Restaurant Brands International Inc.

Good morning and welcome to the Restaurant Brands International fourth quarter 2020 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. You will hear a tone to confirm that you are in the queue. Thank you, Operator. Good morning, everyone, and welcome to Restaurant Brands International's earnings call for the fourth quarter ended December 31st, 2020.

As a reminder, a live broadcast of this call may be accessed through the Investor Relations webpage at investor.rbi.com, and a recording will be available for replay. Joining me on the call today are Restaurant Brands International's CEO, Jose Sill, COO, Josh Kobza, and CFO, Matt Dunnigan. Today's earnings call contains forward-looking statements, which are subject to various risks set forth in the press release issued this morning and in our SEC filings. In addition, this earnings call includes non-GAAP financial measures. Reconciliations of non-GAAP financial measures are included in the press release available on our website. Let's quickly review the agenda for today's call. Jose will start with some opening remarks on our performance during Q4 and our ongoing recovery from the COVID-19 pandemic, before providing additional detail around our performance at Tim Hortons, Burger King, and Popeyes. Josh will then provide an update on technology. And to conclude, Matt will review our financial results before opening the call up for Q&A. I'd now like to turn the call over to Jose.

Thanks, Chris, and good morning, everyone. Thank you for joining us on today's call for the fourth quarter and full year ended December 31st, 2020. I hope everyone is doing well and staying healthy. It's been almost a year since the start of the COVID-19 pandemic and our response to mobilize behind a clear set of priorities to confront the crisis. We've seen considerable progress in our objectives over the past year, and the recovery in our business we've seen since March highlights the resilience of our three iconic brands and our network of strong and well-capitalized partners around the world. It's also testament to the incredible hard work from our restaurant team members, franchisees, and employees to reopen restaurants and get back to safely serving delicious food and coffee to our guests. Burger King, Tim Hortons, and Popeyes are all leaders in their respective categories and offer high-quality, craveable food and beverages combined with convenience that few can match. We also offer familiarity and comfort, as well as great value, characteristics we've seen consumers gravitate towards in more trying times like those we face today. We've reopened nearly 6,000 restaurants globally since the peak of the crisis, and as of the end of Q4, over 96% of our restaurants were open worldwide, Thank you for joining us. We remain focused on the key priorities we outlined last year to adapt our strategy to evolving conditions and drive a continued recovery in sales and ultimately get back to global system-wide sales growth. Our diversified network of strong and well capitalized master franchisees has been a key pillar of our platform for years, and we're working hard alongside our partners to return to growth. We're also working closely with our partners around the world to prepare for what we believe will be opportunities for growth and building strong pipelines for development as we move past the pandemic and look ahead. There is considerable white space for each of our brands around the world, and we believe that dislocation caused by COVID-19 has reinforced the positioning and consumer value of world-class brands like Burger King, Tim Hortons, and Popeyes. We believe all three brands are well-positioned to take advantage of an opportunity to win market share as economies around the world reopen and normal routines are reestablished. I would now like to share some highlights from the quarter and some areas where challenges remain. Thank you for joining us. We've made great progress in our work to revolutionize our drive-thru experience and have now installed outdoor digital menu boards at around a third of the over 10,000 drive-thrus in the U.S. and Canada. Josh will provide more details around our continued progress in this area. Digital sales reached record levels globally at $6 billion, and digital sales in home markets more than doubled in 2020. We've seen strong growth in average delivery sales per restaurant through December, including on our own app, and we're confident the market penetration we've been building in our delivery channels will position us well for continued off-premise growth as we emerge from this crisis. The strong growth that we've seen in our digital and delivery businesses is part of the larger exciting digital journey that we're on to become a leader in our industry. However, challenges remain. We're seeing reimposed lockdowns in many regions, but especially in Canada and EMEA. Routines remain on hold for many of our guests. This has resulted in mixed performance across day parts. Breakfast remains significantly impacted at Tim's Canada and Burger King U.S., especially in core urban areas. Late night continues to struggle as well, especially where restrictions and limitations on nightlife are more prevalent. Despite these challenges, we spent 2020 investing in priorities essential to our brands. This past year, we announced our Restaurant Brands for Good framework and published a number of major initiatives for Burger King, Tim Hortons, and Popeyes. We launched the Real Whopper, our flagship iconic sandwich, without colors, flavors, or preservatives from artificial sources in all Burger King restaurants in the U.S. and more than a dozen key international markets. Burger King and Tim Hortons announced a partnership in October with an industry-leading zero-waste platform where we'll pilot a new reusable and returnable packaging system for food and beverages on the go in 2021. And for the first time ever, we measured our global carbon footprint and are working to set and disclose a clear plan and strategy for reduction in the near future. We also made important commitments on diversity and inclusion. In 2020, we once again achieved 100% on the Corporate Equality Index as a positive LGBTQ plus workplace. And for the first time in our history, we earned a Great Place to Work certification based on employee feedback on culture and management. Moving on to Tim Hortons. In 2020, our system-wide sales decreased approximately 18% to $5.5 billion, mainly driven by a decrease in global comparable sales of approximately 16%, including a decrease in comparable sales of 17% in Canada. In the fourth quarter, Tim Horton's system-wide sales decreased approximately 13% to $1.5 billion, driven by a decrease in global comparable sales of approximately 11% and Canada comparable sales of negative 12%. The increase in cases of COVID-19 and reinstatement of restrictions in different parts of Canada in the fourth quarter had a negative impact on mobility. Since the start of COVID, we've seen a strong correlation between the incidence of lockdowns and disruption to routines and transit mobility. which in turn negatively impacted our sales performance. Despite the ongoing disruption and because of the proactive work our teams have done throughout the quarter, overall Canada comparable sales improved to negative high single digits in December, the strongest result we've seen since the onset of the crisis. And while we've seen a greater impact on our more urban inline restaurants, it's important to note that two-thirds of our system in Canada has a drive-thru, which is the largest drive-thru network in the country. and at drive-thru restaurants in Canada, our comparable sales did get back to about flat at various points in the quarter. As we more recently saw stricter lockdowns and curfews in Ontario and Quebec, sales softened in January at the levels of performance we saw in Q3. We've seen a clear distinction between the nature and impact of these lockdowns in Canada versus the U.S., including at similar Tim Hortons restaurants just across the border. and we continue to make substantial progress on the initiatives we shared with you earlier this year including elevating the quality of our coffee with our fresh brewers. To date, about 90% of the system in Canada is now brewing delicious Tim Hortons coffee in our new fresh brewers and we've seen a quantifiable increase in our customer satisfaction scores to date. We've also worked to modernize our brand image through the rollout of roughly 1,300 outdoor digital menu boards in Canada in 2020 with the remainder expected to be upgraded in 2021. While it's still early days, we've seen encouraging results from restaurants when we've installed outdoor digital menu boards and modernized the overall drive-thru experience, and Josh will talk more about this a little later. Finally, we innovated on our core offerings, with successful launches from products like the new and much-improved Dark Roast, Tim's Craveables, and freshly cracked eggs last week. These quality initiatives helped reaffirm our belief and our research findings that guests absolutely love our coffee and food offerings, and they vote with their feet and their wallets when we focus on quality and taste and we get it right. Our Tim's Rewards program positively contributed to our fourth quarter comparable sales performance. We're pleased with the progress we've made to scale the program over the last 18 months. Incredibly, nearly one-third of all Canadian adults have used Tim's Rewards so far and we believe that Tim's Rewards will be a powerful tool to engage with our guests in the months and years ahead, particularly as they reestablish their routines. On franchise profitability, in 2020, as expected, we saw a decrease in full-year, full-wall profitability attempts in Canada driven by the decline in sales. However, including the impact of government wage subsidy programs designed to keep team members employed, our franchisees are generally in a good financial position exiting the year. Thank you for joining us. Turning to Burger King, in 2020, our system-wide sales decreased approximately 11% to $20 billion, driven by a decrease in global comparable sales of 8%, including home market comparable sales decrease of 6%, temporary closures in our international markets, and net restaurant growth of approximately negative 1%. For the quarter, system-wide sales decreased approximately 8%, driven by a decrease in global comparable sales of 8%, including home market comparable sales decrease of 3%, temporary closures in our international markets, and net restaurant growth of approximately negative 1%. We continue to see varied performance across state parts in the fourth quarter as the COVID-19 pandemic continues to affect routines in the U.S., with particular softness in breakfast and late night, partially offset by growth in our lunch and snack day parts. While we're disappointed by the negative growth this quarter, we're happy with the progress we made transforming the Burger King brand and positioning our more than 7,000 restaurants in the U.S. for long-term growth. We launched and promoted the 100% real Whopper with no artificial flavors or preservatives. We know that our guests crave real products and high-quality ingredients. And with this change to the Whopper, around 85% of our permanent menu is now free from artificial flavors or preservatives, with a path to getting to 100% in the next few months. We also revisited our value offering. After months of research, testing, design, and redesign, as of the end of December, we launched the Burger King $1 Your Way Menu, a quality, everyday value-for-money offering. Thank you for joining us. A straightforward, easy-to-understand, everyday value proposition featuring craveable products only Burger King can offer is something QSR fans are demanding and we're happy to oblige and confident we're on the right path. Beyond transformation changes in value, product quality, and brand visual identity, we continued investing in our tech capabilities in the fourth quarter and saw exciting results in digital and delivery across the Burger King brand that Josh will touch on shortly. Moving on to franchisee profitability, four-wall profitability was down versus 2019, driven by declines in sales as a result of the COVID-19 pandemic. However, when coupled with government support that many of our franchisees qualified for and used to support their team members and staff, our franchisees in the U.S. generally finished 2020 in a solid position. Turning now to our international business, system-wide sales decreased 12% reflecting comparable sales declines of 12% in addition to the impact from restaurants that remain temporarily closed. Sales in our EMEA region were particularly impacted in the fourth quarter due to the reintroduction of lockdowns in many markets after we'd seen a nice recovery in Q3 when lockdowns had eased, with about 94% of our restaurants open at the end of Q4. Despite the challenges in EMEA, Progress in our APAC market gives us confidence that falling COVID case counts, reopening of dining rooms, and the return of routines, in addition to exciting digital and product activations, is a powerful recipe for growth. For example, our restaurants in Australia and New Zealand saw comparable sales growth of 8%, restaurants in Japan were up 7%, and restaurants in Korea were up 4%, with a combination of strong digital and product news that catered well to the demands of our hungry guests. We've also seen progress in other parts of the world as markets have begun slowly reopening. In Latin America, where Q3 same-store sales declined 21% with 84% of our restaurants open, we've now improved to Q4 comparable sales of negative 11% with 94% of our restaurants open. The recovery in these markets has demonstrated the strength and resilience of our Burger King brand internationally and the work we've done to reposition the brand and business in the U.S. sets us up well for future growth. In 2021, we remain focused on proactively confronting the pandemic as vaccines roll out around the world. Our strong off-premise and digital capabilities along with our network of well-capitalized partners gives us confidence that we can get back to growth in 2021 and beyond. Finally, at Popeyes, 2020 system-wide sales increased approximately 18% to over $5 billion, driven by an increase in global comparable sales of 14%, including home market comparable sales of 16% and net restaurant growth of 4%. Fourth quarter system-wide sales decreased approximately 1%, driven by a decrease in global comparable sales of approximately 6%, which was partially offset by net restaurant growth of 4%. In the U.S., fourth quarter comparable sales for Popeyes decreased by 6%. Popeyes U.S. has been on an incredible run since the second half of 2019, and I'm sure you'll recall that we relaunched our chicken sandwich permanently in November 2019, posting a positive 38% comparable sales in the fourth quarter of 2019. Nominal sales in Q4 of 2020 continued at very strong levels driven by sustained sandwich sales and also success across the menu and in group and family occasions. In January, we continue to lap the early days of the relaunch of Chicken Sandwich, with the businesses back to flat and continuing to perform at healthy nominal levels. Given the significant top-line increase we've seen in the U.S. between 2019 and 2020, Popeyes today generates an average of over $1.8 million in sales per restaurant versus just $1.4 million prior to the Chicken Sandwich launch. This strong growth in top-line has led to record levels of four-wall profitability for Popeyes franchisees in the U.S., Making Popeyes one of the most exciting and profitable QSR concepts in the U.S. As we've mentioned in the past, a large part of this growth is attributable to the chicken sandwich, but we continue to see significant growth across every category of our menu. The compelling unit economics and the consumer demand for more access to the brand have created a tremendous amount of appetite for new developments. Thank you so much for joining us today. We also made good progress expanding the brand's reach globally, entering several new markets and executing deals to enter several more. Now addressing development across all of our brands, you remember that in Q2, during the depths of the crisis, we laid out our views on unit growth for 2020 and 2021. We said that in 2020, we would take advantage of the challenging business environment to proactively optimize our restaurant portfolios by closing underperforming restaurants around the world. We did just that and closed just under 1,200 restaurants in 2020, representing about 4% of global restaurants but only about 2% of global system-wide sales. Not only is this healthy and positive for our brand image, but it positively impacts franchisee profitability and frees up resources for our franchisees to redeploy into building newer, better, and more profitable restaurants. And importantly, in 2020, our incredible network of restaurant owners also opened 1,100 restaurants around the world despite the challenges they faced in light of COVID. They were able to do this because of compelling unit economics and strong consumer demand. This gives us confidence that we can deliver net restaurant growth in 2021 in line with what we delivered in 2018 and 2019. With that, I'll now turn it over to Josh to talk more about technology. Josh?