of things, as the franchisor the point of all of that is to give the franchisee an opportunity to make a great return on their investment of time and resources,” Doyle said in an interview with Restaurant Business. “Fundamentally, that’s the franchisor’s product.”
“The performance of the franchisee is everything,” he added. “The cash-on-cash returns they generate by being part of your brand, your system, is the key metric.”
“If that return isn’t there, you’re not going to be able to attract great franchisees, operators are not going to invest in their restaurants or build new ones. It is the ultimate measure of success.” -Patrick Doyle.
Doyle guided Domino’s to one of the strongest runs the industry had seen after the Michigan native took over as CEO in 2010. The company had only one quarter of negative same-store sales during his leadership, helping guide what at one point was a penny stock into one of the restaurant industry’s most valuable and admired brands.
While the company’s technology moves were frequently credited for that performance, Doyle himself, however, has cited the brand’s franchising strategy and its focus on ensuring operators could generate a return on their locations.
The impact of that profitability focus remains evident today. Domino’s franchisees have closed only two total locations this year through the third quarter. That’s a stunning statistic for a legacy restaurant chain with about 6,900 locations. Few closures on their own represent a major benefit for franchisors, ensuring that all capital spent on new builds represents growth, rather than just replacement.
Domino’s franchisees also remodeled locations quickly before the pandemic, overhauling the store base in a couple of years, paving the way for more carryout sales, which fueled even more growth.
“If that return isn’t there,” Doyle said, “you’re not going to be able to attract great franchisees, operators are not going to invest in their restaurants or build new ones. It is the ultimate measure of success.”
Doyle was lured out of retirement in 2022, with a hefty incentive package, to run Restaurant Brands International, where flagship Burger King was floundering coming out of the pandemic. Doyle brought that same focus with him to RBI.
As Domino’s did, Doyle had RBI publicize franchisee profitability metrics, making them among the few restaurant companies to do so. By making that data public, even when it didn't look good, the chains keep the focus of both management and investors on the state of the people operating the restaurants.
But RBI is a different animal than was Domino’s in 2010. It operates four brands, including Tim Hortons, Popeyes and Firehouse Subs. Flagship chain Burger King has proven to be a difficult nut to crack by numerous management teams and multiple ownership groups dating back multiple decades. And it has a far bigger competitor (McDonald’s) than Domino’s (Pizza Hut).
When Doyle took over, Burger King’s sales were struggling from a failed chicken sandwich offering. The company’s marketing fell back on discounts, something it has done on and off for years, which has kept unit volumes low. Large-scale franchisees, struggling with debt and soaring costs, began to file for bankruptcy. Hundreds of locations shut down. Some operators who didn’t land in bankruptcy came close.
RBI’s response under Doyle has been immense, and expensive. The company is spending more than $2 billion to revitalize the brand, thanks to a $400 million “Reclaim the Flame” plan kicked off in 2022 to fund marketing and remodels, plus another $300 million for remodels announced last year. The company also bought massive franchisee Carrols Restaurant Group for $1 billion and will spent hundreds of millions more remodeling those restaurants.
“The relationship with franchisees in the Burger King system is notably good right now. We’re not where we need to be yet. But the trust level is high that this is in their best interest.” -Doyle
All of that is to guarantee that the company’s 7,000 domestic restaurants look a lot better by 2028.
The corporate investment was necessary, because Burger King operators themselves were not profitable enough that they would put all that money into their brands without some assistance.
“Burger King is a pretty specific situation,” Doyle said. “We needed to get the remodel process going. We needed to improve operations across the board as the business had struggled. We had to get our share of voice higher on the marketing side. All that had to happen at a point where returns are not great for franchisees.
“We chipped in as a company, proved the partnership and have done really good things for the business.”
To be sure, circumstances can interrupt progress. Last year was not great for fast-food sales or profitability. But to Doyle the system is in a better spot. “The relationship with franchisees in the Burger King system is notably good right now,” Doyle said. “We’re not where we need to be yet. But the trust level is high that this is in their best interest.”
Doyle cited the work by Josh Kobza, named RBI CEO in early 2023, and Tom Curtis, president of Burger King North America, who has made improving operations a centerpiece of the chain’s revival.
Deploying a strategy like this isn’t always easy in a world in which the money behind the companies, including private-equity owners or public-company investors, don’t always have the patience to wait for such efforts to generate returns for franchisors.
Many franchisors, hell-bent on quick revenue growth, sell stores to anybody willing to sign a franchise agreement. Or they push aggressive discounts to generate revenue growth even when it creates problems for franchisees.
Burger King’s shift to discount marketing in 2021 when the Ch’King sandwich didn’t work—even though consumers weren’t necessarily interested in value offers at the time—clearly contributed to franchisee problems.
Doyle said it’s key for executives to communicate strategies to investors or owners, and be transparent about the purpose of investing behind franchisee profitability.
“You communicate a lot,” Doyle said. “You talk about what’s going right or wrong. We felt very strongly about this. Josh and I could not agree on this more. You need to be incredibly transparent on earnings calls and investor presentations.”
“It’s really about building trust,” he added. “If you’re transparent about the business, investors are going to give you the benefit of the doubt.”
“Franchisees are the local heroes. They’re involved in the community. They know the customers. They are the face of the brand in the community. That’s very powerful. There are restaurant chains that have had some extraordinary success doing it through corporate stores. But I think it’s easier and better when it’s primarily a franchise system.” -Doyle
Doyle, for what it’s worth, remains bullish on the franchising model, period. He thinks companies should own some restaurants so they have skin in the game. But he believes that franchising is ultimately better because of the connection franchisees have with their community.
Indeed, Burger King under Doyle has also shifted its franchising strategy to better emphasize in-restaurant operators.
Rather than encourage franchisees to amass huge collections of restaurants that span numerous states and require heavy debt loads to build and support, Burger King is now shifting its focus to smaller-scale operators that are more easily managed.
Once they’re remodeled, the 1,000, former-Carrols locations will be sold off in groups of 50 or fewer.
“Franchisees are the local heroes,” Doyle said. “They’re involved in the community. They know the customers. They are the face of the brand in the community. That’s very powerful. There are restaurant chains that have had some extraordinary success doing it through corporate stores. But I think it’s easier and better when it’s primarily a franchise system.”
As for struggling brands looking to replicate the strategies Doyle is using, he said that it’s vital for franchisors and franchisees to get their interests aligned.
“Understand that there is no path to success that doesn’t go through franchisees being successful first,” he said. “When that’s not happening, and people start looking at the size of the pie is being static and how that pie is going to be split up, then things are going to come unglued. It’s when you’re focused on how you’re growing the pie that things get easy.”