Restaurant Brands International Inc.

20-25 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'll be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. You'll hear a tone to confirm that you are in the queue. To exit the question queue, you may press star then two. All callers will be limited to one question. Please note this event is being recorded. I'd now like to turn the conference over to Kendall Peck, RBI's Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Restaurant Brands International's earnings call for the first quarter ended March 31st, 2025. Joining me on the call today are Restaurant Brands International's Executive Chairman, Patrick Doyle, CEO, Josh Kabza, and CFO, Sami Siddiqui. Following remarks from Josh, Sammy, and Patrick, we will open the call to questions. Today's discussion may include forward-looking statements, which are subject to risks detailed in the press release issued this morning and in our SEC filings. We will also reference non-GAAP financial measures, reconciliations of which are available in the press release and trending schedules available on our website. As a reminder, following our acquisition of Carroll's Restaurant Group, which closed on May 16, 2024, And our acquisition of Popeyes China, which closed on June 28, 2024, we introduced a sixth reportable segment, restaurant holdings, which comprises the Popeyes China business and the Burger King Carol's restaurants. The consolidated growth metrics discussed on this call, including organic adjusted operating income growth and organic adjusted EPS growth, exclude results from the restaurant holding segment. In addition, on February 14th, 2025, we acquired substantially all the remaining equity interests in Burger King China from our former joint venture partners. Commencing with our first quarter 2025 results, BK China has been classified as held for sale and reported as discontinued operations in our financial statements, as we are actively working to identify a new controlling shareholder. That said, BK China KPIs continue to be included in our international segment KPIs. A breakdown of BK China's KPIs and its impact on our 2024 financial statements can be found in the trending schedules available on our website. And now I'll turn the call over to Josh.

Good morning, everyone, and thank you for joining us. Through the first few months of 2025, we've been navigating a highly dynamic macro backdrop, one that's evolving differently across each of our key markets. As a global franchisor offering convenience and everyday value for guests, we're certainly better positioned than many others to navigate this evolving environment. but we're not immune and our Q1 results reflect that. First quarter consolidated comparable sales were 0.1% or just over 1% excluding the impact from leap day and net restaurant growth was 3.3%. This translated into system-wide sales growth of 2.8% and organic adjusted operating income growth of 2.6%. We anticipated that Q1 would be our softest quarter of the year and believe that some of the macro noise may have driven further softness. That said, we continue to perform reasonably well compared to many of our global peers, reflecting the underlying strength of our brands and the quality of the plans we are executing to improve on the fundamentals that our guests care about most. We know relative performance alone isn't enough and doesn't pay the bills for us or our franchisees though, which is why we're focused on delivering improved absolute results through the balance of the year. In any environment, our guests are focused on quality, service, and convenience at a fair price. And our teams are focused on exactly that, improving the value proposition for our guests at each of our brands and making that experience better each time they come in. Whether that is newly remodeled restaurants at Burger King and Popeyes or improved service standards at Tim Hortons and the PM Depart, we're spending our time on what matters most. That's why, despite the slower start to the year, we were encouraged to see improved sales momentum in April. Combined with our continued discipline on costs, which Sammy will address later, we're confident we'll deliver at least 8% organic adjusted operating income growth in 2025. With that, let's turn to our results, starting with Tim Hortons in Canada. Tim Hortons Canada experienced relatively flat comparable sales of 0.1%, or approximately 1.2% after adjusting for leap day, while lapping one of our strongest first quarter nominal sales results ever last year. While our results were masked this quarter by the tougher comparison, the leap day impact, and macro pressures, it's clear the underlying plan is working. The TIMMS team executed thoughtful calendar initiatives like the introduction of our 100% Canadian freshly cracked scrambled eggs, the $1 donut with a coffee promotion, and the return of physical roll-up room cups, a much-loved Canadian tradition. Importantly, although Canadian consumer confidence remains challenged, trends have improved in April as year-over-year comparisons normalize. and we build momentum with a strong marketing calendar and continued operational improvements. Looking ahead, we will continue providing Canadians great everyday pricing for their favorite Tim's products while innovating across day parts and categories. For example, in breakfast, we recently launched our scrambled eggs loaded breakfast box in collaboration with Ryan Reynolds. In the PM, we expect to expand share through new loaded platform and flatbread pizza flavors, like our hat trick pizza. as well as innovation in sandwiches and sides. Axel and team just wrapped up spring regionals in Canada, and there's a ton of enthusiasm from restaurant owners around the opportunity to continue growing in the PM day part through strong menu initiatives and execution. We also continue to enhance our beverage portfolio, particularly cold and espresso based beverages, to complement our leading market share position in hot brewed coffee. We're excited about our summer beverage lineup, including the introduction of frozen quenchers in April. Later this year, we'll begin rolling out new espresso machines to further elevate our espresso quality and credibility. Operational excellence remains a cornerstone of TIM's success, and our restaurant owners continue to demonstrate this with average morning drive-through times improving year over year for nine consecutive quarters and reaching one of the highest guest satisfaction levels of all time in the first quarter. Finally, we're accelerating our development efforts in Canada. We're on track to return to positive net unit growth in 2025, with a focus on under-penetrated regions such as Western Canada, where we have approximately one restaurant per 13,000 Canadians versus the national average of one per 10,000. In summary, despite a noisy start to the year, Tim Hortons continues to build on its strong foundation and its underlying plan is clearly working. With its number one brand love, affordable everyday pricing, engaging marketing, and relentless commitment to operational excellence, we are confident the brand will deliver solid growth in the quarters and years ahead. Shifting out international we're pleased with our relative performance this quarter delivering 2.6% comparable sales are roughly 3.7% excluding the headwind from leap day and 8.6% system wide sales growth. We saw solid growth in many of our largest markets, including the UK, Germany, Brazil, Japan and Australia, these markets share a few common traits compelling everyday value. exciting menu innovation, modern restaurant image, strong digital capabilities, and a focus on restaurant-level execution. In the UK, Burger King continued to take share through growing delivery, expanded core value platforms like the £4.99 King Box, and premium innovation with products like the Memphis BBQ King Double. In Germany, operational improvements and product innovation, including the launch of our new tortilla platform, helped drive both sales momentum and industry outperformance. I had the opportunity to visit several key international markets this quarter, including France and Spain, two of our largest businesses. I'm always impressed when I spend time with the Burger King France and Spain teams. They have beautiful, modern, and well-run restaurants and demonstrate the power and importance of having well-capitalized local partners. Both have done a great job navigating more difficult consumer backdrops in recent quarters and have set their businesses up for continued success. Tiago, Sami, and I also spent time in India, One of our most important growth markets Burger King India recently crossed the 500 restaurant milestone just 10 years after market entry. Raj Varman has run that business from the beginning and it's an incredible accomplishment, but I still believe the brightest days are ahead for BK India, with a huge runway. We also spent time with the Popeyes team in India, which is earlier in its growth journey but it's benefiting from a wonderful partner in Jubilant which has deep local knowledge and a committed long term mindset. In China, our teams have acted quickly since taking over the Burger King business in mid-February, solidifying a strong local leadership team and implementing early sales driving initiatives. Sammy and I were in Shanghai in March and were encouraged by early signs of progress, including an improvement in comparable sales. We expect to close a number of unprofitable restaurants over the next 12 months in order to have a more sustainable base for restarting growth. While we don't have a final count yet, the average sales volumes of these restaurants are relatively low. less than 300,000 US dollars, which means the impact of system-wide sales will be limited. Importantly, we view this portfolio cleanup as a critical and a necessary step to reposition the business for long-term success. In parallel, we've engaged Morgan Stanley and are actively working to secure a new local partner within the next year. Shifting now to Burger King in the US, where we saw a 1.1% decrease in comparable sales, or relatively flat results adjusting for leave day. Burger King U.S. continued to outperform the broader Burger QSR category, reflecting the ongoing progress of our Reclaim the Flame plan in capturing share. Tom and the team are staying disciplined in their approach to marketing, balancing value, premium, and family, while protecting franchisee profitability. This quarter, strong value offerings like the $5 duos and $7 trios were complemented by premium innovation, including the Steakhouse Bacon Whopper, which achieved one of our highest product satisfaction scores to date. Looking ahead, we're excited to launch a bold new family activation that taps into our flame grilled heritage and broadens the brand's appeal. We're also making progress on operations. We just finished franchisee roadshows, and it's clear there's strong alignment across the system around raising standards. We're continuing to take steps to transition restaurants into the hands of more engaged operators. And we're seeing those efforts translate into improvements across key metrics, not just at underperforming stores, but across the system. These improvements, coupled with an ongoing effort to expand hours of operation, are driving better guest experiences and contributing to the outperformance we've seen relative to the industry. Importantly, as we sustain this momentum over time, we believe it will result in stronger unit economics for our franchisees. Modernizing our restaurant base will be another important driver of franchisee profitability. We expect to complete about 400 remodels this year, including many with our new sizzle image. and average sales uplifts are holding in the mid-teens net of control. Between remodels and the net impact of openings and non-modern image closures, we're on track to reach over 85% modern image by the end of 2028. Our Carol's re-franchising efforts are also underway. We're in the process of placing restaurants with more engaged, smaller owner-operators, whether that's high-performing existing franchisees, strong new entrants, or internal talent within the system ready to take on ownership. The team and our franchisees remain focused on navigating the current environment with discipline and doing all the right things to build a healthier, more competitive Burger King system. Turning now to Popeyes in the US and Canada, we saw net restaurant growth of 3% and comparable sales decline 4% or down roughly 2.9% adjusted for leap day. This followed a 5.7% increase in comparable sales in the prior year, which benefited from the brand's first ever Super Bowl ad. While results were softer than we would like, we just returned from Popeye's convention in Orlando, where Jeff and the team reiterated their easy to love strategy to build a healthier, higher performing system. The plan is focused on delivering our world famous fried chicken more consistently to our guests. We will continue to bring exciting innovation like our pickle menu and relevant partnerships like our Don Julio collaboration from February. These messages are being supported by a step up in national advertising spend that began in April. and will continue for the next three years if performance targets are met. Over the medium term, our incredible food is going to be increasingly paired with foundational work we're doing to strengthen the system. We know modern, well-run restaurants deliver much stronger results, with remodeled restaurants that achieve an A grade generating 30% higher profitability than the system average. That's why we're going to roll out our easy-to-run kitchen upgrades over the next few years while we're remodeling our stores to reach a consistent modern image by 2030. And we'll focus on moving more of our restaurants to an A operations level. Much like we have at Burger King, we're being more intentional about prioritizing operational consistency over new development by prioritizing top operators who share our focus on operational excellence. Our field teams are raising the bar on operations and our company restaurant portfolio has expanded to approximately 100 locations, which we aim to make the example for the entire system. There's a lot of energy in the Popeye system today. The chicken segment of QSR has compelling growth dynamics, but is increasingly competitive, requiring us to raise the bar again on how we bring Popeye's amazing chicken to our guests. With a sharper focus on fundamentals, better marketing support, and a more modern, high-functioning base of restaurants, we're confident in our ability to perform in the quarters and years ahead. Finally, firehouse subs in the U.S. and Canada grew comparable sales by 0.6%, or nearly 2% excluding leap day. Net restaurants grew 5.9% and system-wide sales 7.3%. We continue to outperform the broader sub sandwich category in Q1, supported by fan favorites like our delicious French dip sub and our recent hot ones collaboration. Digital remains a strength for the brand with a digital mix of over 45%, the highest of our home market brands. And on the development front, we're building on the momentum we created in 2024 with hundreds of new store commitments from both new and existing franchisees. It's encouraging to see that energy translate into a growing pipeline, and it gives me confidence in another year of improved unit growth in 2025. With that, I'll turn it over to Sammy to walk through our financial results for the quarter.