Q2 2024 Restaurant Brands International Inc Earnings Call

August 8, 2024

Good morning, and welcome to the Restaurant Brands International Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. To unit assistant, please signal conference specialist by pressing the star key, followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on the telephone keypad. You will hear a tone to confirm that you are in the queue. To exit the question queue, you may press star, then 2.

Operator: At the end of today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on the telephone keypad. You will hear a tone to confirm that you are in the queue. To exit the question queue, you may press star, then 2.

Operator: News Conference Call, all participants will be in this and only mode. Surely the system, 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 1 on the telephone keypad.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star than one on telephone keypad. You will hear a ton to confirm that you're in the queue. To exit the question queue, you may press star than two. All callers will be limited to one question.

Speaker Change: You hear a tone to confirm that you're in the queue.

Operator: All callers will be limited to one question. Please note, this event is being recorded. I would now like to turn the conference over to Kendall Peck, RBI's Head of Investor Relations. Please go ahead.

Speaker Change: to exceit the question q you may press star thank you

All callers will be limited to one question.

Please note this event is being recorded. I would now like to turn the conference over to Kendall Peck, RBI's Head of Investor Relations. Please go ahead.

Kendall Peck: Thank you, Operator. Good morning, everyone.

Kendall Peck: Thank you, operator. Good morning, everyone, and welcome to Restaurant Brands International's Ernst Conference Call for the second quarter ended June 30, 2024. As a reminder, a live broadcast of this call may be accessed on the Investor Relations webpage at rbi.com forward slash investors, and a recording will be available for replay. Joining me on the call today are Restaurant Brands International's Executive Chairman Patrick Doyle, CEO Josh Kobza, and CFO Sami Siddiqui.

Operator: Please note, this event is being recorded.

Kendall Peck: I will now let you turn the conference over to Kendall Peck. I'll be eyes head of investor relations. Please go ahead. Thank you operator.

Kendall Peck: And welcome to Restaurant Brands International's conference call for the second quarter ended June 30, 2024. As a reminder, a live broadcast of this call may be accessed on the investor relations web page at rbi.com forward slash investors, and a recording will be available for replay. Joining me on the call today are RBI Executive Chairman Patrick Doyle, CEO Josh Kobza, and CFO Sami Siddiqui.

Kendall Peck: thank you operator good morning everyone and welcome to restaurant brands international' earnings conference call for the second quarter ended june thirtieth twothousand and twenty four

Kendall Peck: Good morning, everyone, and welcome to Restaurant Brands International's Ernst Conference Call for the second quarter ended June 30th, 2024. As a reminder, a live broadcast of this call may be accessed on the investor relations webpage at rbi.com forward slash investors and a recording will be available for replay. Joining me on the call today are Restaurant Brands International's Executive Chairman, Patrick Doyle, CEO Josh Cobsa, and CFO, Sami Siddiqui. Today's earnings call contains four looking statements, which are subject to various risks set forth in the press release issued this morning and in our SEC finalings. In addition, this earnings call includes non-gap financial measures, reconciliation of non-gap financial measures are included in the press release and trending schedules available on our website.

Speaker Change: As a reminder, a live broadcast of this call may be accessed on the Investor Relations webpage at rbi.com forward slash investors, and a recording will be available for replay. Joining me on the call today are Restaurant Brands International's Executive Chairman Patrick Doyle, CEO Josh Kobza, and CFO Sami Siddiqui.

Kendall Peck: 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 filing. In addition, this earnings call includes non-GAAP financial measures. Reconciliations of non-GAAP financial measures are included 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, we introduced a sixth reportable segment, Restaurant Holdings.

Speaker Change: today's earnings call contains forward-looking statements which are subject to various risks set forth in a press release issued this morning and in our sec filings

Speaker Change: In addition, this earnings call includes non-GAAP financial measures.

Reconciliations of non-GAAP financial measures are included in the press release and trending schedules available on our website.

Speaker Change: As a reminder, following our acquisition of Carroll's Restaurant Group, which closed on May 16, 2024, we introduced a sixth reportable segment, Restaurant Holdings.

Kendall Peck: This segment includes results from operations of the Burger King restaurants acquired as part of the Carroll's acquisition and will include results from our Popeyes China restaurants beginning in the third quarter. The consolidated growth metrics discussed in the prepared remarks, including organic adjusted operating income growth and organic adjusted EPS growth, exclude results from our restaurant holding segment.

Kendall Peck: As a reminder, following our acquisition of Carol's Restaurant Group, which closed on May 16th, 2024, we introduced a six reportable segment, Restaurant Holdings. This segment includes results from operations of the Burger King restaurants acquired as part of the Carol's acquisition, and will include results from our Popeyes China restaurants beginning in the third quarter. The consolidated growth metrics discussed during the prepared remarks, including organic adjusted operating income growth and organic adjusted EPS growth, exclude results from our restaurant holding segment.

Speaker Change: This segment includes results from operations of the Burger King restaurants acquired as part of the Carol's acquisition and will include results from our Popeyes China restaurants beginning in the third quarter.

Joshua Kobza: And now, I'll turn the call over to Josh.

Josh: The consolidated growth metrics discussed during the prepared remarks, including organic adjusted operating income growth and organic adjusted EPS growth, exclude results from our restaurant holding segment. And now I'll turn the call over to Josh.

Joshua Kobza: And now, I'll turn the call over to Josh.

Joshua Kobza: Good morning, everyone, and thanks for joining us. We had a busy second quarter and grew comparable sales while navigating a softer consumer environment that's impacting the broader restaurant industry. Our teams work closely with franchisees and their team members to deliver delicious food and beverages, provide a great experience for guests, and improve our physical and digital footprint. We close strategic transactions that will strengthen our long-term positioning for the Burger King brand in the U.S. and for Tim Hortons and Popeyes in China, and we identify opportunities to drive cost savings for our franchisees, P&L, and around the world.

Josh: Good morning everyone and thanks for joining us. We had a busy second quarter and grew comparable sales while navigating a softer consumer environment that's impacting the broader restaurant industry.

Josh Kobza: And now I'll turn the call over to Josh.

Josh Kobza: Good morning, everyone, and thanks for joining us. We had a busy second quarter and grew comparable sales while navigating a softer consumer environment, that's impacting the broader restaurant industry. Our teams worked closely with franchisees and their team members to deliver delicious food and beverages, provide great experience for guests, and improve our physical and digital footprints. We closed strategic transactions that will strengthen our long-term positioning for the Burger King brand in the US, and for Tim Hortons, and Popeyes in China.

Josh Kobza: And we identified opportunities to drive cost savings for our franchisees, P&L, and our own. Our results demonstrate our brand's strong relative value propositions, the importance of franchisee alignment, and the benefits of maintaining cost discipline. Comparable sales grew 1.9%, and that restaurants grew 4%, which translated into system-wide sales growth of 5%, and organic adjusted operating income growth of 9.3%. We certainly were planning for better absolute top line results. However, relative to the overall performance of our industry, we've continued to outperform key competitors in some of our largest markets.

Josh: Our teams worked closely with franchisees and their team members to deliver delicious food and beverages, provide great experience for guests, and improve our physical and digital footprints.

Josh: We close strategic transactions that will strengthen our long-term positioning for the Burger King brand in the U.S. and for Tim Hortons and Popeyes in China.

Speaker Change: and we identify opportunities to drive stsavings for our franchisees pl and around

Joshua Kobza: Our results demonstrate our brand's strong relative value proposition. The Importance of Franchisee Alignment and the Benefits of Maintaining Cost Discipline. Comparable sales grew 1.9% and net restaurants grew 4%, which translated into system-wide sales growth of 5% and organic adjusted operating income growth of 9.3%. We certainly were planning for better absolute top-line results.

Josh: Our results demonstrate our brand's strong relative value propositions, the importance of franchisee alignment, and the benefits of maintaining cost discipline.

Josh: Comparable sales grew 1.9% and net restaurants grew 4% which translated into system-wide sales growth of 5% and organic adjusted operating income growth of 9.3%.

Joshua Kobza: However, relative to the overall performance of our industry, we've continued to outperform key competitors in some of our largest markets. Tim Hortons and International drive nearly 70% of our adjusted operating income, and both delivered strong AOI in the second quarter. Timbs in Canada once again outperformed the industry and continues to showcase the power of delivering the fundamentals of quality, service, and convenience to guests every day and driving results for restaurant owners and for our business. Our international business demonstrated its resilience and delivered solid top-line results that translated into strong adjusted operating income growth. The remaining 30% of our AOI comes from Burger King, Popeyes, and Firehouse in North America.

Joshua Kobza: However, relative to the overall performance of our industry, we've continued to outperform key competitors in some of our largest markets. Tim Hortons and International drive nearly 70% of our adjusted operating income, and both delivered strong AOI in the second quarter. Tim's in Canada once again outperformed the industry and continues to showcase the power of delivering the fundamentals of quality, service, and convenience to guests every day and driving results for restaurant owners and for our business. Our international business demonstrated its resilience and delivered solid top-line results that translated into strong adjusted operating income growth. The remaining 30% of our AOI comes from Burger King, Popeyes, and Firehouse in North America.

Josh: We certainly were planning for better absolute top-line results. However, relative to the overall performance of our industry, we've continued to outperform key competitors in some of our largest markets.

Josh: Tim Hortons and International drive nearly 70% of our adjusted operating income, and both delivered strong AOI in the second quarter.

Josh Kobza: Tim Hortons, an international driving nearly 70% of our adjusted operating income, and both delivered strong ALI in the second quarter. Tim's in Canada once again outperforming the industry, and continues to showcase the power of delivering the fundamentals of quality, service, and convenience to guests every day, and driving results for restaurant owners and for our business. Business. Our international business demonstrated its resilience and delivered solid top line results that translated into strong and adjusted operating income growth.

Speaker Change: Tim's in Canada once again outperformed the industry, and continues to showcase the power of delivering the fundamentals of quality, service, and convenience to guests every day, and driving results for restaurant owners and for our business.

Josh: our international business demonstrated its resilience and delivered solid topline results that translated into strong adjusted operating income growth

Josh: The remaining 30% of our AOI comes from Burger King, Popeyes, and Firehouse in North America.

Joshua Kobza: At Burger King U.S., our turnaround is well underway. Our balanced approach to everyday value continues to resonate with guests, and the team has reacted calmly in the face of heightened promotional activity across the industry. Popeyes remains focused on unlocking sales opportunities through menu innovation and making restaurants easier to run. And at Firehouse, the team is building on its development pipeline, with a clear path to accelerate growth this year and beyond.

Joshua Kobza: At Burger King U.S., our turnaround is well underway. Our balanced approach to everyday value continues to resonate with guests, and the team has reacted calmly in the face of heightened promotional activity across the industry. Popeyes remains focused on unlocking sales opportunities through menu innovation and making restaurants easier to run. And at Firehouse, the team is building out its development pipeline with a clear path to accelerate growth this year and beyond.

Speaker Change: At Burger King U.S., our turnaround is well underway.

Josh Kobza: The remaining 30% of our AOI comes from Burger King, Popeyes, and Firehouse in North America. At Burger King, US, our turnaround is well underway. Our balanced approach to everyday value continues to resonate with guests and the team has reacted calmly in a face of heightened promotional activity across the industry. Popeyes remains focused on unlocking sales opportunities through menu innovation and making restaurants easier to run. And at Firehouse, the team is building on development pipeline with a clear path to accelerate growth this year and beyond.

Speaker Change: Our balanced approach to everyday value continues to resonate with guests, and the team has reacted calmly in a phase of heightened promotional activity across the industry.

Josh: Popeyes remains focused on unlocking sales opportunities through menu innovation and making restaurants easier to run.

Josh: And at Firehouse, the team is building out its development pipeline, with a clear path to accelerate growth this year and beyond.

Joshua Kobza: As I mentioned before, this quarter we took a few important steps to strengthen our long-term positioning in the U.S. and in China. We closed the acquisition of Carroll's and are working to remodel 600 Carroll's restaurants through 2028, so we can begin refranchising the vast majority of the portfolio to smaller owner operators in the next few years. You also saw us acquire Popeyes China and make a co-investment into Tim Hortons in China

Joshua Kobza: As I mentioned before, this quarter we took a few important steps to strengthen our long-term positioning in the U.S. and in China. We closed the acquisition of Carroll's and are working to remodel 600 Carroll's restaurants through 2028, so we can begin refranchising the vast majority of the portfolio to smaller owner-operators in the next few years. You also saw us acquire Popeyes China and make a co-investment into Tim Hortons in China. We have taken control of Popeyes China and plan to grow the business ourselves in the coming years before finding a new partner to accelerate long-term growth.

Josh: As I mentioned before, this quarter we took a few important steps to strengthen our long-term positioning in the U.S. and in China.

Josh Kobza: As I mentioned before, this quarter, we took a few important steps to strengthen our long-term positioning and in the US and in China. We closed the acquisition of Carrils and are working to remodel 600 Carrils restaurants through 2028 so we can begin refranchising the vast majority of the portfolio to smaller owner operators in the next few years. You also saw us acquire Popeyes China and make a co-investment into Tim Hortons in China.

Speaker Change: we closed the acquisition of carol and are working to remodel six hundred carols restaurants through twothousand twenty ighth so can begin refranchising the vast majority of the portfolio to smaller owner operators in the next few years

Josh: you also saw acquire popckwise china and make a co-invment into tim importance in china

Joshua Kobza: We have taken control of Popeyes China and plan to grow the business ourselves in the coming years before finding a new partner to accelerate long-term growth. We're working closely with the Popeyes China team to refine our business plans, and we'll update you when we have more to share. Our co-investment in Tim's China reflects our confidence in the long-term potential of the brand in the market. There is a lot of work for us to do in China, especially given the compounding impacts of lingering consumer and competitive challenges. But these are both important steps in the right direction.

Josh: We have taken control of Popeyes China and plan to grow the business ourselves in the coming years before finding a new partner to accelerate long-term growth.

Josh Kobza: We have taken control of Popeyes China and planned to grow the business ourselves in the coming years before finding a new partner to accelerate long-term growth. We're working closely with the Popeyes China team to refine our business plans and will update you when we have more to share. Our co-investment in Tim's China reflects our confidence in the long-term potential of the brand in the market. There's a lot of work for us to do in China, especially given the compounding impacts of lingering consumer and competitive challenges, but these are both important steps in the right direction.

Joshua Kobza: We're working closely with the Popeyes China team to refine our business plans, and we'll update you when we have more to share. Our co-investment in Tim's China reflects our confidence in the long-term potential of the brand in the market. There's a lot of work for us to do in China, especially given the compounding impacts of lingering consumer and competitive challenges, but these are both important steps in the right direction. We're fortunate to have Patrick Seward, a seasoned executive with extensive knowledge of food, beverage, and consumer products in Asia, on board as our Chairman for Asia Pacific.

Josh: We're working closely with the Popeyes China team to refine our business plans and will update you when we have more to share.

Josh: Our co-investment in Tim's China reflects our confidence in the long-term potential of the brand in the market. There's a lot of work for us to do in China, especially given the compounding impacts of lingering consumer and competitive challenges, but these are both important steps in the right direction.

Joshua Kobza: We're fortunate to have Patrick Seward, a seasoned executive with extensive knowledge of food, beverage, and consumer products in Asia, on board as our chairman for Asia Pacific. He's helping us solidify long-term plans, build key relationships, and accelerate development for each of our businesses in the region. Before I turn to segment results, I'd like to provide a high-level update on expectations for 2024, which Sami will expand upon shortly. While we still delivered solid global comparable sales growth this quarter, there's no denying that the environment has been tough. As such, we believe system-wide sales will be a bit lighter this year compared to our stated long-term growth algorithm.

Speaker Change: we're fortunate to have patrick seward a seasoned executive with extensive knowledge and food beverage and consumer products in asia on boardred as our chairman for age to pacific he's helping us to idify long-term plans build key relationships and accelerate development for each of our businesses in the region

Joshua Kobza: He's helping us solidify long-term plans, build key relationships, and accelerate development for each of our businesses in the region. Before I turn to segment results, I'd like to provide a high-level update on expectations for 2024, which Sami will expand upon shortly. While we still delivered solid global comparable sales growth this quarter, there's no denying that the environment has been tough. As such, we believe system-wide sales will be a bit lighter this year compared to our stated long-term growth algorithm.

Josh Kobza: We're fortunate to have Patrick Seward, a seasoned executive with extensive knowledge in food, beverage, and consumer products in Asia on board as our chairman for Asia Pacific. He's helping us to let a fly long-term plans, build key relationships, and accelerate development for each of our businesses in the region.

Speaker Change: before iturn to segment results i'd like to proide a high level upate on expectations for twothousand and twenty-four which dam will expand upon shortly

Josh Kobza: Before I turn to segment results, I'd like to provide a high-level update on expectations for 2024, which Samuel expand upon shortly. While we still delivered solid global comparable sales growth this quarter, there's no denying that the environment has been tough. As such, we believe system-wide sales will be a bit lighter this year compared to our stated long-term growth algorithm. That said, we've implemented expense improvements while continuing to invest in all the right areas to drive sustainable sales growth. As a result, I'm confident we'll deliver organic adjusted operating income growth of 8% plus this year.

Speaker Change: While we still delivered solid global comparable sales growth this quarter, there's no denying that the environment has been tough.

Speaker Change: As such, we believe system-wide sales will be a bit lighter this year compared to our stated long-term growth algorithm.

Joshua Kobza: That said, we've implemented expense improvements while continuing to invest in all the right areas to drive sustainable sales growth. As a result, I'm confident we'll deliver organic adjusted operating income growth of 8% plus this year. Turning now to segment results, I'll start with Tim Hortons, which delivers about 43% of our adjusted operating income. In June, I joined Axel, the Tim's team, and over 1,800 restaurant owners and leaders in Toronto for their convention celebrating 60 years of Tim Hortons in Canada, 50 years of the Tim's Foundation, and 40 years of Tim Hortons in the U.S.

Speaker Change: that said we've implemented expense improvements while continuing to invest in all the right areas that to drive sustainable sales growth

Speaker Change: As a result, I'm confident we'll deliver organic adjusted operating income growth of 8% plus this year.

Speaker Change: yeah

Speaker Change: Turning now to segment results, I'll start with Tim Hortons that delivers about 43% of our adjusted operating income.

Speaker Change: In June , I joined Axel, the Tim's team, and over 1,800 restaurant owners and leaders in Toronto for their convention celebrating 60 years of Tim Hortons in Canada, 50 years of the Tim's Foundation, and 40 years of Tim Hortons in the U.S.

Josh Kobza: Turning now to segment results, I'll start with Tim Hortons that delivers about 43% of our adjusted operating income. In June, I joined Axel, the Tim's team, and over 1,800 restaurant owners and leaders in Toronto for their convention celebrating 60 years of Tim Hortons in Canada, 50 years of the Tim's foundation, and 40 years of Tim Hortons in the U.S. It was an incredible experience, complete with a special musical, the last timbit, and a ton of product tastings from the culinary and beverage teams.

Joshua Kobza: It was an incredible experience, complete with a special musical, The Last Timbit, and a ton of product tastings from the Culinary and Beverage departments. It was amazing to celebrate the Tim's Foundation, which is so core to Tim's strong community ties, and we recently raised nearly 13 million Canadian dollars for Tim's Foundation camps through our annual camp day.

Joshua Kobza: It was an incredible experience, complete with a special musical, The Last Timbit, and a ton of product tastings from the Culinary and Beverage departments. It was amazing to celebrate the Tim's Foundation, which is so core to Tim's strong community ties. And we recently raised nearly $13 million Canadian dollars for Tim's Foundation camps through our annual camp day.

Speaker Change: it was an incredible experience complete with a special musicical the last timbit and a ton of product tastings from the colllonarian beverage team

Josh Kobza: It was amazing to celebrate the Tim's foundation, which is so core to Tim's strong community ties, and we recently raised near the $13 million Canadian for Tim's Foundation camps through our annual camp day. I love seeing the excitement and confidence of so many restaurant owners for the future of this brand. So much of this confidence is due to the strong foundation, Axel, and the Tim's leadership team have built alongside our restaurant owners over the past five years, and the results that they continue to drive every day.

Speaker Change: It was amazing to celebrate the Tim's Foundation, which is so core to Tim's strong community ties, and we recently raised nearly $13 million Canadian dollars for Tim's Foundation camps through our annual camp day.

Joshua Kobza: I love seeing the excitement and confidence of so many restaurant owners for the future of this brand. So much of this confidence is due to the strong foundation Axel and the TIMSS leadership team have built alongside our restaurant owners over the past five years and the results that they continue to drive every day. Tim's in Canada delivered a 4.9% increase in comparable sales, well ahead of the broader industry, and did so through a balanced mix of traffic and jet growth.

Speaker Change: I love seeing the excitement and confidence of so many restaurant owners for the future of this brand.

Speaker Change: So much of this confidence is due to the strong foundation Axel and the TIMSS leadership team have built alongside our restaurant owners over the past five years, and the results that they continue to drive every day.

Speaker Change: timsonin canada delivered a four point nine percent increase in comparable sales well ahead of the broader industry

Joshua Kobza: It's pretty remarkable to see the market leader expand share in core categories like coffee, breakfast, and baked goods. This is a testament to the team's marketing and menu initiatives, relevant value positioning, operational excellence, and unmatched convenience. Morning daypart sales grew 4.5% year over year, anchored by our leadership in brewed coffee, with over 70% market share, and breakfast sandwiches and wraps, where we hold over 60% market share. Some of you may have seen that even Deadpool can't live without his Tim.

Joshua Kobza: It's pretty remarkable to see the market leader expand share in core categories like coffee, breakfast, and baked goods. This is a testament to the team's marketing and menu initiatives, relevant value positioning, operational excellence, and unmatched convenience. Morning Day Part sales grew 4.5% year over year, anchored by our leadership in brewed coffee, with over 70% market share, and breakfast sandwiches and wraps, where we hold over 60% market share. Some of you may have seen that even Deadpool can't live without his Tim.

Speaker Change: and did so through a balanced mix of traffic and jet growth.

Josh Kobza: Timson, Canada delivered a 4.9% increase in comparable sales, well ahead of the broader industry, and did so through a balanced mix of traffic and check growth. It's pretty remarkable to see the market leader expand share in core categories like coffee, breakfast, and baked goods. This is a testament to the team's marketing and menu initiatives, relevant value positioning, operational excellence, and unmatched convenience. Morning day part sales grew 4.5% year over year, anchored by our leadership and brewed coffee, with over 70% market share, and breakfast sandwiches and wraps where we hold over 60% market share.

Speaker Change: It's pretty remarkable to see the market leader expand share in core categories like coffee, breakfast, and baked goods.

Speaker Change: This is a testament to the team's marketing and menu initiatives, relevant value positioning, operational excellence, and unmatched convenience.

Speaker Change: morning dayport dap our sales grew four point five percent year-over-year anchored by our leadership in broude coffee with over seventy percent market share and breakast swiches and wraps where we hold over sixty percent market share

Joshua Kobza: We're looking forward to working with Ryan, and we'll have more to share on that. Great results are as much a product of strong operations as strong markets. The team is delivering some of the best weekday morning service times we've seen in the past five years, with even more opportunity in the morning day part through increased adoption of our Scan and Pay app, Shoulder to Shoulder Restaurant Visits, and Layout Optimization from Store Renovations and New Build. We've made exciting strides on our PM food journey, which began in 2022 with the launch of Loaded and Anytime Snackers. We've already seen these two platforms contribute two points to PM food market share growth.

Joshua Kobza: We're looking forward to working with Ryan, and we'll have more to share on that. Great results are as much a product of strong operations as strong markets. The team is delivering some of the best weekday morning service times we've seen in the past five years, with even more opportunity in the morning daypart through increased adoption of our Scan and Pay app, Shoulder-to-Shoulder Restaurant Visits, and Layout Optimization from Store Renovations and New Builds. We've made exciting strides on our PM food journey, which began in 2022 with the launch of Loaded and Anytime Snackers. We've already seen these two platforms contribute two points to PM food market share growth.

Speaker Change: Some of you may have seen that even Deadpool can't live without his Timbs. We're looking forward to working with Ryan, and we'll have more to share on that soon.

Josh Kobza: Some of you may have seen that even Deadpool, Deadpool can't live without his Tim's. We're looking forward to working with Ryan and we'll have more to share on that soon. Great results are as much of the product of strong operations and strong marketing. The team is delivering some of the best weekday morning service times we've seen in the past 5 years, with even more opportunity in the morning day part, through increased adoption of our scan and pay app feature.

Speaker Change: great results are as much of the product of strong operations in strong marketing

Speaker Change: The team is delivering some of the best weekday morning service times we've seen in the past five years With even more opportunity in the morning day part through increased adoption of our scan and pay app feature Shoulder-to-shoulder restaurant visits and layout optimization from store renovations and new builds

Speaker Change: we've made exciting strides on our pm food journey which began in two thousand and twenty two with the un loaded in anytime nackers

Josh Kobza: Shoulders or shoulder restaurant visits and layout optimization from store renovations and new builds. We've made exciting strides on our PM food journey, which began in 2022 with the launch of loaded and anytime snackers. We've already seen these two platforms contribute two points to PM food market share growth. This success paved the way for our expansion into collaborative pizzas, introduced in mid-April after two years of testing, aligning with restaurant owners, and adding new ovens to the back of house.

Joshua Kobza: This success paved the way for our expansion into Collaborate Pizzas, introduced in mid-April after two years of testing, aligning with restaurant owners, and adding new ovens to the back of house. We've been pleased with the results so far, and we're excited for the innovation opportunities our new ovens will unlock. I had the pleasure of tasting a number of these at convention in June.

Speaker Change: we've already seen these two platforms contribute two points to pm food market share growth

Speaker Change: This success paved the way for our expansion into Collaborate Pizzas, introduced in mid-April after two years of testing, aligning with restaurant owners, and adding new ovens to the back of house.

Speaker Change: We've been pleased with the results so far, and we're excited for the innovation opportunities our new ovens unlock. I had the pleasure of tasting a number of these at convention in June .

Joshua Kobza: Flatbread pizzas are helping us increase our exposure to the family guest occasion and improve throughput for restaurants during historically underutilized times, such as after 2 p.m. and on the weekend. Between loaded flatbread pizzas and our savory pastries, we have a clear path to drive franchisee profitability and achieve double-digit PM food market share in the near future. Our PM food innovation ties in nicely as we broaden our beverage strength, especially in the cold category, which represented nearly 40% of total beverage sales in the second quarter.

Joshua Kobza: Flatbread pizzas are helping us increase our exposure to the family guest occasion and improve throughput for restaurants during historically underutilized times, such as after 2 p.m. and on the weekends. Between loaded flatbread pizzas and our savory pastries, we have a clear path to drive franchisee profitability and achieve double-digit PM food market share in the near future. Our PM food innovation ties in nicely as we broaden our beverage strength, especially in the cold category, which represented nearly 40% of total beverage sales in the second quarter.

Josh Kobza: We've been pleased with the results so far, and we're excited for the innovation opportunities our new ovens unlock. I had the pleasure of tasting a number of these at Convention in June. Fleprad pizzas are helping us increase our exposure to the family guest occasion, and improve throughput for restaurants during historically underutilized times, such as after 2pm and on the weekends. Between loaded, Fleprad pizzas and our savory pastries, we have a clear path to drive franchisee profitability and achieve double digit PM food market share in the near future.

Speaker Change: Flatbread pizzas are helping us increase our exposure to the family guest occasion and improve throughput for restaurants during historically underutilized times, such as after 2 p.m. and on the weekends.

Speaker Change: Between loaded flatbread pizzas and our savory pastries, we have a clear path to drive franchisee profitability and achieve double-digit PM food market share in the near future.

Speaker Change: Our PM food innovation ties in nicely as we broaden our beverage strength, especially in the cold category, which represented nearly 40% of total beverage sales in the second quarter.

Joshua Kobza: We kicked off the summer with two co-branded ice cap partnerships, Caramilk and Oreo Devil Stuff, to honor 25 years of our iconic ice cap beverage. We also added exciting flavors to our Sparkling Quencher lineup and most recently introduced Infuser, an energy drink made with natural caffeine that appeals to younger guests looking for a delicious caffeinated beverage alternative.

Joshua Kobza: We kicked off the summer with two co-branded ice cap partnerships, Caramilk and Oreo Double Stuff, to honor 25 years of our iconic ice cap beverage. We also added exciting flavors to our Sparkling Quencher lineup and most recently introduced Infuser, an energy drink made with natural caffeine that appeals to younger guests looking for a delicious caffeinated beverage alternative.

Josh Kobza: Our PM food innovation ties in nicely as we broaden our beverage strength, especially in the cold category, which represented nearly 40% of total beverage sales in the second quarter. We kicked off this summer with two co-branded ice cap partnerships, Caramelk and Oreo double stuff, to honor 25 years of our iconic ice cap beverage. We also added exciting flavors to our sparkling quencher lineup, and most recently introduced in fuser, an energy drink made with natural caffeine that appeals to younger guests looking for a delicious caffeinated beverage alternative.

Speaker Change: we kicked off the summer with two co-granded ice cap partnerships kammilk and orio double stuff to or twenty-five years of our iconic ice counam beverage

Speaker Change: We also added exciting flavors to our Sparkling Quencher lineup and most recently introduced Infuser, an energy drink made with natural caffeine that appeals to younger guests looking for a delicious caffeinated beverage alternative.

Joshua Kobza: I'm very excited about all the progress the team continues to make here at Thames & Canada and feel very confident that Thames is well positioned for growth into the future. Moving now to International, which comprises about 25% of our adjusted operating income. International saw comparable sales of 2.6%, net restaurant growth of 8.2%, and system-wide sales growth of 9.2%. In April, I spent some time with our Burger King partners in France, which remains a standout market for us and outperformed the industry this past quarter.

Speaker Change: I'm very excited about all the progress the team continues to make here at Thames & Canada, and feel very confident that Thames is well positioned for growth into the future.

Josh Kobza: I'm very excited about all the progress the team continues to make here at Tim's in Canada, and feel very confident that Tim's well positioned for growth into the future.

Speaker Change: Shifting now to International, which comprises about 25% of our adjusted operating income.

Speaker Change: international saw comparable sales of two point six percent net restaurant growth of eight point two percent and system wide sales growth of nine point two percent

Josh Kobza: Shifting out an international, which comprises about 25% of our adjusted operating income. International saw comparable sales of 2.6%, net restaurant growth of 8.2%, and system wide sales growth of 9.2%. In April, I spent some time with our Burger King partners in France, which remains a standout market for us and outperform the industry this past quarter. Our local team and restaurant operators are really talented and very passionate, and we appreciate the work they've done to build such a powerful and relevant brand in France over the past 10 years, building the brand to over 530 locations today, with over $2 billion in annual system wide sales.

Speaker Change: In April , I spent some time with our Burger King partners in France, which remains a standout market for us and outperformed the industry this past quarter.

Joshua Kobza: Our local team and restaurant operators are really talented and very passionate, and we appreciate the work they've done to build such a powerful and relevant brand in France over the past 10 years, building the brand to over 530 locations today with over $2 billion in annual system-wide sales. Burger King also saw positive results in markets like Brazil, Japan, Australia, and Mexico. This strength helped to partially offset moderating price trends in many of our Western European markets, challenging consumer dynamics in China, and conflict in the Middle East.

Speaker Change: Our local team and restaurant operators are really talented and very passionate, and we appreciate the work they've done to build such a powerful and relevant brand in France over the past 10 years, building the brand to over 530 locations today with over $2 billion in annual system-wide sales.

Speaker Change: burgking also the saw positive results in markets like brazil japan australia and mexico this strength helped to partially offset moderating price trends in many of our western european markets challenging consumer dynamics in china and the conflict in the middle east

Josh Kobza: Burger King also saw positive results in markets like Brazil, Japan, Australia and Mexico. This strength helped to partially offset moderating price trends in many of our Western European markets, challenging consumer dynamics in China and the conflict in the Middle East. Sales.

Joshua Kobza: At Popeyes, we're bringing our delicious Louisiana chicken to more markets around the world. Since acquiring Popeyes in March of 2017, the brand has grown from over 500 international restaurants generating roughly $300 million in annual system sales to nearly 1,300 restaurants today and over $1 billion in system-wide sales. To give you a few market examples, in 2019, we brought Popeyes to Spain with one of our existing Burger King partners, RB Iberia, and we now have nearly 140 stores in the market with an attractive runway for further development.

Speaker Change: at pop were bring our delicious louisiana chicken into more markets around the world

Speaker Change: since acquiring popis in march of two thousand and seventeen the brand has grown from over five hundred international restaurants generating roughly three hundred milliondollars and annual system sales to nearly three teen hundred restaurants today and over one billion dollars in systemwide sales

Josh Kobza: At Popeyes, we're bringing our delicious Louisiana chicken to more markets around the world. Since acquiring Popeyes in March of 2017, the brand has grown from over 500 international restaurants, generating roughly $300 million in annual system sales to nearly 1,300 restaurants today and over $1 billion in system wide sales. To give you a few market examples, in 2019, we brought Popeyes to Spain with one of our existing Burger King partners, RBI, Deeria.

Josh Kobza: And we now have nearly 140 stores in the market with an attractive runway for further development. In the UK and India, the brand is off to a great start and has already reached roughly 50 restaurants in each market in less than three years, with clear paths to accelerate from there. We entered France about a year ago, and although we only have 16 stores today, the market offers a lot of potential. And may I visited our first Popeyes in Leone and saw how much are beautiful restaurants and high quality food are resonating with our French guests.

Joshua Kobza: To give you a few market examples, in 2019, we brought Popeyes to Spain with one of our existing Burger King partners, RB Iberia, and we now have nearly 140 stores in the market with an attractive runway for further development. In the UK and India, the brand is off to a great start and has already reached roughly 50 restaurants in each market in less than three years, with clear paths to accelerate from there.

Speaker Change: To give you a few market examples, in 2019 we brought Popeyes to Spain with one of our existing Burger King partners, Arby's Iberia, and we now have nearly 140 stores in the market with an attractive runway for further development.

Joshua Kobza: In the UK and India, the brand is off to a great start and has already reached roughly 50 restaurants in each market in less than three years, with clear paths to accelerate from there. We entered France about a year ago, and although we only have 16 stores today, the market offers a lot of potential.

Speaker Change: In the UK and India, the brand is off to a great start and has already reached roughly 50 restaurants in each market in less than three years, with clear paths to accelerate from there.

Speaker Change: We entered France about a year ago, and although we only have 16 stores today, the market offers a lot of potential.

Joshua Kobza: In May, I visited our first Popeyes in Lyon and saw how much our beautiful restaurants and high-quality food are resonating with our French guests. Most recently, New Zealand welcomed its first Popeyes restaurant, which is on track to deliver over $6 million in annual restaurant sales, making it one of our strongest new country entries to date. I'll be there with Tiago and our international team in a couple of weeks to celebrate their early success and learn about the key ingredients for it.

Speaker Change: In May I visited our first Popeyes in Lyon and saw how much our beautiful restaurants and high quality food are resonating with our French guests.

Speaker Change: Most recently, New Zealand welcomed its first Popeyes restaurant, which is on track to deliver over $6 million in annual restaurant sales, making it one of our strongest new country entries to date.

Josh Kobza: Most recently, New Zealand welcome its first Popeyes restaurant, which is on track to deliver over $6 million in annual restaurant sales, making it one of our strongest new country entries to date. I'll be there with Tiago and our international team in a couple of weeks to celebrate their early success and learn about the incudence to it. Not to be outdone though, our Latin America team followed the New Zealand opening by opening in Costa Rica and July.

Speaker Change: I'll be there with Tiago and our international team in a couple of weeks to celebrate their early success and learn about the key ingredients to it.

Joshua Kobza: Not to be outdone, though, our Latin America team followed the New Zealand opening by opening in Costa Rica in July, and that restaurant opened to nearly 1,800 transactions on day one. A big congratulations to our teams and our partners on some remarkable accomplishments with Pompeyes International. While Popeyes is having a lot of early success in many markets around the world, we know it can do so much. Shifting now to Burger King, which delivered about 18% of our adjusted operating income this quarter. Burger King U.S. comparable sales were relatively flat, while total net restaurants declined 2%, resulting in a negative 0.8% decline in system-wide sales.

Speaker Change: not to be updone though our latinamerica team followed the new zealand opening by opening in coastto rico and july and that restaurant open to nearly eighteen hundred transactions on day one a bin congratulations to our teams and our partners on some remarkable accomplishments with pies international

Josh Kobza: And that restaurant opened to nearly 1800 transactions on day one. A big congratulations to our teams and our partners on some remarkable accomplishments with Popeyes and international. While Popeyes is having a lot of early success in many markets around the world, we know it can do so much more.

Speaker Change: while popppis is having a lot of early success in many markets around the world we know it can do so much more

Speaker Change: shifting out a burgerking which delivered about eighteen percent of our adjusted operating income this quarter

Speaker Change: Burger King U.S. comparable sales were relatively flat, while total net restaurants declined 2%, resulting in a negative 0.8% decline in system-wide sales.

Josh Kobza: Shifting out of Burger King, which delivered about 18% of our adjusted operating income this quarter. Burger King US comparable sales were relatively flat, while total net restaurants declined 2%, resulting in a negative 0.8% decline in system wide sales. The absolute sales and traffic results at Burger King were clearly softer than we aspire to, but the business continued to outperform burger QSR sales and traffic. I believe this is in large part due to our responsible approach to everyday value.

Joshua Kobza: The absolute sales and traffic results at Burger King were clearly softer than we aspire to, but the business continued to outperform Burger QSR sales and traffic. I believe this is in large part due to our responsible approach to everyday value, our focus on meeting the needs of our guests and franchisees, and the impact of our operational improvements starting to shine through. The word value has received a lot of airtime in the past few months.

Speaker Change: The absolute sales and traffic results at Burger King were clearly softer than we aspire to, but the business continued to outperform Burger QSR sales and traffic.

Speaker Change: i believe this is in large part due to our ponsible approach to every day value our focus on meeting the needs of our guests and franchisees and the impact of our operational improvements starting to shine through

Joshua Kobza: We've been reinforcing Burger King's value proposition, great tasting food at an affordable price, for the past few years now with our distinctive qualities of flame grilling the Whopper and having it your way. We brought back another $5 price-pointed item this quarter, the $5 Your Way Meal, and balanced it with premium menu innovation like Melt and now our new Fiery Menu. There's even more we can do to enhance the value we offer, and I believe great operations, digital, and re-imaging are just as important to win in the long term.

Speaker Change: The word value has received a lot of airtime in the past few months. We've been reinforcing Burger King's value proposition, great tasting food at an affordable price, for the past few years now, with our distinctive qualities of flame grilling the Whopper and have it your way.

Josh Kobza: Our focus on meeting the needs of our guests in franchisees and the impact of our operational improvements starting to shine through. The word value has received a lot of airtime in the past few months. We've been reinforcing Burger King's value proposition, great tasting food at an affordable price for the past few years now, with our distinctive qualities of flame grilling the waffle and have it your way. We brought back another $5 price point at item this quarter, the $5 your way meal, and balanced it with premium menu innovation like melt and now our new fire menu.

Speaker Change: we brought back another five dollar price pointedout in this quarter the five dollar yearway meal and balan it with premium men innovation like melts and now our new fiy menu

Speaker Change: There's even more we can do to enhance the value we offer, and I believe great operations, digital and re-imaging are just as important to win in the long term.

Joshua Kobza: We're on track to complete nearly 400 remodels this year and bring our system to between 85 to 90% modern image by 2028. We now have 150 Royal Reset remodels open for at least six months, and they're driving uplifts in the mid-teens range, net of control. A number of these stores showcase our new sizzle image, and Sami and I got to visit a few recently in Atlanta and in Miami with Tom and the team.

Josh Kobza: There's even more we can do to enhance the value we offer, and I believe great operations, digital and re-imaging are just as important to win in the long term. We're on track to complete nearly 400 remodels this year, and bring our system to between 85% to 90% modern image by 2028. We now have 150 Royal Reset remodels open for at least six months, and they're driving uplifts in the mid-teens range, net of control.

Speaker Change: We're on track to complete nearly 400 remodels this year, and bring our system to between 85-90% modern image by 2028.

Speaker Change: we now have one hundred and fifty royal reset remodels open for at least six months and they're driving uplits in the mid-teens range net of control

Speaker Change: A number of these stores showcase our new sizzle image, and Sami and I got to visit a few recently in Atlanta and in Miami with Tom and the team.

Joshua Kobza: We're very excited to get more sizzles in our system as we remodel Carroll's restaurants and execute our $300 million Royal Reset 2.0 investment. It may take time to see the full impact of our Burger King investments flow through, but I'm confident in the brand's path forward, especially given the focus of our multi-year plans and the strong alignment our team has built with our franchisees. I think we'll find that the shorter-term pressures being felt by the QSR industry are masking some pretty incredible changes at Burger King that will deliver long-term rewards.

Josh Kobza: A number of these stores showcase our new Sizzle image, and Sam and I got to revisit a few recently and Atlanta and in Miami with Tom and the team. We're very excited to get more Sizzles in our system as we remodel Carol's restaurants and execute our $300 million Royal Reset 2.0 investments. Development. It may take time to see the full impact of our Burger King investments flowed through, and I'm confident in the brand's path forward, especially given the focus of our multi-year plans and the strong alignment our team has built with our franchisees. I think we'll find that the shorter term pressures being felt by the QSR industry are masking some pretty incredible changes at Burger King that will deliver long term rewards.

Speaker Change: We're very excited to get more sizzles in our system as we remodel Carroll's restaurants and execute our $300 million Royal Reset 2.0 investment.

Speaker Change: It may take time to see the full impact of our Burger King investments flow through, and I'm confident in the brand's path forward, especially given the focus of our multi-year plans and the strong alignment our team has built with our franchisees.

Joshua Kobza: I think we'll find that the shorter-term pressures being felt by the QSR industry are masking some pretty incredible changes at Burger King that will deliver long-term rewards. Turning now to Popeyes, which comprises about 10% of our adjusted operating income. Popeyes U.S. grew net restaurants 3.8% and comparable sales 0.6%, resulting in system-wide sales growth of 4%. Awareness, trial, and consideration take time to build, and by continuing to focus on wings with the right promotional and advertising strategy, we're confident there's a lot of runway for us to bring in new guests and take share in one of the fastest-growing chicken categories.

Speaker Change: I think we'll find that the shorter-term pressures being felt by the QSR industry are masking some pretty incredible changes at Burger King that will deliver long-term rewards.

Joshua Kobza: Turning now to Popeyes, which comprises about 10% of our adjusted operating income. Popeyes U.S. grew net restaurants 3.8% and comparable sales 0.6%, resulting in system-wide sales growth of 4%. Top-line results reflect the environment I've discussed, but our WINGS platform, which recently expanded with the launch of Boneless and our big box value promotions, helps lead to overall QSR share growth year over year. Our freshly hand-battered and breaded boneless wings are a great way to expand our wing platform to new guests and occasions.

Speaker Change: turning now to popeyes which comprises about ten percent of our adjusted operating income

Speaker Change: Popeyes U.S. grew net restaurants 3.8% and comparable sales 0.6%, resulting in system-wide sales growth of 4%.

Josh Kobza: Turning now to Popeyes, which comprises about 10% of our adjusted operating income. Popeyes US grew net restaurants, 3.8% and comparable sales 0.6%. Resulting in system wide sales growth of 4%. Topline results reflect the environment I've discussed, but our Wings platform, which recently expanded with the launch of Boneless and our big box value promotions, helps lead to overall QSR share growth year over year. Our freshly hand battered and breaded Boneless Wings are a great way to expand our Wings platform to new guests and occasions.

Speaker Change: Top-line results reflect the environment I've discussed, but our Wings platform, which recently expanded with the launch of Boneless, and our big box value promotions, helps lead to overall QSR share growth year-over-year. Our freshly hand-battered and breaded Boneless Wings are a great way to expand our Wings platform to new guests and occasions.

Joshua Kobza: While we aren't yet seeing the uplift from Wings and attracting new users, we are seeing strong traction from existing guests. Awareness, trial, and consideration take time to build, and by continuing to focus on wings with the right promotional and advertising strategy, we're confident there's a lot of runway for us to bring in new guests and take share in one of the fastest-growing chicken categories. Digital is also an important channel to communicate Popeye's value to guests and drive traffic. And we saw 32% growth in digital sales this quarter, reaching a digital sales mix of over 27%.

Speaker Change: while we aren't yet seeing the uplift from wings and attracted new users we are seeing strong traction from existing guests

Speaker Change: awareness trial and consideration take time to build and by continuing to focus on wings with the right promotional and advertising strategy we're confident there's a lot of runway for us to bring a new guests and take share in one of the fastest growing chicken categories

Josh Kobza: While we aren't yet seeing the uplift from Wings and attracted new users, we are seeing strong traction from existing guests. Awareness, trial and consideration take time to build, and by continuing to focus on Wings with the right promotional and advertising strategy, we're confident there's a lot of runway for us to bring in new guests and take share in one of the fastest growing chicken categories. Digital is also an important channel to communicate Popeyes valued to guests and drive traffic, and we saw 32% growth in digital sales supporter reaching a digital sales mix of over 27%.

Speaker Change: Digital is also an important channel to communicate Popeyes value to guests and drive traffic. And we saw 32% growth in digital sales this quarter, reaching a digital sales mix of over 27%.

Joshua Kobza: Jeff and his team have now converted around 50 kitchens under our easy-to-run model, and we shared initial learnings with franchisees at our convention in New Orleans in May. The simplified kitchens and automated ordering are driving improvements in order accuracy, driver wait times, and team member and guest satisfaction. Franchisees are eager to introduce it in their own restaurants, and we're excited to expand to more hub markets like Houston and Central Florida this year.

Joshua Kobza: Jeff and his team have now converted around 50 kitchens under our easy-to-run model, and we shared initial learnings with franchisees at our convention in New Orleans in May. The simplified kitchens and automated ordering are driving improvements in order accuracy, driver wait times, and team member and guest satisfaction. We also expect another solid development year at Popeyes and are focused on delivering high-quality openings with top operators. We're on track to have over 4,000 Popeyes restaurants in the US and Canada by 2028 as we drive average US franchisee profitability closer to our goal of $300,000.

Speaker Change: Jeff and team have now converted around 50 kitchens under our easy-to-run model, and we shared initial learnings with franchisees at our convention in New Orleans in May. The simplified kitchens and automated ordering are driving improvements in order accuracy, driver wait times, and team member and guest satisfaction.

Josh Kobza: Jeff and team have now converted around 50 kitchens under our easy to run model, and we shared initial learnings with franchisees at our convention in New Orleans and May. The simplified kitchens and automated ordering are driving improvements in order accuracy, driver wait times, and team member in guest satisfaction. Franchises are eager to adopt in their own restaurants, and we're excited to expand to more hub markets like Houston and Central Florida this year.

Speaker Change: Franchisees are eager to adopt in their own restaurants, and we're excited to expand to more hub markets like Houston and Central Florida this year. We'll continue to incorporate feedback and provide necessary resources and trainings to optimize this investment before scaling across the entire system.

Joshua Kobza: We'll continue to incorporate feedback and provide necessary resources and training to optimize this investment before scaling across the entire city. We also expect another solid development year at Popeyes and are focused on delivering high-quality openings with top operators. We're on track to have over 4,000 Popeyes restaurants in the U.S. and Canada by 2028 as we drive average U.S. franchisee profitability closer to our goal of $300,000.

Josh Kobza: We'll continue to incorporate feedback and provide necessary resources and trainings to optimize this investment before scaling across the entire system. We also expect another solid development year at Popeyes, and are focused on delivering high quality openings with top operators. We're on track to have over 4,000 Popeyes restaurants in the US and Canada by 2028 as we drive average US franchisee profitability closer towards our goal of $300,000.

Speaker Change: We also expect another solid development year at Popeyes and are focused on delivering high quality openings with top operators.

Speaker Change: We're on track to have over 4,000 Popeyes restaurants in the U.S. and Canada by 2028 as we drive average U.S. franchisee profitability closer towards our goal of $300,000.

Joshua Kobza: Finally, Firehouse Subs, which saw relatively flat comparable sales and increased system-wide sales by 3.3%. Firehouse is becoming more convenient for guests by opening more restaurants and strengthening our digital leadership. Mike and his team have added 44 net new restaurants since the second quarter of 2023 and saw over 40% of sales come through digital channels, primarily driven by mobile order and pay and attractive digital-only deals. I'm excited to join the team and our franchisees in Austin later this month to celebrate Firehouse's 30th anniversary at our convention and update our franchisees on our long-term plan. With that, I'll pass it over to Sami to walk you through our financial results for the quarter. Okay, Sami? Thanks, Josh.

Speaker Change: finally firehouse subs which saw relatively flat comparable sales and increas system wide sales by three point three percent

Speaker Change: firehhouseesis becoming more convenient for gus by opening more restaurants and strengthening our digital leadership my continteam have added forty-four net new restaurants since the second quarter of two thousand and twenty three and saw over forty percent of sales come through digital channels primarily driven by mobile or pay and attractive digital only deals

Josh Kobza: Finally, firehouse subs, which saw relatively flat comparable sales and increased system wide sales by 3.3%. Firehouses becoming more convenient for guests by opening more restaurants and strengthening our digital leadership. My team have added 44 net new restaurants since the second quarter of 2023 and saw over 40% of sales come through digital channels, primarily driven by mobile order and pay and attractive digital only deals. I'm excited to join the team and our franchisees in Austin later this month to celebrate firehouses 30th anniversary at our convention and update franchisees on our long term plans.

Speaker Change: I'm excited to join the team and our franchisees in Austin later this month to celebrate Firehouse's 30th anniversary at our convention and update franchisees on our long-term plans.

Sami Siddiqui: Thanks, Josh, and good morning, everyone. We were pleased to close two significant and highly strategic transactions this quarter, our acquisition of Carroll's, which closed on May 16th, and our acquisition of Popeyes China, which closed at quarter end. I want to provide you with a quick update on how those two transactions impact our segment reporting going forward. As I mentioned last quarter, we want to preserve the franchisor dynamics and P&Ls consistent with how our businesses will be run long term.

Speaker Change: With that, I'll pass it over to Sami to walk you through our financial results for the quarter. Sami? Thanks, Josh. And good morning, everyone.

Sami Siddiqui: With that, I'll pass over to Sammy to walk you through our financial results for the quarter. Sammy? Thanks Josh, and then good morning everyone.

Sami: We were pleased to close two significant and highly strategic transactions this quarter. Our acquisition of Carroll's, which closed on May 16th, and our acquisition of Popeyes China, which closed at quarter end.

Joshua Kobza: I want to provide you with a quick update on how those two transactions impact our segment reporting going forward. All organic growth rates I'll be discussing today exclude results from the restaurant holding sector.

Sami Siddiqui: And since we plan to refranchise the vast majority of the Carroll's restaurants and to find a new partner for our Popeye's China business over time, we will be reporting results of the BK Carroll's and Popeye's China restaurants in a separate segment called Restaurant. Restaurant Holdings will pay intercompany royalties, rents, and advertising fees to the respective franchisor segments, the Burger King and international segments, respectively, which All the organic growth rates I'll be discussing today exclude results from the restaurant holding sector.

Sami Siddiqui: We're pleased to close to significant and highly strategic transactions this quarter. Our acquisition of carols, which closed on May 16th and our acquisition of Popeyes China, which closed at quarter end. I want to provide you with a quick update on how those two transactions impact our segment reporting going forward. As I mentioned last quarter, we want to preserve the franchise or dynamics and PNLs, consistent with how our businesses will be run long term.

Sami: I want to provide you with a quick update on how those two transactions impact our segment reporting going forward.

Speaker Change: as i mentioned last quarter we want to preserve the franchise or dynamics and panuts consistent with how our businesses will be run long term

Speaker Change: and since we plan to refranchise the vast majority of the carrool's restaurants and todeffind a new partner for our popy pop by china business over time we will be reporting results of the bk carroll and popppizedas china restaurants in a separate segment called rerestaurant holdings

Sami Siddiqui: [inaudible] And we grew organic adjusted operating income 9.3% and we grew organic adjusted earnings per share 3.1%. A to I growth outpaced system wide sales growth this quarter for a few reasons. First, our team supply chain business benefited from lower average cost of inventory during the quarter, resulting in organic gross profit dollar growth of roughly 20 million dollars year over year. Over 4 million dollars of that increase was related to net bad debt recovery in the current year period.

Speaker Change: Restaurant Holdings will pay intercompany royalties, rents, and advertising fees to the respective franchisor segments, the Burger King and International segments respectively, which will be eliminated upon consolidation on the face of the P&L.

Speaker Change: All organic growth rates I'll be discussing today exclude results from the restaurant holding segment. For a full primer on how these eliminations map to our segment P&Ls, I'd encourage you to visit our Investor Relations website or feel free to reach out to Kendall if you have any questions.

Sami Siddiqui: For a full primer on how these eliminations map to our segment P&Ls, I'd encourage you to visit our Investor Relations website, or feel free to reach out to Kendall if you have any questions. Now turning to our results. For the second quarter, we grew global comparable sales 1.9%. We grew global system-wide sales 5%.

Sami Siddiqui: For the second quarter, we grew global comparable sales 1.9%. Excluding these recoveries, our supply chain margin would have been just north of 20%, and we continue to expect our full-year supply chain margin to be in the 19% range, as we stated previously. Second, we recorded just over $6 million of net bad debt recoveries across the entire business compared to $3 million of net bad debt expenses in Q2 of 2020. Our Q2'24 net recoveries included that Tim Horton supply chain recovery I just mentioned and also $2 million of net recoveries at BurgerKing.

Speaker Change: Now turning to our results.

Speaker Change: For the second quarter, we grew global comparable sales 1.9%.

Sami Siddiqui: We grew Organic Adjusted Operating Income 9.3%, and we grew Organic Adjusted Earnings Per Share 3.1%. AOI growth outpaced system-wide sales growth this quarter for a few reasons. First, our TIM supply chain business benefited from lower average cost of inventory during the quarter, resulting in organic gross profit dollar growth of roughly $20 million year over year. However, over $4 million of that increase was related to net bad debt recovery in the current year period.

Speaker Change: We grew global system-wide sales 5%.

Speaker Change: We grew Organic Adjusted Operating Income 9.3% and we grew Organic Adjusted Earnings Per Share 3.1%.

Speaker Change: AOI growth outpaced system-wide sales growth this quarter for a few reasons.

Speaker Change: First, our TIMS supply chain business benefited from lower average cost of inventory during the quarter, resulting in organic gross profit dollar growth of roughly $20 million year over year.

Speaker Change: over four million of over four million dollars of that increase was related to net bad debt recoververy in the current year period

Sami Siddiqui: Excluding these recoveries, our supply chain margin would have been just north of 20%, and we continue to expect our full-year supply chain margin in the 19% range, as we stated previously. Second, we recorded just over $6 million of net bad debt recoveries across the entire business compared to $3 million of net bad debt expenses in Q2 of 2020. Our Q2'24 net recoveries included that Tim Horton supply chain recovery I just mentioned and also included $2 million of net recoveries at BurgerKing.

Speaker Change: excluding these recoveries our supply chain margin would have been just north of twenty percent and we continue to expect our full year supply chaune margin in the nineteen percent range as we stated previously

Sami Siddiqui: Excluding these recoveries, our supply chain margin would have been just north of 20% and we continue to expect our full year supply chain margin in the 19% range as we stated previously. Second, we recorded just over $6 million of net bad debt recoveries across the entire business compared to $3 million of net bad debt expenses in Q2 of 23. Our Q2 24 net recoveries included that Tim Horton supply chain recovery I just mentioned and also includes $2 million of net recoveries at Burger King US.

Speaker Change: Second, we recorded just over $6 million of net bad debt recoveries across the entire business compared to $3 million of net bad debt expenses in Q2 of 2023.

Speaker Change: Our Q224 net recoveries included that Tim Horton supply chain recovery I just mentioned and also includes $2 million of net recoveries at Burger King U.S.

Sami Siddiqui: And third and finally, as I discussed on our previous call, we've been working hard to drive operating leverage in our P&L by closely evaluating our costs. To that end, Segment G&A, excluding restaurant holdings, of $158 million was up only 1% year-over-year in cash. These three factors taken together, supply chain, bad debt recovery, and cost discipline, helped drive organic AOI growth of 9.3% for Q2. And they're shifting to EPS.

Speaker Change: and third and finally as i discussed on our previous call we've been working hard to drive operating leverage in our piano by closely evaluating our cost structure

Sami Siddiqui: And third and finally, as I discussed on our previous call, we've been working hard to drive operating leverage in our P&L by closely evaluating our cost structure. To that end, segment G&A excluding restaurant holdings of $158 million was up only 1% year over year in Q2. These three factors taken together supply chain, bad debt recoveries, and cost discipline, health drive organic AOI growth of 9.3% for Q2. Now shifting to EPS, our adjusted EPS with 86 cents for the quarter compared to 85 cents last year, representing an organic increase of 3.1% year over year, excluding an FX headwind of $3 cents per share and a one set benefit from rest.

Speaker Change: to that end segment cha excluding restaurant buildings of one hundred fifty-eight million dollars was up only one percent year-over-year in q two

Sami Siddiqui: These three factors taken together, supply chain, bad debt recovery, and cost discipline help drive organic AOI growth of 9.3% for Q2, as well as an increase in our adjusted net interest expense of approximately $18 million year over year. The increase in Adjusted Net Interest Expense was mainly driven by a higher debt balance following the Arc Carols transaction. As a reminder, our free cash flow metric does not reflect the benefit of our FX and interest rate hedges, which added approximately $46 million of positive cash.

Speaker Change: These three factors taken together, supply chain, bad debt recovery, and cost discipline, help drive organic AOI growth of 9.3% for Q2.

Sami Siddiqui: Our adjusted EPS was $0.86 for the quarter, compared to $0.85 last year, representing an organic increase of 3.1% year-over-year, excluding an FX headwind of $0.03 per share and a $0.01 benefit from restaurant holdings. Our strong growth in organic AOI was offset by an increase in adjusted income tax expense due to a higher effective tax rate, which had a $0.06 per share negative impact on earnings, as well as an increase in our adjusted net interest expense of approximately $18 million year over year.

Speaker Change: that's shifting to eps

Speaker Change: Our adjusted EPS was $0.86 for the quarter, compared to $0.85 last year, representing an organic increase of 3.1% year-over-year, excluding an FX headwind of $0.03 per share and a $0.01 benefit from restaurant holdings.

Speaker Change: Our strong growth in organic AOI was offset by an increase in adjusted income tax expense due to a higher effective tax rate, which had a 6 cent per share negative impact on earnings.

Sami Siddiqui: Our strong growth in organic AOI was offset by an increase in adjusted income tax expense due to a higher effective tax rate, which had a 6 cents per share negative impact on earnings, as well as an increase in our adjusted net interest expense of approximately $18 million year over year. Our adjusted effective tax rate in this quarter was approximately 20% bringing our year-to-date rate to approximately 19%. And the increase in adjusted net interest expense was mainly driven by a higher debt balance following the RKRLS transaction. Action.

Speaker Change: As well as an increase in our adjusted net interest expense of approximately $18 million year-over-year.

Sami Siddiqui: Our adjusted effective tax rate in this quarter was approximately 20%, bringing our year-to-date rate to approximately 19%, and the increase in adjusted net interest expense was mainly driven by a higher debt balance following the Arccarols transaction. In terms of our capital structure, in June, we saw a good opportunity to reprice our $5.9 billion term loan and improve the spread on our interest rate by 50 basis points, from SOFR plus 225 to SOFR plus 175, which is one of the tightest spreads for a credit of this size and this rate. In conjunction, we paid down the Term Loan B from $5.9 billion to $4.75 billion, and we issued $1.2 billion of 6-1-8 senior notes due in 2029.

Speaker Change: Our adjusted effective tax rate in this quarter was approximately 20%, bringing our year-to-date rate to approximately 19%. And, the increase in adjusted net interest expense was mainly driven by a higher debt balance following our CARELS transaction.

Speaker Change: In terms of our capital structure, in June , we saw a good opportunity to reprice our $5.9 billion term loan and improve the spread on our interest rate by 50 basis points.

Sami Siddiqui: In terms of our capital structure, in June, we saw a good opportunity to reprise our $5.9 billion term loan and improve the spread on our interest rate by 50 basis points, from so-for-plus-2.25 to so-for-plus-1.75, which is one of the tightest spreads for a credit of this size and this rating. In conjunction, we paid down the term loan fee from $5.9 billion to $4.75 billion and we issued $1.2 billion of six and one eighth senior notes due in 2029.

Speaker Change: Recipients, from SOFR plus 225 to SOFR plus 175, which is one of the tightest spreads for a credit of this size and this rating.

Speaker Change: In conjunction, we paid down the Term Loan B from $5.9 billion to $4.75 billion, and we issued $1.2 billion of 6-1-8 senior notes due in 2029.

Sami Siddiqui: These successful transactions are expected to drive approximately $30 million in annualized net interest savings and are leveraged in new. We ended Q2 with available liquidity of approximately $2.2 billion, including nearly $950 million of cash on the balance sheet, and our net leverage ratio was five times. We continue to anticipate reaching mid four times net leverage by the end of this year, pro forma for a full year of Carroll's. Turning now to free cash flow and our recent investors.

Speaker Change: These successful transactions are expected to drive approximately $30 million in annualized net interest savings and are leverage neutral.

Sami Siddiqui: These successful transactions are expected to drive approximately $30 million in annualized net interest savings and are leverage neutral. We ended with Q2 with the available liquidity of approximately $2.2 billion, including nearly $950 million of cash on the balance sheet and our net leverage ratio was five times. We continued to anticipate reaching mid-four times net leverage by the end of this year pro forma for a full year of Carroll's results.

Speaker Change: We ended Q2 with available liquidity of approximately $2.2 billion, including nearly $950 million of cash on the balance sheet, and our net leverage ratio was five times.

Speaker Change: We continue to anticipate reaching mid four times net leverage by the end of this year pro forma for a full year of Carroll's results.

Sami Siddiqui: During the quarter, we generated over $290 million in free cash. As a reminder, our free cash flow metric does not reflect the benefit of our FX and interest rate hedges, which added approximately $46 million of positive cash flow.

Speaker Change: Turning now to free cash flow and our recent investments.

Speaker Change: During the quarter, we generated over $290 million in free cash flow.

Sami Siddiqui: Turning now to free cash flow and our recent investments. During the quarter, we generated over $290 million in free cash flow. As a reminder, our free cash flow metric does not reflect the benefit of our FX and interest rate hedges, which added approximately $46 million of positive cash flow. We spent $15 million on reclaim the flame investments at Burger King U.S., of which $5 million was related to our fuel-deflamed marketing investment.

Speaker Change: As a reminder, our free cash flow metric does not reflect the benefit of our FX and interest rate hedges, which added approximately $46 million of positive cash flow.

Sami Siddiqui: We spent $15 million on Reclaim the Flame investments at Burger King U.S., of which $5 million was related to our Fuel the Flame marketing investment. We have $48 million of our fuel-to-flame marketing spend left, and we expect to contribute around $10 million in Q3, with the balance of that $48 million to be spent in Q4. As a reminder, in Q3 of 23, we did not contribute to the Fuel to Flame marketing investment.

Speaker Change: We spent $15 million on Reclaim the Flame investments at Burger King U.S., of which $5 million was related to our Fuel the Flame marketing investment.

Speaker Change: We have $48 million of our fuel-to-flame marketing spend left, and we expect to contribute around $10 million in Q3, with the balance of that $48 million to be spent in Q4.

Sami Siddiqui: We have $48 million of our fuel-deflamed marketing investment, let's marketing spend less and we expect to contribute around $10 million in Q3 with the balance of that $48 million to be spent in Q4. As a reminder, in Q3 of 23, we did not contribute to the fuel-deflamed marketing investment and in Q4 of 23, we contributed $37 million. We returned $261 million of capital to shareholders this quarter through our dividend, which we declared for Q3 at $0.58 per common share and unit, with a 2024 target of $2.32 per share.

Speaker Change: As a reminder, in Q3 of 2023, we did not contribute to the Fuel to Flame marketing investment, and in Q4 of 2023, we contributed $37 million.

Sami Siddiqui: And in Q4 of 23, we contributed $37 million. We returned $261 million of capital to shareholders this quarter through our dividend, which we declared for Q3 at $0.58 per common share and unit with a 2024 target of $2.32 per share. As Josh touched on this quarter, we also acquired Popeyes China for an enterprise value of $15 million.

Speaker Change: we returnturned two hundred and sixty-one million dollars of capital to shareholders this quarter through a dividend which we declared for q three at fifty-eight cents per common share and unit with a two thousand and twenty-four targets of two dollars and thirty-two cents per share

Sami Siddiqui: As Josh touched on this quarter, we also acquired Popeyes China for an enterprise value of $15 million. As Josh discussed earlier, considering our year-to-date results and current industry trends, we now expect our second half results to be similar to what we saw in Q2, implying system-wide sales growth in the 5.5% to 6% range for the full year. Even so, we're very confident we will deliver 8% plus organic adjusted operating income growth this year, consistent with our long-term growth algorithm.

Speaker Change: As Josh touched on this quarter, we also acquired Popeyes China for an enterprise value of $15 million.

Sami Siddiqui: At Tim's China, we agreed to invest up to $30 million via three-year convertible notes, $20 million of which were issued at closing, with the balance to be issued over the coming months, subject to the business meeting certain operational and financial. I'll now provide you with an update on our expectations for 2024, which excludes results from restaurant holdings. As Josh discussed earlier, considering our year-to-date results and current industry trends, we now expect our second half results to be similar to what we saw in Q2, implying system-wide sales growth in the 5.5% to 6% range for the full year.

Speaker Change: At Tim's China, we agreed to invest up to $30 million via 3-year convertible notes, $20 million of which were issued at closing, with the balance to be issued over the coming months, subject to the business meeting certain operational and financial conditions.

Sami Siddiqui: As Josh touched on this quarter, we also acquired Popeye's China for an enterprise value of $15 million. At Tim's China, we agreed to invest up to $30 million via three-year convertible notes, $20 million of which were issued at closing with the balance to be issued over the coming months, subject to the business meetings, certain operational and financial conditions.

Speaker Change: I'll now provide you with an update on our expectations for 2024, which excludes results from restaurant holdings.

Sami Siddiqui: I'll now provide you with an update on our expectations for 2024, which excludes results from restaurant holdings. As Josh discussed earlier, considering our year-to-date results and current industry trends, we now expect our second half results to be similar to what we saw in Q2, implying system-wide sales growth in the 5.5 to 6% range for the full year. Embedded within that are slightly tempered expectations for net restaurant growth of roughly 4% for the full year, given some of the impacts that we're seeing from macro and geopolitical challenges in a few markets, including China.

Speaker Change: as josh discussed earlier considering our year-to-date results and current industry trends we now expect our second half results to be similar to what we saw in q two implying system wide sales growth in the five and a half to six percent range for the full year

Josh: Embedded within that are slightly tempered expectations for net restaurant growth of roughly 4% for the full year, given some of the impacts that we're seeing from macro and geopolitical challenges in a few markets, including China.

Sami Siddiqui: Embedded within that are slightly tempered expectations for net restaurant growth of roughly 4% for the full year, given some of the impacts that we're seeing from macro and geopolitical challenges in a few markets, including China. Even so, we're very confident we will deliver 8% plus organic adjusted operating income growth this year, consistent with our long-term growth outlook. My team and I have been working closely with our business leaders to identify cost opportunities while continuing to invest in all the right areas to build sustainable sales and deliver the long-term growth targets we outlined for you in February.

Speaker Change: Even so, we're very confident we will deliver 8% plus organic adjusted operating income growth this year, consistent with our long-term growth algorithm.

Sami Siddiqui: Even so, we're very confident we will deliver 8% plus organic adjusted operating income growth this year, consistent with our long-term growth algorithm. My team and I have been working closely with our business leaders to identify cost opportunities while continuing to invest in all the right areas to build sustainable sales and deliver the long-term growth targets we outlined for you in February. [inaudible] And finally, we now anticipate adjusted net interest expense to be between $565 million and $575 million inclusive of the $750 million of debt raised as part of our Carol's acquisition and the benefits of our June financing transactions.

Speaker Change: My team and I have been working closely with our business leaders to identify cost opportunities while continuing to invest in all the right areas to build sustainable sales and deliver the long-term growth targets we outlined for you in February .

Sami Siddiqui: As a result, we now expect 2024 segment G&A to be between $640 million and $660 million, including equity-based compensation between $170 million and $180 million, resulting in relatively flat year over year growth in G&A. We continue to expect consolidated 2024 CapEx tenant inducements and incentives to be roughly $300 million, though the timing of cash outlays may spill into 2025. And finally, we now anticipate adjusted net interest expense to be between $565 million and $575 million, inclusive of the $750 million of debt raised as part of our Carol's acquisition and the benefits of our June financing transaction.

Speaker Change: As a result, we now expect 2024 segment GNA to be between $640 million and $660 million.

Speaker Change: including equity-based compensation between one hundred and seventy million dollars and one hundred and eightymillion dollars resulting in relatively flat year-over-year growth in gna

Speaker Change: We continue to expect consolidated 2024 CapEx tenant inducements and incentives to be roughly $300 million, though the timing of cash outlays may spill into 2025.

Speaker Change: And finally, we now anticipate adjusted net interest expense to be between $565 million and $575 million, inclusive of the $750 million of debt raised as part of our Carrolls acquisition and the benefits of our June financing transactions.

Sami Siddiqui: While 2024 will be a softer system-wide sales growth year than our long-term outlook, our business is incredibly resilient, and our balance of strategic investments and history of cost discipline allows us to successfully navigate short-term consumer pressures and not overreact to one or two quarters of softer sales. We have four amazing brands, and I'm pleased with many of the initiatives underway that will help us drive bottom-line growth in 2024 while positioning the business for long-term success. And with that, I'll now hand it over to Pat.

Speaker Change: While 2024 will be a softer system-wide sales growth year than our long-term outlook, our business is incredibly resilient, and our balance of strategic investments and history of cost discipline allows us to successfully navigate the short-term consumer pressures.

Sami Siddiqui: Well, 2024 will be a softer system-wide sales growth year than our long-term outlook. Our business is incredibly resilient and our balance of strategic investments and history of cost discipline allows us to successfully navigate the short-term consumer pressures and not overreact to one or two quarters of softer sales.

Speaker Change: and not overreact to one or two quarters of softer sales. We have four amazing brands and I'm pleased with many of the initiatives underway that will help us drive bottom-line growth in 2024 while positioning the business for long-term success.

Sami Siddiqui: We have four amazing brands, and I'm pleased with many of the initiatives underway that will help us drive bottom-line growth in 2024 while positioning the business for long-term success.

Patrick Doyle: Thank you, Sami, and good morning, everyone. We clearly saw softer sales than expected across our businesses in Q2, and it's not yet clear when we'll see the category strengthen. But in watching this quarter play out, I've learned a lot about this team. While Absolute Sales didn't do what we wanted, we did pretty well on a relative basis. We did that by creating value for our customers and prioritizing our franchisees' profits. That's impressive.

Speaker Change: And with that, I'll now hand it over to Patrick.

Patrick: Thank you, Sami, and good morning, everyone. We clearly saw softer sales than expected across our businesses in Q2, and it's not yet clear when we'll see the category strengthen. But in watching this quarter play out, I've learned a lot about this team.

Patrick Doyle: And with that, I'll now hand it over to Patrick. Thank you, Sammy, and good morning, everyone. We clearly saw softer sales and expected across our businesses in Q2, and it's not yet clear when we'll see the category strengthen.

Patrick: While Absolute Sales

Patrick: weren't what we wanted, we did pretty well on a relative basis.

Patrick Doyle: But in watching this quarter play out, I've learned a lot about this team. While absolute sales work what we wanted, we did pretty well on a relative basis. We did that by creating value for our customers and prioritizing our franchisees profits. That's impressive. The team quickly and efficiently went after costs in our own P&L, and they did it in a manner to protect the investments that are going to grow the business in the medium and long term.

Patrick: We did that by creating value for our customers and prioritizing our franchisees' profits.

Joshua Kobza: That's impressive. The team quickly and efficiently went after costs in our own P&L, and they did it in a way that protected the investments that are going to grow the business in the medium and long term. We're sitting here today with system sales growth lower than we'd expected for our growth algorithm. But, as you heard, we still expect to deliver 8% plus adjusted operating income growth for the year. That's also impressive, and that creates a competitive advantage.

Patrick Doyle: The team quickly and efficiently went after costs in our own P&L, and they did it in a manner to protect the investments that are going to grow the business in the medium and long term. We're sitting here today with system sales growth lower than we'd expected for our growth algorithm. But, as you heard, we still expect to deliver 8% plus adjusted operating income growth for the year. That's also impressive.

Speaker Change: That's impressive.

Patrick: The team quickly and efficiently went after costs in our own P&L and they did it in a manner to protect the investments that are going to grow the business in the medium and long term.

Patrick: we're sitting here today with system sales growth lower than we'd expected for our growth algorithm but as you heard we still expect to deliver eight percent plus adjusted operating income growth for the year that's also impressive

Patrick Doyle: We're sitting here today with system sales growth lower than we'd expected for our growth algorithm. But as you heard, we still expect to deliver 8% plus adjusted operating income growth for the year. That's also impressive. And maybe most importantly, we've seen the value of building a great working relationship with our franchisees by consistently acting in their best interest. It's allowed us to move quickly when needed as conditions have shifted. I hear franchiseors thank their franchisees regularly on these calls.

Patrick Doyle: And maybe most importantly, we've seen the value of building a great working relationship with our franchisees by consistently acting in their best interest. It's allowed us to move quickly when needed as conditions have shifted. I hear franchisors thank their franchisees regularly on these calls. I'm going to do it now, but hopefully you'll understand it isn't in some formal way.

Speaker Change: and maybe most importantly we've seen the value of building a great working relationship with our franchisees by consistently acting in their best interest

Patrick: it's allowed us to move quickly when needed as conditions have shifted

Speaker Change: I hear franchisors thank their franchisees regularly on these calls. I'm going to do it now, but hopefully you're going to understand it isn't in some pro-formal way.

Patrick Doyle: Our alignment with our franchisees is becoming a real strength of our business. We debate things thoroughly, which is how you get to the best answer. But the trust we're building with our franchisees allows us to move quickly together when needed, and that creates a competitive advantage. So, thank you to our franchisees and restaurant owners. Your growing trust in us inspires us to do great work to profitably grow your business. We exist to serve our guests, and we know that their purchase habits are affected by a lot of macro factors, and it's our job to adapt.

Patrick: our alignment with our franchisees is becoming a real strength of our businesses

Patrick Doyle: I'm going to do it now, but hopefully you're going to understand it isn't in some pro form away. Our alignment with our franchisees is becoming a real strength of our business. Businesses. We debate things thoroughly, which is how you get to the best answer. But the trust we're building with our franchisees allows us to move quickly together when needed. And that creates competitive advantage. So thank you to our franchisees and restaurant owners, you're growing trust in us inspires us to do great work to possibly grow your businesses.

Patrick: We debate things thoroughly, which is how you get to the best answer.

Patrick: But the trust we're building with our franchisees allows us to move quickly together when needed, and that creates competitive advantage.

Patrick: So, thank you to our franchisees and restaurant owners. Your growing trust in us inspires us to do great work to profitably grow your businesses.

Patrick: We exist to serve our guests and we know that their purchase habits are affected by a lot of macro factors and it's our job to adapt. But clearly we have opportunities to position ourselves to perform even better in all environments and take share no matter the category conditions.

Patrick Doyle: But clearly, we have opportunities to position ourselves to perform even better in all environments and take share no matter the category condition. We need to continue to provide guests with the best quality food and beverages in each of our categories and to innovate to meet our guests' needs. We need to continue to improve operations across the board. This is something we can never take for granted, even at a brand like Tim's, which is already executing at a stunning level.

Patrick Doyle: Our services habits are affected by a lot of macro factors and it's our job to adapt. But clearly we have opportunities to position ourselves to perform even better in all environments and take share no matter the category conditions. We need to continue to provide guests the best quality food and beverages in each of our categories and to innovate to meet our guest needs. We need to continue to improve operations across the board.

Patrick: We need to continue to provide guests the best quality food and beverages in each of our categories and to innovate to meet our guests needs.

Joshua Kobza: We need to continue to improve operations across the board. This is something we can never take for granted, even at a brand like Tim's, which is already executing at a stunning level. I've been around this business long enough to know that you're going to have both.

Patrick: We need to continue to improve operations across the board. This is something we can never take for granted, even at a brand like Tim's, which is already executing at a stunning level.

Patrick Doyle: We need to bring Burger King into the modern image, and we need to make ourselves more convenient at Popeyes and Firehouse and for all our brands around the world. The great thing is that each of our teams has strong long-term plans in place to do just this, and I'm confident in their ability to execute. I've been around this business long enough to know that you're going to have both. But you don't know the quality of the team and the franchisees until you see them operate through a bump. Having now seen them operate in a tougher environment, I'm impressed. And with that, I'll turn it over to the operator for questions.

Patrick Doyle: This is something we can never take for granted, even at a brand like Tim's, which is already executing at a stunning level. We need to bring Burger King to modern image and we need to make ourselves more convenient at Popeyes and Firehouse and for all our brands around the world. The great thing is that each of our teams has strong long term plans in place to do justice and I'm confident in their ability to execute.

Speaker Change: We need to bring Burger King to modern image, and we need to make ourselves more convenient at Popeyes and Firehouse and for all our brands around the world.

Patrick: the great thing is that each of our teams has strong long-term plans in place to do just this and i'm confident in their ability to execute

Patrick: I've been around this business long enough to know that you're going to have bumps.

Patrick: But you don't know the quality of the team and the franchisees until you see them operate through a bump. Having now seen them operate in a tougher environment, I'm impressed.

Patrick Doyle: I've been around this business long enough to know that you're going to have bumps, but you don't know the quality of the team and the franchisees until you see them operate through a bump. Having now seen them operate in a tougher environment, I'm impressed.

Speaker Change: And with that, I'll turn it over to the operator for questions.

Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on the telephone keypad now. We have our first question from Brian Bittner from Oppenheimer.

Operator: Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on the telephone keypad now. If you change your mind, please press star followed by two to withdraw the question. Please limit to one question at a time, and please ensure that your phone is unmuted locally. Our first question comes from Brian Bittner from Oppenheimer. Brian, your line is now open.

Speaker Change: thank you ladies and gentle if you would like to ask a question please press star allll about one type on key p now

Operator: And with that, I'll turn it over to the operator for questions. Thank you. Ladies and gentlemen, if you would like to ask a question, please press star, follow by one on telephone keypad now. If you change your mind, please press star, follow by two to have shorter questions. Please limit to one question at a time. And please ensure that your phone is muted locally.

Speaker Change: If you change your mind, please press star followed by 2 to withdraw the questions.

Patrick: Please limit to one question at a time.

Speaker Change: and please ensure that your phone is a muted locally where our first question comes from brian bitenness from openheimer

Brian Bittner: Good morning. Thank you.

Brian Bittner: brrian your life is now open

Brian Bittner: Where our first question comes from Brian Bittner from Openheimer. Brian, your life's not open. Good morning. Thank you. I just have a clarification for Sammy and then a follow up question for Johnson Patrick. Just Sammy, you said on the outlook that you expect to be. This year to be an algorithm year for operating profits despite system sales being a little light. Is this being partially driven by the inclusion of the incremental profits from the restaurant holding segment, or are you expecting to achieve algorithmic profit growth regardless of those acquired stores.

Brian Bittner: Good morning. Thank you. I just have a clarification for Sami and then a follow-up question for Josh and Patrick. Just, Sami, you said on the...

Speaker Change: Outlook that you expect to be this year to be an algorithm year for operating profits despite system sales being a little light. Is this...

Brian Bittner: being partially driven by the inclusion of the incremental profits from the restaurant holding segment or are you expecting to achieve algorithmicprofit growth regardless of those acquired stores and forjoure patrick just as it relates to unit growth

Speaker Change: You anticipate to drive unit growth of roughly 4% across the enterprise in 2024. Can you...

Brian Bittner: And for Joshua Patrick, just as it relates to unit growth, you anticipate to drive unit growth of roughly 4% across the enterprise in 2024. Can you update us on how you are anticipating unit growth to evolve after 24 into 25. If you do anticipate any acceleration, can you remind us of the building blocks that drive this? Thanks guys. All right, Brian, morning. Thanks for the question.

Speaker Change: Update us on how...

Patrick: you are anticipating unit growth to evolve after twenty four into twenty five

Speaker Change: And if you do anticipate any acceleration, can you remind us of the building blocks that drive this? Thanks, guys.

Brian Bittner: All right, Brian, morning. Thanks for the question. So just to clarify, when I was speaking to the algorithm and the forward-looking guidance, we were very clear that it does not include restaurant holding. So it is the business kind of pre the Carol's transaction. And just to reiterate, for the full year, we're expecting 8% plus organic adjusted operating income growth, which excludes care.

Brian Bittner: I have a clarification question for Sami and then a follow-up question for Josh and Patrick. Just Sami, you said on the outlook that you expect this year to be an algorithm year for operating profits, despite system sales being a little light. Is this being partially driven by the inclusion of the incremental profits from the restaurant holding segment? Or are you expecting to achieve algorithmic profit growth regardless? Of those acquired stores, and for Josh or Patrick, just as it relates to unit growth.

Speaker Change: All right, Brian , good morning. Thanks for the question. So just to clarify, when I was speaking to the algorithm and the forward-looking guidance, we were very clear that it does not include restaurant holdings. So it is the business kind of pre-the Carrolls transaction. And just to reiterate, for the full year, we're expecting 8% plus organic adjusted operating income growth.

Brian Bittner: You anticipate driving unit growth of roughly 4% across the enterprise in 2024. Can you update us on how you are anticipating unit growth to evolve after 24 into 25? And if you do anticipate any acceleration, can you remind us of the building blocks that drive this? Thanks, guys.

Sami Siddiqui: All right, Brian, morning. Thanks for the question. So just to clarify, when I was speaking to the algorithm and the forward-looking guidance, we were very clear that it does not include restaurant holding. So it is the business kind of pre-Carol's transaction. And just to reiterate, for the full year, we're expecting 8% plus organic adjusted operating income growth, which excludes Carol.

Sami Siddiqui: So just to clarify, when I was speaking to the algorithm and the forward looking guidance, we were very clear that it does not include restaurant holding. So it is the business kind of pre the carols transaction and just to reiterate for the full year, we're expecting 8% plus organic adjusted operating income growth, which excludes care. Council. Great.

Joshua Kobza: Great. And Brian, I'll take the second one on unit growth. So there are a number of things that we're working on to drive improvement in unit growth over time, and I'll talk through each of those.

Joshua Kobza: Great. And Brian, I'll take the second one on unit growth. So there's a number of things that we're working on to drive improvement in unit growth over time, and I'll talk through each of those.

Joshua Kobza: You know, first of all, we have seen improvement in the trajectory of our Burger King US business, and we hope to see even further improvement in the unit trajectory of that business as we go into 2025. We're also making progress at Firehouse.

Speaker Change: which excludes Carol's.

Speaker Change: Great. And Brian, I'll take the second one on unit growth. So there's a number of things that we're working on to drive improvement unit growth over time, and I'll talk through each of those.

Josh Kobza: And Brian, I'll take the second one on on unit growth. So there's a number of things that we're working on to drive improvement unit growth over time. I'll talk to each of those. First of all, we have seen improvement in our, the trajectory of our burking US business and we hope to see even further improvement in the unit trajectory of that, that business as we go into 2025. We're also making progress at firehouse.

Speaker Change: First of all, we have seen improvement in the trajectory of our Burger King U.S. business.

Speaker Change: and we hope to see even further improvement in the unit trajectory of that business as we go into 2025. We're also making progress at Firehouse. I mentioned a bunch of times that Mike's been doing some great work building up a development pipeline in the U.S. and in Canada as well to improve the pace of growth there. So I'm hopeful that we'll see some good improvement here in 2024 and build upon that as we go into 2025.

Joshua Kobza: I mentioned a bunch of times that you know, Mike's been doing some great work, building up a development pipeline in the US and in Canada as well, to improve the pace of growth there. So I'm hopeful that we'll see some good improvement here in 2024. And build upon that as we go into 2025. I also think we can see some improvement at Tim Hortons in Canada and the US. We've talked about the opportunities in both of those geographies, but we're looking at opportunities to grow the store base in Canada. As you know, we've referenced a little bit in the past, the population has grown up here. And that creates opportunities.

Josh Kobza: I mentioned a bunch of times that, you know, Mike's been doing some great work, building up a development pipeline in the US and in Canada as well to improve the pace of growth there. So I am hopeful that we'll see some good improvement here in 2024 and build upon that as we go into 2025. I also think we can see some improvement at Tim Hortons in Canada and the US. We've talked about the opportunities in both of those geographies, but we're looking at opportunities to grow the store base in Canada as we've referenced a little bit in the past.

Speaker Change: I also think we can see some improvement at Tim Hortons in Canada and the U.S.

Joshua Kobza: And there are still some provinces where we're relatively under penetrated, so we're looking at some opportunities in Canada. And we're also making some good progress in the US. So Katharine and her team are building development pipelines, both in some of our existing markets in the northern parts of the US, but we're also opening more restaurants in the southern parts of the US. So you've seen us in Texas and Georgia.

Speaker Change: We've talked about the opportunities in both of those geographies, but we're looking at opportunities to grow the store base in Canada, as we've referenced a little bit in the past. The population has grown up here, and that creates opportunities, and there are still some provinces where we're relatively underpenetrated.

Josh Kobza: The population's grown up here, and that creates opportunities and there's still some provinces where we're relatively under penetrated. So we're looking at some opportunities in Canada and we're also making some good progress in the US. So countering and her team are building development pipelines both in some of our existing markets in the northern parts of the US, but we're also opening more restaurants in the southern part of the US. So you've seen us in Texas and Georgia, and we have plans to open up a number of additional geographies later in this year and building upon that into 2025.

Speaker Change: We're looking at some opportunities in Canada, and we're also making some good progress in the U.S., so Katerina and her team.

Katerina: Our building development pipelines both in some of our existing markets in the northern parts of the U.S.

Joshua Kobza: And we have plans to open up in a number of additional geographies later this year and build upon that into 2025. On top of that, there's a lot we're working on in our international markets. I referenced a few of the really exciting developments that we've seen, especially at Popeyes, I would say, and we've got some big markets that are starting to get to relevant scale. Places that I mentioned, like Spain, the UK, and India, are starting to ramp up their development pace.

Katerina: But we're also opening more restaurants in the southern part of the U.S.

Katerina: You've seen us in Texas and Georgia, and we have plans to open up in a number of additional geographies.

Speaker Change: later in this year and building upon that into 2025.

Speaker Change: On top of that, there's a lot we're working on in our international markets. I referenced a few of the really exciting developments.

Josh Kobza: On top of that, there's a lot we're working on in our international markets. I referenced a few of the really exciting developments that we've seen, especially at Popeyes, I would say, and we've got some big markets that are starting to get to relevant scale, places that I mentioned like Spain, the UK, India, those are starting to ramp up their development pace, but we're opening some new markets as well. I would say the results of those new markets have been really encouraging.

Speaker Change: We've got some big markets that are starting to get to relevant scale, places that I mentioned like Spain, the UK, India, those are starting to ramp up their development pace, but we're opening some new markets as well. And I would say the results of those new markets have been really encouraging. So all that, all that are kind of projects that we're working on for 2025.

Joshua Kobza: But we're opening some new markets as well, and I would say the results of those new markets have been really encouraging. So all these are projects that we're working on for 2025. On top of that, we're trying to make more progress in China. You saw us take a few important steps there in this quarter, setting ourselves up for, I think, better results in the future, especially for Popeyes and Tim Hortons as we get into 2025, though we obviously have work to do on our Big A business there still.

Speaker Change: On top of that, we're trying to make more progress in China. You saw us take a few important steps there this quarter, where we're setting ourselves up for, I think, better results in the future, especially for Popeyes and Tim Hortons as we get into 2025. Though we obviously have work to do on our Big A business there still. So I don't think we have a solution to everything there, but I think we're making some good progress across a lot of our international markets.

Joshua Kobza: You saw us take a few important steps there this quarter, setting ourselves up for, I think, better results in the future, especially for Popeyes and Tim Hortons as we get into 2025, though we obviously have work to do on our Big A business there still. So I don't think we have a solution for everything there, but I think we're making some good progress across a lot of our international markets. So those are some of the building blocks we're working on. There is a lot of stuff going on, and I think there are a lot of ways to accelerate growth from where we are today.

Josh Kobza: So all that projects that we're working on for 2025. On top of that, we're trying to make more progress in China. You saw us take up a few important steps there in this quarter where we're setting ourselves up for I think better results in the future, especially for Popeyes and Tim Hortons as we get into 2025. So we obviously have work to do on our business there still. So I don't think we on the solution to everything there, but I think we're making some good progress across a lot of our international markets.

Joshua Kobza: So I don't think we have a solution for everything there, but I think we're making some good progress across a lot of our international markets. So those are some of the building blocks we're working on. Lots of stuff going on, and I think there are a lot of ways to accelerate growth from where we're at today.

Speaker Change: so those are some of the buildingblocks where we're working on a lot of stuff going on andi think a lot ofways to accelerate growth and wherewe're today

Operator: Thanks. Thanks for the clarification, Sami, and thanks for the answer, Josh. I appreciate it.

Joshua Kobza: Thanks. Thanks for the clarification, Sami. And thanks for the answer, Josh. I appreciate it.

Josh Kobza: So those are some of the building blocks we're working on. A lot of stuff going on, and I think a lot of ways to accelerate growth from where we're at today. Thanks. Thanks for the clarification, Tammy, and thanks for the answer, just appreciate it. Thank you.

Speaker Change: Thanks. Thanks for the clarification, Sami, and thanks for the answer, Josh. Appreciate it.

David Palmer: Thank you. Our next question comes from David Palmer from Apricot SIS. David, your line is now open.

Operator: Thank you. Our next question comes from David Palmer from AfriCorps SIS. David, your line is now open.

Speaker Change: Thank you. Our next question comes from David Palmer from Africore SIS. David, your line is now open.

David Palmer: Good morning. I'd love to just explore what you're thinking about in terms of gives and takes on same-source sales in the second half of the year. I think you're more or less saying that comps globally blended will be something like 2% in the second half, based on your commentary on things being roughly similar to the second quarter. I think there's concern out there that the industry trends are getting softer into the third quarter and that competitive discounting is intensifying. But maybe you could talk about gives and takes among your brands and regions and maybe what gives you confidence that you can at least be somewhat stable into the second half? Thanks.

David Palmer: Our next question comes from David Palmer from Africa, SIS. David, you're nice. The old.

David Palmer: Good morning.

David Palmer: I'd love to just explore what you're thinking about.

Sami Siddiqui: Good morning. I want to just explore what you're thinking about in terms of gifts and takes on the same source sales in the second half of the year. I think you're more or less saying that comps globally blended will be something like 2% in the second half based on your commentary on on, you know, things being roughly similar to the second quarter. I think there's concern out there that the industry trends are getting softer into the third quarter and competitive discounting is intensifying. So maybe could you talk about gifts and takes among your brands and regions and maybe what gives you confidence you can at least be somewhat stable into the second half. Thanks.

Speaker Change: In terms of gives and takes on the same source sales in the second half of the year, I think you're more or less saying that comps globally blended will be something like 2% in the second half.

Speaker Change: Based on your commentary on

Speaker Change: on, you know, things being roughly similar to the second quarter.

Speaker Change: I think there's concern out there that the industry trends are getting softer into the third quarter and a competitive discounting.

Speaker Change: is intensifying. But maybe could you talk about gives and takes among your brands and regions and maybe what gives you confidence you can at least be somewhat stable into the second half? Thanks.

Sami Siddiqui: Hey, David, and Sami, morning. Thanks for the question. So the way you're framing it is correct. We expect the second half of the year comp to be consistent with what we saw in Q2. That was roughly 2%. As you look at Q2, same store sales, we're not going to get into the specifics of the business units and the segments around the world, but there will be puts and takes as you think about kind of how big our businesses are and, and where we are, you know, how diversified we are.

Speaker Change: Hey David, it's Sami. Good morning. Thanks for the question. So, the way you're framing it is correct. We expect the second half of the year comp to be consistent with what we saw in Q2. That was roughly 2% as you look at Q2 same-store sales.

Sami Siddiqui: Hey, David, it's Sami, morning. Thanks for the question. So the way you're framing it is correct. We expect the second half of the year to be consistent with what we saw in Q2. That was roughly 2% as you look at Q2 same-store sales. We're not going to get into the specifics of the business units and the segments around the world. There will be puts and takes as you think about kind of how big our business is.

Sami Siddiqui: And, and where we, you know, how diversified we are. But I think we expect kind of I think probably speaking the environment to continue to be the same as we compare H2 to the second quarter. And for the full year that that would that would kind of give this confidence around the guidance of 5.5 to 6% system wide sales growth and 8% plus adjusted operating income growth. And the one things Patrick, the one thing I'd add to that is, as you think about value and you, you suggest it kind of, you know, heavier value positioning from, from the category, you know, look overall, I mean, if you look at our two biggest businesses, Tim continues to do just exceptionally well in Canada, the Canadian market is is no easier right now than the US.

Speaker Change: We're not going to get into the specifics of the business units and the segments around the world. There will be puts and takes as you think about kind of how big our business is.

Sami Siddiqui: But I think we expect kind of, broadly speaking, the environment to continue to be the same as we compare H2 to the second quarter. And for the full year, that that would give us confidence around the guidance of five and a half to 6% system-wide sales growth and 8% plus adjusted operating income. And the one thing is, Patrick, the one thing I'd add to that is, as you think about value.

Speaker Change: and where we, you know, how diversified we are. But I think we expect kind of, I think, broadly speaking, the environment to continue to be the same as we compare H2 to the second quarter. And for the full year, that's what kind of gives us confidence around.

Speaker Change: The guidance of five and a half to six percent system-wide sales growth and eight percent plus adjusted operating income growth.

Patrick Doyle: And the one thing, Patrick, the one thing I'd add to that is, as you think about value and, you know, you suggested kind of, you know, heavier value positioning from the category, you know, look, overall, I mean, if you look at our two biggest businesses, Tim's continues to do just exceptionally well in Canada; the Canadian market is no easier right now than the U.S. From an overall perspective, it's just outperformance We're taking a share.

Speaker Change: And the one thing, Patrick, the one thing I'd add to that is, as you think about value and, you know, you, you...

Patrick: suggest that kind of heavier

Patrick: value positioning from from the category, you know, look, overall, if you look at our two biggest businesses, Tim's continues to do just exceptionally well. In Canada, the Canadian market is

Joshua Kobza: is no easier right now than the U.S. From an overall perspective, it's just outperformance by Axel and the team. We're taking share. We're just hitting on all cylinders up here. If you look at the burger category and Burger King in the U.S., we feel really good about the different value levers that we have in the U.S. There are levers that we've been pulling for a while, and frankly, the fact that there are others out there that are advertising around $5 for meals is probably overall a positive because it is

Patrick: is no easier right now than the US from an overall perspective. It's just outperformance by Axel and the team. We're taking share. We're just hitting on all cylinders up here. If you look at the burger category and Burger King in the US,

Patrick Doyle: We're just hitting on all cylinders up here. If you look at the burger category and Burger King in the U.S., Yo, we feel really good about the different, uh, value levers that we have in the US. They're levers that we've been pulling for a while.

Sami Siddiqui: From an overall perspective, it's just out performance by axle and the team, we're taking share, we're just hitting on all cylinders up here. If you look at the burger category and Burger King in the US, you know, we feel really good about the different value levers that we have in the US, their, their levers that we've been pulling for a while. And frankly, the fact that, that there are others out there that are advertising around $5 on meals is probably overall a positive because it is getting consumers to understand that there is good value in the category overall.

Patrick: We feel really good about the different value levers that we have in the US. They're levers that we've been pulling for a while. And frankly, the fact that

Patrick Doyle: And frankly, the fact that there are others out there that are advertising around $5 for meals is probably overall a positive because it is getting consumers to understand that there is good value in the category overall. You know, we need to not only be focused ourselves on seeing if we can take share, but we also need the category to be healthy. And the fact that there's a lot of messaging out there right now around that $5 price point, I think is overall positive for the category.

Patrick: that there are others out there that are advertising around $5 on meals is probably overall a positive because it is...

Patrick: Getting consumers to understand that there is good value in the category overall, that's a positive.

Patrick: You know, we need to not only be focused ourselves on seeing if we can take share, but we also need the category to be healthy.

Sami Siddiqui: That's a positive, you know, we need to not only be focused ourselves on seeing if we can take share, but we also need the category to be healthy. And the fact that there's a lot of messaging out there right now around that $5 price point, I think is overall a positive for the category. So we feel pretty good about where we are. But, you know, we're taking actions on the business as if this is going to continue for at least another quarter or two through the end of the year.

Patrick: and the fact that there is a lot of messaging out there right now around that five dollar

Patrick Doyle: So we feel pretty good about where we are. But you know, we're taking actions on the business as if this is going to continue for at least another quarter or two through the end of the year. We've gone after the cost side of the business to make sure that we're protecting that 8% plus algorithm that we've talked about as our long-term growth algorithm for the bottom line on operating income.

Patrick: Price Point I think is overall a positive for the category so we feel pretty good about where we are but you know we're taking actions on the business

Patrick: as if this is going to continue for at least another, you know, quarter or two through the end of the year. We've, we've gone after the the cost side of the business to make sure that we're protecting.

Patrick: That 8% plus algorithm that we've talked about is our long-term growth algorithm for the bottom line on operating income. And we're gonna do that in an environment where we're probably gonna be a couple points short of.

Sami Siddiqui: We've gone after the cost side of the business to make sure that we're protecting that 8% plus algorithm that we've talked about is our long term growth algorithm for the bottom line on operating income. And we're going to do that in a, you know, in an environment where we're probably going to be a couple points short of, you know, our system wide sales long term growth algorithm that we said we would hit on average over time, you know, unfortunately, this first year, it looks like we may be a little short on that.

Patrick Doyle: And we're going to do that in an, you know, in an environment where we're probably going to be a couple points short of, you know, our system-wide sales, long-term growth algorithm that we said we would hit on average over time. Unfortunately, this first year, it looks like we may be a little short of that. But we're protecting the bottom line; we're going to deliver really good operating income growth. I'm proud of the team. I mean, they've gotten after it. And I think on an overall basis, we're doing a really nice job of doing a bit better than the industry overall.

Patrick: You know our system wide sales

Patrick: Long-term Growth Algorithm that we said we would hit on average over time.

Patrick: Unfortunately, this first year, it looks like we may be a little short on that, but we're protecting the bottom line. We're going to deliver really good operating income growth. I'm proud of the team. I mean, they've gotten after it. And I think on an overall basis, we're doing a really nice job of

Sami Siddiqui: But we're protecting the bottom line we're going to deliver really good operating income growth. I'm proud of the team, I mean, they've gotten after it. And I think on an overall basis, we're doing a really nice job of doing a bit better than the industry overall. Thank you.

Patrick: of doing a bit better than the industry overall.

John Ivankoe: Our next question comes from John Ivankoe from JP Morgan.

Operator: Our next question comes from John Ivankoe from JP Morgan. John, your line is now open.

Speaker Change: Thank you.

Patrick: Our next question comes from John Ivankoe from JP Morgan.

John Ivankoe: Thank you very much. First, since it's been a focus on the call, the G&A and cost containment in fiscal 24, does that represent a new base to grow off of in fiscal 25? Or might it actually present some difficult comparisons from a profit growth perspective, 25 over 24, as there may be some catch-up expenses? That is the first question. And secondly, you mentioned the economic geopolitical situation, which obviously has been deeper for longer than any of us would have hoped and, I think, expected.

John Ivankoe: Thank you very much. First, since it's been a focus on the call, the G&A and cost containment in fiscal 24, does that represent a new base to grow off of in 25, or might it actually present some difficult comparisons from a profit growth perspective, 25 over 24, as there may be some catch-up expenses? And secondly, you mentioned the economic and geopolitical situation, which obviously has been deeper for longer than you know, certainly any of us would have hoped.

Patrick: John , your line is now open.

Jon Ivankoe: Our next question comes from Jon Ivankoe from Pete Morgan. Jon, you're lies now open. Very much, you know, first since it's been, you know, a focus on the call, you know, the GNA and cost containment in fiscal 24, does that represent a new plan?

John Ivankoe: Thank you very much. You know, first, since it's been, you know, a focus on the call, you know, the GNA and cost containment in fiscal 24, does that represent a new base, you know, to grow off of, you know, in 25 or

Patrick: might it actually present, you know, some difficult comparisons from a profit growth perspective, 25 over 24s, or maybe some catch-up expenses, is the first question. And secondly,

Sami Siddiqui: A new base, you know, to grow off of it, you know, in 25 or might it actually present, you know, some difficult comparisons from a profit growth perspective 25 over 24 or maybe some catch up at spaces is the first question. And secondly, you know, you mentioned, you know, economic, geopolitical situation, which obviously has been, you know, deeper for longer than you have certainly any of us would have hoped and I think it's expected.

John Ivankoe: And I think it's expected, you know, as you know, a number of your franchisees do, you know, asset reviews on a trade area by trade area basis, you know, might there be an uptick in closures, you know, as we kind of go into 25, at this point, or, you know, are these 20 year types of investments, you know, where your franchisees are willing, able, you know, to kind of withstand that, you know, a bad year or slow year, in terms of impacted markets, and basically just wait this, wait the storm or war, as you want to call it out. Thank

Speaker Change: You know, you mentioned, you know, economic, geopolitical.

John Ivankoe: As a number of your franchisees do asset reviews on a trade area by trade area basis, might there be an uptick in closures as we kind of go into 25 at this point? Or are these 20-year types of investments where your franchisees are willing and able to kind of withstand a bad year or a slow year in terms of impacted markets and basically just wait out the storm or war, as you want to call it out?

Speaker Change: In a situation which obviously has been deeper for longer than certainly any of us would have hoped and I think expected.

Speaker Change: You know, as, you know, a number of your franchisees do, you know, asset reviews on a trade area by trade area basis.

Sami Siddiqui: You know, as, you know, a number of your franchisees do, you know, asset reviews on a trade area by trade area basis, you know, might there be an uptick enclosures, you know, as we kind of go into 25 at this point, or, you know, these 20 year types of investments, you know, where your franchisees are willing able, you know, to kind of withstand that, you know, a bad year or slow year in terms of interactive markets and basically just wait the storm or as you want to call it out.

Speaker Change: You know, might there be an uptick in closures, you know, as we kind of go into 25 at this point, or you know, are these 20 year types of investments, you know, where your franchisees are willing able, you know, to kind of withstand that, you know, a bad year or slow year.

Speaker Change: In terms of impacted markets and basically just wait this wait the storm or war as you want to call it out. Thank you

Sami Siddiqui: Great. Thanks, John, for the question. I'll take the first one, and then I'll throw it over to Josh.

John Ivankoe: Thank you.

Speaker Change: Great.

Josh: thanks john for the question i'll take the first one and then ' author ick to josh specifically on the g n a it's a great question i think broadly speaking as you look at where you know our guidance has has come down and gotten better as a years's progressed on un g n a that's really driven by three factors and

Sami Siddiqui: Thank you. Great. Thanks, John, for the question. I'll take the first one and then I'll throw it over to Josh specifically on the GNA. It's a great question. I think probably speaking as you look at where, you know, our guidance has has come down and gotten better as a years progressed on GNA. That's really driven by three factors and roughly a third, a third, a third. I think the first one was something we commented on Q1 was there are some personnel and senior level changes earlier this year that are flowing through the PNL and as you think about the recurring nature of those, that is a new baseline.

Sami Siddiqui: Specifically on the GNA, it's a great question. I think, broadly speaking, as you look at where our guidance has come down and gotten better as the years have progressed on the GNA, that's really driven by three factors, and roughly a third, a third, a third. I think the first one was something we commented on in Q1: there were some personnel and senior-level changes earlier this year that are flowing through the P&L, and as you think about the recurring nature of those, that is a new baseline, so those are permanent.

Speaker Change: Roughly a third, a third, a third. I think the first one was something we commented on Q1 was there were some personnel and senior level changes earlier this year that are flowing through the P&L. And as you think about the recurring nature of those, that that is a new baseline.

Sami Siddiqui: I think as you look at the second bucket, you see where the year is sort of headed; our incentive-based compensation structure for this year will be slightly down because our algorithm, our full-year numbers have sort of changed, so you'll see that also reflected in the numbers. But I would argue that that is not a permanent change.

Speaker Change: So those those are permanent. I think as you look at the second bucket, you look at as where the year is sort of headed, our incentive based compensation structure for this year will be slightly down because our algorithm, our full year numbers of outlook have sort of changed. So you'll see that also reflected in the numbers. Now, I would argue that that is not a permanent change. As you think about incentive based compensation, we typically go into every year assuming that we'll hit our targets.

Sami Siddiqui: So those are permanent. I think as you look at the second bucket, you look at as where the year is sort of headed, our incentive based compensation structure for this year will be slightly down because our algorithm or our full year numbers of outlook have sort of changed. So you'll see that also reflected in the numbers. Now I would argue that that is not a permanent change as you think about incentive based compensation.

Sami Siddiqui: As you think about incentive-based compensation, we typically go into every year assuming that we'll hit our targets and we'll pay out on those targets. This year is a little light on that, which is why the incentive-based comp has come down a little bit. And then the third bucket that we've alluded to as well is really kind of broadly just cost discipline measures that we're implementing across the business. So we've slowed the pace of hiring a little bit, and we've been really disciplined about where we invest our resources without compromising some of the really big investments that we're making in our brands like Burger King.

Speaker Change: and will pay out on those targets. This year is a little light on that, which is why the incentive based comp has come down a little bit.

Sami Siddiqui: And I think that is a new baseline; we will continue to see those investments and those decisions really flow through the P&L. And so I'd say, you know, as you look at the allocation of G&A, I think two of the three buckets are a new baseline for the business. So hopefully that helps.

Sami Siddiqui: We typically go into every year, assuming that we'll hit our targets and we'll pay out on those targets this year is a little light on that, which is why the incentive based compass come down a little bit. And then the third bucket that we've alluded to as well is really kind of broadly just cost discipline measures that we're implementing across the business. So we've slowed the pace of hiring a little bit.

Speaker Change: And then the third bucket.

Speaker Change: that we've alluded to as well is really kind of broadly just cost discipline measures that we're implementing across the business. So we've slowed the pace of hiring a little bit. We've been really disciplined about where we invest our resources without compromising some of the really big investments that we're making in our brands like Burger King. And I think that is a new baseline. We will continue to see those investments and those decisions

Sami Siddiqui: We've been really disciplined about where we invest our resources without compromising some of the really big investments that we're making in our brands like Burger King. And I think that is a new baseline. We will continue to see those investments and those decisions really flow through the P&L. And so I'd say as you look at the allocation, if you're going to think two of the three buckets are a new baseline for the business.

Speaker Change: really flow through the pianl and so id say as you look at the alcations that gi anythingthink two of the three buckets are a new baseline for out for the business so hopefully that help

Joshua Kobza: Great, and John, I'll take the second part. And we have seen some of the geopolitical impacts last a little bit longer than I think many of us expected. What we're seeing so far, at least is probably just some marginal slowdown in some of the opening pace in some of the impacted markets, and that's part of what's reflected in that NRG outlook that we had it moving from four and a half to four percent. Okay, thank you. Thank you. The next question comes from...

Sami Siddiqui: Great. Thanks, John, for the question. I'll take the first one, and then I'll throw it over to Josh.

Speaker Change: Great, and John , I'll take the second part.

Sami Siddiqui: I think as you look at the second bucket, you see where the year is sort of headed; our incentive-based compensation structure for this year will be slightly down because our algorithm, our full-year numbers have, outlook has sort of changed, so you'll see that also reflected in the numbers. Now, I would argue that that is not a permanent change.

John Ivankoe: and we have seen some of the geopolitical impacts last a little bit longer than I think many of us expected. What we're seeing so far at least is probably just some marginal slowdown in some of the opening pace in some of the impacted markets and that's part of what's reflected in that NRG outlook that we had it moving from four and a half to four percent.

Josh Kobza: So hopefully that helps. Thank you. Great. And I'll take the second part. And we have seen some of the geopolitical impacts last a little bit longer than I think many of us expected. What we're seeing so far, at least, is probably just some marginal slowdown in some of the opening pace in some of the impacted markets. And that's part of what's reflected in that NRG outlook that we had at moving from 4.5 to 4%.

Josh Kobza: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: Okay, thank you.

Lauren Silberman: Our next question comes from Lauren Silberman from Deutsche Bank. Lauren, your line is now open. Thank you very much. I wanted to ask about

Speaker Change: Thank you.

Speaker Change: Our next question comes from Lauren Silberman from Deutsche Bank. Lauren, your line is now open.

Lauren Silberman: Thank you very much. I wanted to ask about TIMS and solid trends during the quarter. Any color you can give on cadence of what you saw, how you're thinking about the outlook, really just talk a bit more on what you're seeing with the consumer in Canada specifically. Thank you very much.

Lauren Silberman: Our next question comes from Lauren Silberman from Boyce Bank. Lauren, your life is now open. Thank you very much. I wanted to ask about him and saw the trends during the quarter. Any color you can give on cadence of what you saw, how you're thinking about the outlook, really just talk a bit more on what you're seeing with consumer in Canada specifically. Thank you very much.

Joshua Kobza: Yeah, Lauren, it's Joshua. I'll take that one. As you mentioned, I think Tim's performance has really been remarkable. You know, even in a somewhat challenging consumer environment, they're outperforming the industry by a wide margin, and they've been doing it consistently for a long time. And, you know, like I said, I think that's really a credit to Axel and the rest of the Tim's team and our restaurant owners. I think they're getting all the basics right. And they're they're building their business.

Joshua: Yeah, Lauren, it's Joshua. I'll take that one. As you mentioned, I think Tim's performance has really been remarkable. You know, even in a somewhat challenging consumer environment, they're outperforming the industry by a wide margin, and they've been doing it consistently for a long time. And, you know, like I said, I think that's really a credit to Axel and the rest of the Tim's team and our restaurant owners. I think they're getting all the basics right, and they're building their business. And I think really taking the industry forward in a lot of the new categories. You know, we've been pushing into PM food for a while and cold beverages, and we've done that consistently with a number of new platforms, the latest of which was our flatbread pizzas that we launched.

Josh Kobza: Lauren, I'll take that one. As you mentioned, I think Tim's performance has really been remarkable. You know, even in a somewhat challenging consumer environment, they're outperforming the industry by a wide margin, and they've been doing it consistently for a long time. And you know, like I said, I think that's that's really a credit to axle on the rest of the team into restaurant owners. I think they're getting all the basics right.

Joshua Kobza: And I think really taking the industry forward in a lot of new categories. You know, we've been pushing into PM food for a while, and into cold beverages. And we've done that consistently with a number of new platforms, the latest of which was our flatbread pizzas that we launched in April. I think the progress there has been really encouraging. We actually just realized, recently, we broke the 10%, really around the 10% threshold in PM food.

Josh Kobza: And they're building their business. And I think really taking the industry forward in a lot of the new categories, you know, we've been pushing into PM food for a while and it cold beverages and we've done that consistently with the number of new platforms, the latest of which which are flatbread pizzas that we launched in April. I think the progress there has been really encouraging. We actually, we just realized recently we broke the 10% really around the 10% threshold in PM food.

Josh Kobza: And so I think we're making a lot of progress there. It's kind of a big milestone. We wanted to we wanted to get to and we want to build much beyond that. And I think as I look at the pipeline that axle and hope in the team have here for building that PM food and pulled beverage business for the next couple of years. I'm really excited. And I think they're going to continue to grow this business really well. Thank you.

Speaker Change: in april i think the progress there has been really encouraging we actually we just realized recently we broke the ten percent reallyly around the ten percent threshold in pm food

Joshua Kobza: And so I think we're making a lot of progress there. That's kind of a big milestone we wanted to get to. And we want to build much beyond that. And I think, as I look at the pipeline that Axel and Hope and the team have here for building that PM food and cold beverage business for the next couple of years, I'm really excited. And I think they're going to continue to grow this business really well.

Speaker Change: and so I think we're making a lot of progress there, it's kind of a big milestone we wanted to get to, and we want to build much beyond that, and I think as I look at the pipeline,

Speaker Change: Thank you to Axel and Hope and the team here for building that PM food and cold beverage business for the next couple of years. I'm really excited and I think they're going to continue to grow this business really well.

Operator: Our next question comes from Lauren Silberman from Deutsche Bank. Lauren, your line is now open. Thank you very much. I wanted to ask about

Hope: Thank you.

Speaker Change: Our next question comes from Dennis Geiger from UBS. Dennis, your line is now open.

Joshua Kobza: Yeah, Lauren. It's Joshua. I'll take that one.

Dennis Geiger: Our next question comes from Dennis Geiger from UBS. Dennis, you're not in that. It's not open. Great. Thanks guys.

Dennis Geiger: Great. Thanks, guys. I just wanted to ask a little bit more on the Burger King investments in the US and maybe specifically on the reimage program, just kind of the latest and greatest there on thoughts, how that rollout's going, what you guys are seeing and kind of confidence in the plans going forward and what that can do for the business overall. Thank you.

Josh Kobza: Just wanted to ask a little bit more on the on the Burger King investment in the US and maybe specifically on the re-image program, just kind of the latest and greatest there on on thoughts, how that rule out's going. I think what you guys are seeing and kind of confidence in the plans going forward and what that can do for the business overall. Thank you. Yeah, Dennis, it's it's just thanks for the question.

Joshua Kobza: Yeah, Dennis. It's Josh. Thanks for the question. We've seen continued progress on a few different fronts. We're seeing an increase in the pace of renovations. And I mentioned that a little bit earlier; we expect to do about 400 this year, which will be fantastic. And as the sample sizes have grown, we're continuing to see really great results from those re-images. So we're still around sort of the mid-teens uplift.

Speaker Change: Yeah, Dennis, it's Josh. Thanks for the question. We've seen continued progress on a few different fronts. We're seeing an increase in the pace of remodels, and I mentioned that a little bit earlier. We expect to do about 400 this year, which will be fantastic.

Josh Kobza: We've seen continued progress on a few different fronts. We're seeing an increase in the pace of remodel remodels. And I mentioned that a little bit earlier. We expect to do about 400 this year, which will be fantastic. And as the sample size is as grown, we're continuing to see really great results from those remodels. So we're still around sort of the mid teens uplift. That's tremendous. That's a great result. And I think it speaks to the quality of the projects that we're doing and execution of those projects.

Speaker Change: As the sample size has grown, we're continuing to see really great results from those re-images, so we're still around sort of the mid-teens uplift. That's tremendous, that's a great result, and I think it speaks to the quality of the projects that we're doing and execution of those projects.

Joshua Kobza: That's tremendous. That's a great result, and I think it speaks to the quality of the projects that we're doing and the execution of those projects. We've been around to visit an awful lot of them.

Joshua Kobza: And especially, we're trying to visit as many sizzles as we can. And I've got to tell you, I think this is a limit. It's getting better and better every time we do a new one. And some of the customer reactions we've seen have been incredible. So I think there's building excitement for the sizzle image. And as we transition to doing more of those this year and especially into next year, I think it's really going to transform the image of the Burger King brand in the US and help to modernize it and elevate it.

Speaker Change: We've been around to visit an awful lot of them, and especially, we're trying to visit as many sizzles as we can, and I've got to tell you, I think the sizzle image, it's getting better and better every time we do a new one, and some of the customer reactions we've seen have been incredible, so I think there's building excitement for the sizzle image, and as we transition to doing more of those this year, and especially into next year, I think it's really going to transform the image of the Burger King brand in the U.S., and help to modernize it and elevate it.

Josh Kobza: We've been around to visit an awful lot of them and especially we're trying to visit as many sizzles as we can. And I've got to tell you, I think this is a limit. It's getting better and better every time we do a new one. And some of the customer reactions we've seen have been incredible. So I think there's building excitement for the sizzle image and as we transition to doing more of those this year and especially into next year.

Joshua Kobza: So I think we're seeing good returns, we're seeing good progress on getting the remodels done, and good progress towards moving to our new modern image. So I'm really happy with it so far and think the team is doing a great job. Okay. Thanks, Josh. Thank you. Our next question comes from Andrew Charles from TD Cohen and Julia Lyons-Darrow.

Josh Kobza: I think it's really going to transform the image of the Burger King brand in the US and help to modernize it and elevate it. So I think we're seeing good returns. We're seeing good progress and getting the remodels done and good progress towards moving to our new modern image. So I'm really happy with it so far and think the team's doing a great job.

Speaker Change: So, I think we're seeing good returns, we're seeing good progress on getting the remodels done, and good progress towards moving to our new modern image. So, I'm really happy with it so far and think the team's doing a great job.

Josh Kobza: Great, thanks Josh. Thank you.

Joshua Kobza: As you mentioned, I think Tim's performance has really been remarkable. You know, even in a somewhat challenging consumer environment, they're outperforming the industry by a wide margin. And, you know, like I said, I think that's really a credit to Axel and the rest of the Tim's team and our restaurant owners. I think they're getting all the basics right, and they're building their business.

Andrew Charles: Our next question comes from Andrew Charles from TD Cohen.

Andrew Charles: Our next question comes from Andrew Charles from TD Cohen and Julia Lansdale. Great, thanks. You talked about how

Josh: Great, thanks Josh.

Josh: Thank you.

Speaker Change: Our next question comes from Andrew Charles from TD Cohen.

Speaker Change: And you realize they're open.

Andrew Charles: Great, thanks. You talked about how the long-term guidance framework for 5% plus net restaurant growth still holds through 2028, though 2024, of course, is tempered to around 4%.

Andrew Charles: Andrew, you're nice now open. Great, thanks. You talked about how the long-term guidance framework for 5% plus net restaurant growth still holds through 2028, though 2024, of course, is tempered to around 4%. Key help bridge, though, from how you get to 4% unit growth in 24 to 5% in 2025. You'll recognize obviously that China investments will help. That's probably a piece of it. That's something else is probably needed to help accelerate that cadence of openings back to 5%.

Andrew Charles: Can you help bridge, though, from how you get to 4% unit growth in 2024 to 5% in 2025? You know, I recognize, obviously, that China investments will help, but that's probably only a piece of it. That's something else that's probably needed to help accelerate that cadence of openings back to 5%. Thanks.

Joshua Kobza: Yeah, Andrew. So, as I mentioned a little bit earlier, there's a lot of things we're working on, you know, Frankly, across all of the business units. I think we've got a lot of opportunities; we just have to go out and realize all those opportunities. And each of them can be a material building block towards getting towards that long-term algorithm. You know, I think the math is pretty simple. A point is about 300 restaurants.

Speaker Change: Yeah, Andrew. So as I mentioned a little bit earlier, there's a lot of things we're working on, you know, frankly, across all of the business units. I think we've got a lot of opportunities we've got to go out and realize.

Andrew Charles: Thanks. Yeah, Andrew, so as I mentioned a little bit earlier, there was a lot of things we're working on, frankly, across all of the business units. I think we've got a lot of opportunities. We've got to go out and realize all those opportunities. And each of them can be a material building block towards getting towards that long-term algorithm. I think the math's pretty simple. A point is about 300 restaurants. And so that's not so far.

Andrew Charles: All those opportunities, and each of them can be a material building block towards getting towards that long-term algorithm.

Andrew Charles: I think the math is pretty simple. A point is about 300 restaurants, and that's not so far. We're not so far off of that level, and I think if we can make progress on a decent number of the things that I laid out a little bit earlier, we have confidence that we're going to get back to where we need to be to hit that guidance over the long term.

Andrew Charles: We're not so far off of that level. I think if we can make progress on a decent number of the things that I laid out a little bit earlier, we've got, we have confidence that we're going to get back to where we need to be to hit that guy in so long-term.

Andrew Charles: Thank you.

Joshua Kobza: And, you know, so that's not, that's not so far, we're not so far off of that level. And I think if we can make progress on, you know, a decent number of the things that I laid out a little bit earlier, we've got, we have confidence that we're going to get back to where we need to be to hit that guidance over the long term. Our next question comes from Danilo Gargiulo from AB Bernstein. Your line is now open.

Joshua Kobza: And so I think we're making a lot of progress there. It's kind of a big milestone we wanted to get to, and we want to build much beyond that. And I think as I look at the pipeline that Axel and Hope and the team have here for building that PM food and cold beverage business for the next couple of years, I'm really excited. And I think they're going to continue to grow this business really well. Thank you. The next question comes from Dennis Geiger from UBS.

Operator: Our next question comes from Dennis Geiger from UBS. Dennis, your line is now open. Great. Thanks, guys. Just wanted to ask

Danilo Gargiulo: Our next question comes from Danilo Gargiulo from A.B. Bernstein. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Danilo Gargiulo from AB Bernstein. Your line is now open.

Daniel Gadgeto: Our next question comes from Daniel Gadgeto from AP Princeton.

Danilo Gargiulo: Great, thank you. Can you please highlight how Burger King is going to be approaching value going forward? Specifically, some peers have talked about another national platform, so what is it reasonable to expect from Burger King?

Josh Kobza: Your life is now open. Great. Thank you. Can you please highlight how Burger King is going to be approaching value going forward, specifically some peers have talked about another national platform. So what is it reasonable to expect from from Burger King? And then can you maybe also help us understand the impact on traffic and comms of $5 meal deal and how you were able to make it profitable for your friends of these?

Andrew Charles: and then can you maybe also help us understand the impact on traffic and comms of $5 meal deal and how you were able to make it profitable for for your franchisees. Thank you.

Joshua Kobza: Yeah, Danilo, I would say a couple things about Burking's value approach, which we're really happy with overall. It's not something new. We've had value in our business, and we've had compelling value offerings at both the $5 price point and elsewhere for some time. You know, we've had our $5 Whopper Junior Duos out there, we've had the $5 Your Way meal a couple of times, and we have some great offers, both in printed and digital format.

Speaker Change: Yeah, Danilo, I would say a couple things on Burking's value approach.

Speaker Change: We've had value in our business and we've had compelling value offerings, both the $5 price point and elsewhere for some time. We've had our $5 Whopper Junior Duos out there. We've had the $5 Your Way meal a couple of times, and we have some great offers, both in printed and digital format.

Josh Kobza: Thank you. Yeah. I would say a couple things on Burger King's value approach, which we're really happy with overall. It's not something new. We've had value in our business and we've had compelling value offerings. Both the $5 price point and elsewhere for some time. We've had our $5 offer junior duo's out there. We've had the $5 your way meal a couple of times. And we have some great offers both in printed and digital format.

Joshua Kobza: And I would say as we look at the business, and as we talk to some of our biggest operators, I'd say our feel is that we've got the value offering just right; we're not trying to change anything. We think it's working for the business, and we can see it's really compelling for consumers and what they're looking for in the business today. And we see that in the incidence of all of those offers, which have been received really well. But importantly, they're also profitable for our franchisees. They have a reasonable gross profit margin.

Speaker Change: And I would say, as we look at the business and as we talk to some of our biggest operators, I'd say our feel is that we've got the value offering just right. We're not trying to change anything. We think it's working for the business. We can see it's really compelling to consumers and what they're looking for in the business today. And we see that.

Josh Kobza: And I would say as we, the business and as we talked to some of our biggest operators, I'd say our feel is that we've got the value offering just right. We're not trying to change anything. We think it's working for the business. We can see it's really compelling to consumers and what they're looking for in the business today. And we see that in the incidence of all of those offers, which they've been received really well.

Speaker Change: In the incidents of all of those offers, which they've been received really well, but importantly, they're also profitable for our franchisees. They have a reasonable gross profit margin.

Joshua Kobza: And so our I think our franchisee base, our operators, and we're a big owner of restaurants too, we think it's exactly the right balance for the business. Just to give a little bit more color on that, you know, Tom and the team just decided together with the franchisees that we're going to extend that $5 Your Way meal now into October because we feel like it's working perfectly for the business and we think customers are loving it.

Andrew Charles: And so I think our franchise, eBase, our operators, and we're a big owner of restaurants, too, we think it's exactly the right balance for the business. Just to give a little bit more color on that,

Josh Kobza: But importantly, they're also profitable for our franchisees. They have a reasonable gross profit margin. And so our, I think our franchise e-base, our operators, and we're a big owner of restaurants too. We think it's exactly the right balance for the business. Just to give a little bit more color on that. We, Tom and the team just just assigned it together with the franchisees that we're going to extend that $5 your way meal now into October because we feel like it's working perfectly for the business.

Andrew Charles: Tom and the team just decided together with the franchisees that we're going to extend that $5 year-away meal now into October, because we feel like it's working perfectly for the business and we think customers are loving it. So we're gonna keep that going because we think we have the right balance.

Josh Kobza: And we think customers are allowing it. So we're going to keep that going because we think we have the right balance. So, you know, I think we've got the right things going on. We're happy with how it's performing in the business and that's kind of what's embedded in our outlets for the rest of the year.

Andrew Charles: So, you know, I think we've got the right things going on. We're happy with how it's performing in the business, and that's kind of what's embedded in our outlook for the rest of the year.

Joshua Kobza: Hey, Danilo, I'll just add that, as you know, we launched the $5 Year Away Meal in early June, and we're seeing some really interesting stats so far early on. We're seeing it over-indexed with lower and middle income consumers, which was really the intended purpose. We're also seeing it over-indexed with women, and we're seeing that the average check is over $10. So I think as you look at the $5 Year Away Meal and you also look at it in conjunction with the $5 Whopper Junior Duos, we really have a comprehensive value strategy, plus wraps at $2.99, that really is able to speak to all of our guests in a comprehensive way that delivers value in a profitable way for our franchise.

Joshua Kobza: So we're going to keep that going because we think we have the right balance. So you know, I think we've got the right things going on. We're happy with how it's performing in the business. And that's kind of what's embedded in our outlet for the rest of the year. Hey, Danilo, I'll just add that, you know,

Andrew Charles: Hey, Danilo, I'll just add that, you know, as you know, we launched the $5 Your Way Meal in early June , and we're seeing some really interesting stats so far early on. We're seeing it over indexed,

Josh Kobza: Hey, Danilo, I'll just add that, you know, as you know, we launched the $5 your way of meal in early June. And we're seeing some really interesting stats so far early on. We're seeing it over index with the lower and middle income consumers, which was really the intended purpose. We're also seeing it over index with women. And we're seeing the average check is over $10. And so I think as you look at the $5 your way meal, and you also look at it in conjunction with the $5 Wapper Junior Duos, we really have a comprehensive value strategy plus, plus wraps at $2.99 that really is able to speak to all of our guests in a comprehensive way that delivers value in a profitable way for our franchisees. Great. Thank you.

Speaker Change: with the lower and middle income consumers, which was really the intended purpose. We're also seeing it over-indexed with women.

Speaker Change: and we're seeing the average check is over $10 and so I think as you look at the $5 your way meal and you also look at it in conjunction with the $5 Whopper Junior Duos, we really have a comprehensive value strategy plus wraps at $2.99 that really is able to speak to all of our guests

Speaker Change: in a comprehensive way that delivers value in a profitable way for our franchisees.

Sara Senatore: Thank you. Our next question comes from Sara Senatore from Bank of America. Sara, your line is now open.

Speaker Change: Great, thank you.

Speaker Change: Thank you. Our next question comes from Sara Senatore from Bank of America. Sara, your line is now open.

Catherine: Hi, thank you. This is Catherine on behalf of Sara.

Operator: Our next question comes from Andrew Charles from TD Cowen and Julia Lyon from Star Opening. Great, thanks. You talked about how

Speaker Change: Hi, thank you. This is Catherine on for Sara. Thanks for the questions. First, I just wanted to ask about the, you know, some of the pressure that you're seeing in the demand and competitive environment. Will this change how you're thinking about the trajectory of the franchisee cash flow targets that you've previously outlined?

Sarah Senatore: Our next question comes from Sarah Sanato from Bank of America. Sarah, your line's not open. Hi, thank you.

Katherine Griffin: This is Catherine on for Sarah. Thanks for the question. First, I just wanted to ask about the, you know, some of the pressure that you're seeing in the demand and competitive environment. Well, this can, how you're thinking about the trajectory of the franchisee cash flow targets that you've previously outlined. Nope. Great. Thank you. We're feeling good about it. And franchisee profitability is absolutely top of mind. And we want to continue making improvements there. And our, but nope, doesn't change the thing. Okay, thanks.

Catherine: Thanks for the questions. First, I just wanted to ask about some of the pressure that you're seeing in the demand and competitive environment. Will this change how you're thinking about the trajectory of the franchisee cash flow targets that you've previously outlined?

Speaker Change: Nope.

Joshua Kobza: Great, thank you.

Speaker Change: We're feeling good about it, and franchisee profitability is absolutely top of mind, and we want to continue making improvements there, and are, but nope, doesn't change a thing.

Joshua Kobza: We're feeling good about it, and franchisee profitability is absolutely top of mind, and we want to continue making improvements there, but nope, doesn't change a thing.

Kevin: Okay, thanks. And then second question, just on some of the investments in Tim's China, I think given some of the pretty persistent challenges in that market, had you considered pausing or maybe rethinking some of the growth targets in that market rather than reinvesting in the business in order to sustain growth there? Catherine, so my point of view on this is that

Speaker Change: Okay, thanks. And then second question, just on the some of the investments in Tim's China, I think given some of the pretty persistent challenges in that market, had you considered pausing or maybe rethinking some of the growth targets in that market rather than reinvesting in the business in order to sustain growth there?

Patrick Doyle: And then second question just on the, some of the investments in Kim's China. I think given some of the pretty persistent challenges in that market, had you considered pausing or maybe rethinking some of the growth target in that market rather than reinvesting in the business in order to sustain growth there? So my point of view on this, I think that we absolutely believe in the long term potential of the coffee market in China.

Kevin: Kevin, so my point of view on this is that we absolutely believe in the long-term potential of the coffee market in China. We recognize it's very competitive right now, but I think that's a reflection of the size of the opportunity.

Speaker Change: Kevin, so my point of view on this, I think that we absolutely believe in the long term potential of the coffee market in China. We recognize it's very competitive right now. I think that's a reflection of the size of the opportunity, but

Speaker Change: I think the business, you know, any of those businesses that's going to be competitive in China, you've got to get to critical mass, you've got to get to large scale to be competitive. So I think it is really important over the medium to long term that we pursue a pretty aggressive growth path there.

Patrick Doyle: We recognize it's very competitive right now. I think that's a reflection of the size of the opportunity. But I think the business, you know, any of those businesses that's going to be competitive in China, you've got to get to to critical mass. You've got to get to large scale to be competitive. So I think it is, it is really important over the medium to long term that we pursue a pretty aggressive, growth path there.

Kevin: But I think any business that's going to be competitive in China, you've got to get to critical mass; you've got to get to a large scale to be competitive. So I think it is really important over the medium to long term that we pursue a pretty aggressive growth path there. At the same time, we are working on making sure that we're operating the business in a really profitable way.

Speaker Change: At the same time, we are working on making sure that we're operating the business in a really profitable way. So, the team at Tim's in China has taken a lot of actions to improve the profitability of the business, the profitability of the restaurant base, and I think we're seeing some good progress now. We've come a long way in the first six, seven months of the year, and that's encouraging to us in terms of how the business is performing, but it also gives more confidence.

Patrick Doyle: At the same time, we are working on making sure that that we're operating the business in a really profitable way. So the team at Tim's in China has taken a lot of actions to improve the profitability of the business of the profitability of the restaurant base. And I think we're seeing some good progress now. We've come a long way in the first six, seven months of the year. And that's encouraging to us in terms of how the business is performing. But it also gives more confidence to want to see that business grow aggressively over time. Thank you.

Speaker Change: to want to see that business grow aggressively over time.

Speaker Change: Thank you.

Kevin: So the team at Tim's in China has taken a lot of actions to improve the profitability of the business, the profitability of the restaurant base, and I think we're seeing some good progress now. We've come a long way in the first six, seven months of the year, and that's encouraging to us in terms of how the business is performing, but it also gives us more confidence to want to see that business grow aggressively over the next few years.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Jeffrey Bernstein from Barclays. Jeffrey, your line is now open.

Jeffrey Bernstein: Our next question comes from Jeffrey Bernstein from Barclays. Jeffrey, your line is now open.

Operator: Our next question comes from Danilo Gargiulo from A.B. Bernstein. Your line is now open.

Joshua Kobza: And I would say, as we look at the business, and as we talk to some of our biggest operators, I'd say our feeling is that we've got the value offering just right. We're not trying to change anything.

Joshua Kobza: We think it's working for the business; we can see it's really compelling for consumers and what they're looking for in the business today. And we see that in the incidence of all of those offers, which have been received really well. But importantly, they're also profitable for our franchisees. They have a reasonable gross profit margin.

Jeffrey Bernstein: Our next question comes from Jeffrey Bernstein from Barclays.

Speaker Change: Hi, good morning. This is Pratik for Jeff. Thanks for taking the question.

Pratik Patel: Jeffrey, your line's not open. Hi, good morning. This is product for Jeff. Thanks for taking a question. It seems like the balance sheet, even after the acquisitions and investments in Tim China, et cetera, is in pretty good shape with a sizable cash balance. And I believe the release mentioned that you're within your target leverage ratio around five times. Just how should we think about cash usage going forward? It seems like, you know, the shares are out of pretty attractive value right now. And just want to get your thoughts on potential shares. We're just going forward.

Pratik: Sami, it seems like the balance sheet, even after these acquisitions and investments in Tim China, etc., is in pretty good shape with a sizable cash balance, and I believe the release mentioned that you're, you know, within your target...

Speaker Change: We've got a good leverage ratio around five times. Just how should we think about cash usage going forward? It seems like the shares are at a pretty attractive value right now, and I just wanted to get your thoughts on potential share repurchase going forward. Thank you.

Pratik Patel: Hi, good morning. This is Pratik for Jeff. Thanks for taking the time to answer my question. Sami, it seems like the balance sheet, even after these acquisitions and investments in Tim China, etc., is in pretty good shape with a sizable cash balance. And I believe the release mentioned that you're within your target leverage ratio of around five times. Just how should we think about cash usage going forward? It seems like, you know, the shares are at a pretty attractive value right now. And I just wanted to get your thoughts on potential share repurchases going forward. Thank you.

Sami Siddiqui: Hey, Pratik, thanks for the question. And yeah, we similarly feel very strongly about the position we're in and the balance sheet, the balance sheet position. I think it's really a testament to the business model. It's a resilient business model that generates really high free cash flow, which allows us to do a couple things. I think, number one, and first and foremost, we're going to continue to invest in our own business. As you've seen with the Burger King Reclaim the Flame plan, as you've seen really with the Carroll's acquisition, which was really an investment in the Burger King US business.

Operator: Hey Danilo, I'll just add that, as you know, we launched the $5 Your Way Meal in early June, and we're seeing some really interesting stats so far early on. We're seeing it over-indexed with lower and middle-income consumers, which was really the intended purpose. We're also seeing it over-indexed with women, and we're seeing that the average check is over $10. So I think as you look at the $5 Your Way Meal and you also look at it in conjunction with the $5 Whopper Junior Duos, we really have a comprehensive value strategy, plus wraps at $2.99, that really is able to speak to all of our guests in a comprehensive way that delivers value in a profitable way for our franchise.

Sami: Hey Pratik, thanks for the question. And yeah, we similarly feel very strongly about the position we're in and the balance sheet, the position of the balance sheet. I think it's really a testament to the business model. It's a resilient business model that generates really high free cash flow, which allows us to do a couple things. I think number one, and first and foremost, we're going to continue to invest in our own business.

Pratik Patel: Thank you. Hey, Pratik, thanks for the question. And yeah, we similarly feel very strongly about the position we're in and the balance sheet, the position of the balance sheet. I think it's really a testament to the business model. It's a resilient business model that generates really high pre-cash flow, which allows us to do a couple things. I think number one and first and foremost, we're going to continue to invest in our own business as you've seen with the Burger King, reclaim the flame plan.

Speaker Change: As you've seen with the Burger King Reclaim the Flame plan, as you've seen really with the Carroll's acquisition, which was really an investment in the Burger King U.S. business, and I think it's really important that we continue to do that with the right discipline measures in place.

Sami Siddiqui: And I think it's really important that we continue to do that with the right discipline measures in place. Number two, I think we are committed to our dividend and having a healthy payout ratio. And so as we think about capital allocation, the dividend has been a big part of our strategy for a while now and will continue to be a big part of our capital allocation going forward. And then, as you sort of start thinking about share buybacks in response to your question, and you sort of measure them against deleveraging, I think it's hard to speak sort of in absolutes, but I'd say our preference at the moment is really to focus on

Pratik Patel: As you've seen really with the Carol Zach, acquisition, which was really an investment in the Burger King U.S, business. And I think it's really important that we continue to do that with the right discipline measures in place. I think number two, we are committed to our dividend and having a healthy payout ratio. And so as we think about capital allocation, the dividend has been a big part of our strategy for a while now and will continue to be a big part of our capital allocation going forward.

Speaker Change: I think number two, we are committed to our dividend and having a healthy payout ratio. And so as we think about capital allocation, the dividend has been a big part of our strategy for a while now and will continue to be a big part of our capital allocation going forward.

Sami Siddiqui: We've been very clear that we want to hit the mid four times leverage range by the end of this year, and we remain committed to that. And so we will continue to, you know, always be nimble. But I think deleveraging is our priority on the balance right.

Speaker Change: And then, as you sort of start thinking about share buybacks to your question and...

Speaker Change: and you sort of measure it against deleveraging.

Pratik Patel: And then as you sort of start thinking about share buybacks to your question and you sort of measure it against de-leveraging. I think it's hard to speak sort of an absolute, but I'd say our preference at the moment is really to focus on de-leveraging. We've been very clear that we want to hit the mid four-time leverage range by the end of this year. And we remain committed to that. And so we will continue to always be nimble, but I think de-leveraging is our priority on the balance right now.

Speaker Change: I think it's hard to speak.

Speaker Change: So, I think we're in sort of an absolute, but I'd say our preference at the moment is really to focus on deleveraging. We've been very clear that we want to hit the mid four times leverage range by the end of this year, and we remain committed to that. And so, we will continue to, you know, always be nimble, but I think deleveraging is our priority on the balance right now.

Pratik Patel: Thanks.

Pratik Patel: I appreciate that.

Pratik Patel: Got it. Thanks. I appreciate that.

Pratik Patel: Thank you.

Speaker Change: Got it. Thanks, I appreciate that.

John Powell: Our next question comes from John Powell from Citi. John, your line is now open.

Operator: Thank you. Our next question comes from Sara Senatore from Bank of America. Sara, your line is now open.

Speaker Change: Thank you. Our next question comes from John Powell from Citi. John , your line is now open.

John Powell: Great, thanks for taking the question. Just a follow-up on the China business, maybe not the Tim Horton side, but the PLK, as well as the Burger King business. I'm just curious, you know, with the investment in PLK, should we expect any strategic shifts in that market specifically around that brand? And then can you give us an update on the Burger King China business? And I know that that's been a source of slower growth for the overall company. Have you made any progress in, you know, shoring up growth going forward from a unit growth perspective over there?

Unknown Shareholder: Hi, thank you. This is Catherine on behalf of Sarah.

John Powell: Great, thanks for taking the question. Just I guess a follow up on the China business, maybe not the Tim Horton side, but the PLK, as well as the Burger King business. I'm just curious, you know, with the investment in PLK, you know, should we expect any strategic shifts in that market specifically around that brand? And then

John Powell: Our next question comes from John Powell from City. John, you're nice, now open. Great. Thanks for taking the question. Just I guess follow up on the China business, maybe not the Tim Horton side, but the PLK as well as the Burger King business. I'm just curious, you know, with the investment in PLK, you know, should we expect any strategic shifts in that market specifically around that brand? And then can you give us an update on the Burger King China business?

Speaker Change: Can you give us an update on the Burger King China business, and I know that that's been a source of

Speaker Change: Unknown Speaker Slower growth for the overall company. Have you made any progress and, you know, shoring up growth going forward from a new unit growth perspective over there?

John Powell: And I know that that's been a source of slower growth for the overall company. Have you made any progress and, you know, showing up growth going forward from a new group perspective over there? Hey, John, it's Josh. Thanks for the questions. I'll take each of those. So in Popeyes, you know, we were really encouraged by how the brand was received initially. And I would say that the shift is just for us to take it on and make sure it has the capital and the support it needs to realize its full potential.

Unknown Shareholder: Thanks for the questions. First, I just wanted to ask about some of the pressure that you're seeing in the demand and competitive environment. Will this change how you're thinking about the trajectory of the franchisee cash flow targets that you've previously set?

Joshua Kobza: Hey, John, it's Josh. Thanks for the questions. I'll take each of those.

Josh: Hey John , it's Josh.

John: Thanks for the questions. I'll take each of those. So in Popeyes, you know, we were really encouraged by how the brand was received initially. And I would say that the shift is just for us to take it on and make sure it has

Speaker Change: The Capital and the support it needs to realize its full potential. So I'd say not a big like brand positioning or strategy shift there. I think we'll just be working on building up the team, and then building up the development pipeline to make sure that we start growing that at the pace we that we think makes sense. So that's the game plan there. We'll, you know, and we're planning to do that ourselves for a while. And then then we'll start working on finding the right long term local partner there over the next couple of years.

John Powell: So I see not a big like brand positioning or strategy shift there. I think we'll just be working on building up the team and then building up the development pipeline to make sure that we start growing that at the pace we that we think makes sense. So that's the game plan there will, you know, and we're planning to do that ourselves for a while, and then we'll start working on finding the right long-term local partner there over the next couple of years.

Joshua Kobza: So in Popeyes, you know, we were really encouraged by how the brand was received initially. And I would say that the shift is just for us to take it on and make sure it has the capital and the support it needs to realize its full potential. So I'd say not a big, like brand positioning, or strategy shift there. I think we'll just be working on building up the team and then building up the development pipeline to make sure that we start growing that at the pace we think makes sense. So that's the game plan there. We'll, you know, and we're planning to do that ourselves for a while.

Speaker Change: and in terms of Burger King in China, it has been a challenging environment so that the business has been a bit challenged there. We don't have anything new to share as that one's more of a work in progress. Happy with that we made some progress on Tim's and Popeye's and we're still working on Burger King.

John Powell: And in terms of Burger King in China, it has been a challenging environment so that the business has been a bit challenged there. We don't have anything new to share as that one's more of a work in progress. Happy with that we made some progress on Tim's and Popeyes, and we're still working on Burger King. Got it.

Josh Kobza: Thank you.

Speaker Change: Got it. Thank you.

Joshua Kobza: And then we'll start working on finding the right long-term local partner there over the next couple of years. And in terms of Burger King in China, it has been a challenging environment. So the business has been a bit challenged there. We don't have anything new to share as that one's more of a work in progress. I'm happy that we made some progress on Tim's and Popeyes. And we're still working on Burger.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Eric Gonzalez from KeyBank Capital Markets. Eric, your line is now open.

Joshua Kobza: Got it. Thank you.

Joshua Kobza: We're feeling good about it, and franchisee profitability is absolutely top of mind, and we want to continue making improvements there, but nope, doesn't change a thing.

Chris: Our next question comes from Eric Gonzalez from Keybank Capital Lockets. Eric, your line's not open. Hi, good morning. This is Chris on for Eric. So maybe following up on the prior franchisee profitability question, can you provide an update, at least at a high level on some of the puts and takes around BK domestic franchisee profitability today? I know you'll provide specific details. Once the year closes, but any updates on progress against last year's 205K average four wall EBITDA in the context of some of the consumer and operating dynamics today, including folks on value, commodity and labor costs trends or anything else that's relevant.

Speaker Change: Hi, good morning. This is Creston for Eric. So maybe following up on the prior franchisee profitability question,

Creston: Can you provide an update, at least at a high level, on some of the puts and takes around BK Domestic Franchisee profitability today? I know you'll provide specific details once the year closes, but

Creston: Any updates on progress against last year's $205K average four-wall EBITDA in the context of some of the consumer and operating dynamics today, including focus on value, commodity and labor cost trends, or anything else that's relevant. Thank you.

Eric Gonzalez: Our next question comes from Eric Gonzalez from QBank Capital Markets. Eric, your line is now open.

Chris Onfer: Hi, good morning. This is Chris Onfer, Eric.

Unknown Shareholder: Okay, thanks. And then second question, just on some of the investments in Tim's China, I think given some of the pretty persistent challenges in that market, had you considered pausing or maybe rethinking some of the growth targets in that market rather than reinvesting in the business in order to sustain growth there? Kevin, so my point of view on this.

Joshua Kobza: Kevin, so my point of view on this is that we absolutely believe in the long-term potential of the coffee market in China. We recognize it's very competitive right now, but I think that's a reflection of the size of the opportunity.

Joshua Kobza: But I think any business that's going to be competitive in China, you've got to get to critical mass; you've got to get to a large scale to be competitive. So I think it is really important over the medium to long term that we pursue a pretty aggressive growth path there. At the same time, we are working on making sure that we're operating the business in a really profitable way.

Speaker Change: Hey Chris, I can take the first or second part of that question regarding sort of some of the costs we're seeing in the business. You've obviously seen the reported sales that we're seeing in the Burger King business, and really roughly flat for the quarter on the top line. As you think of sort of some of the commodity impacts,

Chris: Thank you. Hey, Chris, I can take the first or second part of that question regarding sort of some of the costs we're seeing in the business that you've obviously seen the reported sales that we're seeing at the Burger King business and really roughly flat for the quarter on the top line. As you think of sort of some of the commodity impacts, we haven't seen a whole ton of impact in terms of commodity inflation from beef, which has been widely reported on I think earlier this year.

Speaker Change: We haven't seen a ton of impact in terms of commodity inflation.

Speaker Change: from BEEF, which has been widely reported on, I think, earlier this year. We do expect in the second half of the year to see some BEEF inflation.

Speaker Change: and so I think as you think about the Burger King commodity basket for the full year.

Chris: We do expect in the second half of the year to see some beef inflation. And so I think as you think about the Burger King commodity basket for the full year, we'll see low single digits commodity inflation. In that range, primarily driven by beef, there's some other items that are also impacting that. And then on the labor side, I think nothing dissimilar from what we're seeing across the rest of the industry also low single digits inflation on the labor side.

Speaker Change: We'll see low single digits commodity inflation in that range, primarily driven by beef. There's some other items that are also impacting that.

Speaker Change: And then on the labor side, I think nothing dissimilar from what we're seeing across the rest of the industry. Also, low single digits inflation on the labor side. So those are probably the cost elements. I don't know, Josh, if you have anything to add on the top line.

Chris Onfer: So maybe following up on the prior franchisee profitability question, can you provide an update, at least at a high level, on some of the puts and takes around BK domestic franchisee profitability today? I know you'll provide specific details once the year closes, but any updates on progress against last year's $205K average four-wall EBITDA in the context of some of the consumer and operating dynamics today? Including a focus on value, commodity, and labor cost trends, or anything else that's relevant. Thank you.

Joshua Kobza: So the team at Tim's in China has taken a lot of actions to improve the profitability of the business, the profitability of the restaurant base, and I think we're seeing some good progress now. We've come a long way in the first six, seven months of the year, and that's encouraging to us in terms of how the business is performing, but it also gives us more confidence to want to see that business grow aggressively over the next few years.

Josh: As you mentioned, we'll share the update at the end of the year. I'd say overall, BKUS franchise profitability has been sort of stable to improving, and so that's what we're seeing so far, and we'll give specific numbers when we get to the year end.

Chris: So those are probably the cost elements. I don't know, Josh, if you have anything to add on the top line. No, I think as you mentioned, we'll share the update at the end of the year. I'd say overall, BK, US, French as profitability has been sort of stable to improving. And so that's what we're seeing so far and we'll give specific numbers when we get to the end to the year end. All right, thanks so much. Thank you.

Chris Onfer: Also, low single-digit inflation on the labor side. So those are probably the cost elements. I don't know, Josh, if you have anything to add to that. Now, as you mentioned, we'll share the update at the end of the year.

Operator: Our next question comes from Jeffrey Bernstein from Barclays. Jeffrey, your line is now open.

Josh: Alright, thanks so much.

Sami Siddiqui: And I think it's really important that we continue to do that with the right discipline measures in place. Number two, I think we are committed to our dividend and having a healthy payout ratio. And so as we think about capital allocation, the dividend has been a big part of our strategy for a while now and will continue to be a big part of our capital allocation going forward. And then, as you sort of start thinking about share buybacks in your question, and you sort of measure them against deleveraging, I think it's hard to speak sort of of an absolute, but I'd say our preference at the moment is really to focus on deleveraging

Speaker Change: Thank you.

Speaker Change: Our next question comes from Gregory Francfort from the Newham Securities. Gregory, your line is now open.

Chris Onfer: Hey, Chris, I can take the first or second part of that question regarding sort of some of the costs we're seeing in the business. You've obviously seen the reported sales that we're seeing in the Burger King business and, really, roughly flat for the quarter on the top line. As you think of sort of some of the commodity impacts, we haven't seen a ton of impact in terms of commodity inflation from beef, which was widely reported on, I think, earlier this year.

Unknown Shareholder: Hi, good morning. This is Pratik for Jeff. Thanks for taking the time to answer my question. Sami, it seems like the balance sheet, even after these acquisitions and investments in Tim China, etc., is in pretty good shape with a sizable cash balance. And I believe the release mentioned that you're within your target leverage ratio of around five times. Just how should we think about cash usage going forward? It seems like, you know, the shares are at a pretty attractive value right now, and I just wanted to get your thoughts on potential share repurchases going forward. Thank you.

Chris Onfer: We do expect in the second half of the year to see some beef inflation. And so I think as you think about the Burger King commodity basket for the full year, we'll see low single-digit commodity inflation in that range, primarily driven by beef. There are some other items that are also impacting that. And then on the labor side, I think nothing dissimilar from what we're seeing across the rest of the industry.

Josh Kobza: Our next question comes from Gregory Frafford from Gungeoam, Secretties. Gregory, you're lies now open. Hey, thank you guys for question. My question is just, there's been a lot of talk about the US consumer. You guys are performing pretty well at Tim's Canada. I'm just wondering if you could kind of compare and contrast what you're seeing in the US or what you're seeing in Canada. And then I think your biggest competitor up there about four weeks ago, put out a dollar level entry price point for coffee. Do you feel like you have value in the right spot up there? Do you feel like you have to make any changes? Just any thoughts on kind of the menu construct and the pricing construct. Thanks.

Gregory Francfort: Hey, thank you guys for the question. My question is just, there's been a lot of talk about the U.S. consumer. You guys are performing pretty well.

Gregory Francfort: at Tim's Canada. And I'm just wondering if you could kind of compare and contrast

Speaker Change: What you're seeing in the U.S. and what you're seeing in Canada, and then I think your biggest competitor up there about four weeks ago.

Speaker Change: put out a dollar level entry price point for coffee. Do you feel like you have value in the right spot up there? Do you feel like you have to make any changes? Just any thoughts on kind of the the menu construct and the pricing construct? Thanks.

Joshua Kobza: As you mentioned, we'll share the update at the end of the year. I'd say overall, BKUS franchise profitability has been sort of stable to improving, and so that's what we're seeing so far, and we'll give specific numbers when we get to the end of the year.

Speaker Change: Yeah, Greg, I'll take this one. You know, there has been some consumer softness in Canada. There are a little bit different dynamics, I would say, you know, inflation has softened up in Canada a fair bit, but there's a little bit more unemployment up here. So some a little bit of nuance there. And, you know, I think the probably the biggest difference is just Tim's is doing a great job outperforming the market even in a difficult market. And that's been the case for a while now. And it's certainly been the case in the year to date and in the second quarter.

Josh Kobza: Yeah, Greg, I'll take this one. You know, there has been some consumer softness in Canada. There are a little bit different dynamics. I would say, you know, inflation has softened up in Canada a fair bit, but there's a little bit more unemployment up here. So some a little bit of nuance there. And I think probably the biggest difference is just Tim's is doing a great job outperforming the market even in a difficult market.

Gregory Francfort: Great, thanks so much. Thank you. Our next question comes from Gregory Francfort from Dunningham Securities. Gregory, your line is now open. Hey, thanks guys for the questions.

Speaker Change: In terms of value offerings, two thoughts on this one. One, I think that Tim's business, what it does so well is provide incredible everyday value.

Josh Kobza: And that's been the case for a while now. And it's certainly been the case in the year to date and in the second quarter. In terms of value offerings, you know, two thoughts on this one. One, I think that Tim's business, what it does so well, is provide incredible everyday value. Review. You see that in our menu prices, but we also hear it back from guests and any of our brand surveys were number one in value for money.

Gregory Francfort: Our next question comes from Gregory Francfort from Dunningham Securities. Gregory, your line is now open.

Speaker Change: You see that in our menu prices, but we also hear it back from guests, and any of our brand surveys were number one in value for money. So I think we've been really disciplined in our everyday pricing, which has been paying really good dividends.

Speaker Change: We also do have value mechanisms from time to time up here. Right now we have a $3 breakfast sandwich with the purchase of any coffee. I had that this morning for breakfast, which was great. That's all been really effective and is great for the business and guests are really enjoying that. I think we're pretty well positioned up here.

Josh Kobza: So I think we've been really disciplined in our everyday pricing, which has been paying really good dividends. So we also do have value mechanisms from time to time up here. Right now we have a $3 breakfast sandwich with the purchase of any coffee. I had that this morning for breakfast, which was great. And you know, and that's all then really effective. And it's great for for the business and guests are really enjoying that.

Speaker Change: and and you kind of see that in the results. And the one thing I would add to that is that what's generating growth at Tim's in Canada is just relentless.

Josh Kobza: So I think we're pretty well positioned up here and you can't see that in the results. And I do one thing I would add to that is that what's generating growth at Tim's in Canada is just relentless improvement across the business. What builds a great restaurant business is continually improving your food, improving your service. Making your restaurants look great, having a great relationship with with terrific motivated franchisees, focusing on on success for them and for us, and we're seeing that with Tim's and it is frankly the template for success everywhere for us.

Josh: Improvement across the business. What builds a great restaurant business is

Josh: I'm continually improving your food, improving your service, making your restaurants look great.

Josh: Having a great relationship with terrific, motivated franchisees, focusing on success for them and for us.

Josh: And we're seeing that with TIMSS. And it is frankly, the template for success everywhere for us. If we continue to give better service,

Josh: Deliver better food. You know, the price part is an element of that.

Josh Kobza: If we continue to give better service, deliver better food, you know, the price part is a is an element of that. But it's not the only thing and frankly, it's less important than most of the other things, which is continually giving a better experience to your customers. And that's the lesson from the success that Tim's is having in Canada, and they're out performance. Versus, you know, the industry and frankly, they're great absolute performance given, you know, given the overall economy in Canada right now. And it's the model for how we grow burger king and all of our businesses.

Josh: But it's not the only thing. And frankly, it's less important than most of the other things, which is continually giving a better experience.

Joshua Kobza: Yeah, Greg, I'll take this one. You know, there has been some consumer softness in Canada, but there are a little bit different dynamics. I would say inflation has softened up in Canada a fair bit, but there's a little bit more unemployment up here. So there is a little bit of nuance there. And, you know, I think the probably the biggest difference is just Tim's is doing a great job outperforming the market, even in a difficult market.

Joshua Kobza: And that's been the case for a while now, and it certainly has been the case in the year to date and in the second quarter. In terms of value offerings, you know, two thoughts on this one. One, I think that Tim's business, what it does so well, is provide incredible everyday value. You see that in our menu prices, but we also hear it back from guests. And all of our brand surveys were number one in value for money.

Tim's: to your customers. And that's the lesson from the success that Tim's is having in Canada, and their outperformance.

Josh: versus, you know, the industry and frankly, their great absolute performance given, you know, given the overall economy in Canada right now. And it's the model for how we grow Burger King and all of our businesses.

Speaker Change: Thank you both.

Speaker Change: Thank you. Our last question comes from Christine Cho from Goldman Sachs. Christine, your line is now open.

Joshua Kobza: So I think we've been really disciplined in our everyday pricing, which has been paying really good dividends. Though, you know, we also do have value mechanisms from time to time up here. Right now, we have a $3 breakfast sandwich with the purchase of any coffee. I had that this morning for breakfast, which is great.

Operator: Thank you, Booth. Thank you.

Christine Cho: Thank you. So I think the previous question provides a good segue. But I think, how do you think about kind of the value messaging in other international markets? And, and how do you make sure that these kind of local strategies align with the brand equity and core strategies that you have here? Any colour will be great. Thank you.

Christine Chow: Our last question comes from Christine Chow from Goldman Sach. Christine, your life now open. Thank you.

Christine Chow: So I think the previous question provides a good segue, but I think how do you think about kind of the value messaging in other international markets and and how do you make sure that these kind of local strategies align with the brand equity and core strategies that you have here. Any color will be great. Thank you. Christine, it's a great question. And I think I guess that's something that we talked about a lot of just value a great value proposition is one important part of the business, and it is important all over.

Joshua Kobza: And you know, that's all been really effective and is great for the business, and guests are really enjoying it. So I think we're pretty well positioned up here. And you kind of see that in the results. And the one thing I would add to that is that what's

Joshua Kobza: I would add to that that what's generating growth at Tim's in Canada is just relentless improvement across the business. What builds a great restaurant business is that I'm continually improving your food, improving your service, making your restaurants look great. Having a great relationship with terrific motivated franchisees, focusing on success for them and for us. And we're seeing that with Tim's, and it is, frankly, the template for success everywhere for us.

Joshua Kobza: If we continue to give better service, Deliver Better Food, you know, the price part is an element of that, um, but it's not the only thing, and, frankly, it's less important than most of the other things, which is continually giving a better experience to your customers. And that's the lesson from the success that Timm's is having in Canada, and their outperformance versus the industry and, frankly, their great absolute performance given, And it's the model for how we grow Burger King and all of our businesses.

Speaker Change: Hey Christine, this is Josh. It's a great question and I think, I guess that's something...

Christine: that we talked about a lot. Value, a great value proposition is one important part of the business, and it is important all over. And you've seen us in a lot of our international markets as well, bring through compelling value. That can mean a little bit, something a little bit different in each market. What exactly we focus on, whether it's a meal or, you know, a two burger for a fixed price, that can be a little bit local. But wherever we've had really great value for our customers, everyday value and promotions, those are the things that I think are really resonating with guests in the US and Canada and in a large number of our international markets. So it's something that we're focused on, and all of our international teams try to work with the local master franchisees to make sure that we've got

Christine Chow: And you've seen us in a lot of our international markets as well, bring through compelling value. That can mean a little bit something a little bit different in each market. What exactly we focus on whether it's a meal or a two burger for fixed price. That can be a little bit local, but wherever we've had really great value for our customers every day value and promotions, those are the things that I think are really resonating with guests in the US and Canada and in a large number of our international markets.

Joshua Kobza: Thank you both. Thank you. Our last question comes from Christine Cho from Goldman Sachs. Christine.

Christine Chow: We're focused on and all of our international teams try to work with the local master franchisees to make sure that we've got the right balance of that in each of our markets. Markets. Thank you. We have no further questions on the line.

Christine Cho: Thank you. Our last question comes from Christine Cho from Goldman Sachs. Christine, your line is now open. Thank you.

Joshua Kobza: Yeah, Christine, and Josh, it's a great question. And I think that's something you know we talked about a lot of value: a great value proposition is one important part of the business. And it is important all over. And you've seen us in a lot of our international markets as well, bringing compelling value, and that can mean a little bit something a little bit different in each market. What exactly we focus on, whether it's a meal or, you know, a two burger for a fixed price, that can be a little bit local, but wherever we've had really great value for our customers, everyday value, and promotions, those are the things that I think are really responding with guests in the US and Canada and in a large number of our international markets.

Joshua Kobza: So it's something that we're focused on, and all of our international teams try to work with the local master franchisees to make sure that we've got the right balance of that in each of our markets.

Christine: Thank you.

Christine: We have no further questions on the line. I will now pass back to Josh for closing remarks.

Operator: Got it. Thanks. I appreciate that.

Joshua Kobza: We have no further questions on the line. I will now pass back to Josh for closing remarks. Great. Well, thanks, everybody, for joining us today. We really appreciate it.

Joshua Kobza: Great. Well, thanks, everybody, for joining us today. We really appreciate the time and the great questions. We look forward to chatting again. We'll update you here in a few months with our Q3 earnings. Have a great day.

Unknown Shareholder: Our next question comes from John Powell from Citi. John, your line is now open.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining us. You may now disconnect the lines.

Unknown Shareholder: Great, thanks for taking the question. Just a follow-up on the China business, maybe not the Tim Horton side, but the PLK, as well as the Burger King business. I'm just curious, you know, with the investment in PLK, should we expect any strategic shifts in that market specifically around that brand? And then can you give us an update on the Burger King China business? And I know that that's been a source of, uh, slower growth for the overall company. Have you made any progress in, you know, shoring up growth going forward from a unit growth perspective over there? Hey, John, it's Josh.

Joshua Kobza: Great. Well, thank you everybody for joining us today. We really appreciate the time and the great questions. We look forward to

Joshua Kobza: Hey, John, it's Josh. Thanks for the questions. I'll take each of those.

Joshua Kobza: So in Popeyes, you know, we were really encouraged by how the brand was received initially. And I would say that the shift is just for us to take it on and make sure it has the capital and the support it needs to realize its full potential. So I'd say not a big, like brand positioning, or strategy shift there. I think we'll just be working on building up the team and then building up the development pipeline to make sure that we start growing that at the pace we think makes sense. So that's the game plan there. Well, you know, and we're planning to do that ourselves for a while.

Josh: Great. Well, thanks everybody for joining us today. We really appreciate the time and the great questions. We look forward to chatting again. We'll update you here in a few months with our Q3 earnings. Have a great day.

Operator: Our next question comes from Eric Gonzalez from KeyBank Capital Markets. Eric, your line is now open.

Unknown Shareholder: Hi, good morning. This is Chris Onfer, Eric.

Josh Kobza: Now I'll pass back to Josh for closing remarks.

Unknown Shareholder: So maybe following up on the prior franchisee profitability question, can you provide an update, at least at a high level, on some of the puts and takes around BK domestic franchisee profitability today? I know you'll provide specific details once the year closes, but any updates on progress against last year's $205K average four-wall EBITDA in the context of some of the consumer and operating dynamics today? Including a focus on value, commodity, and labor cost trends, or anything else that's relevant. Thank you.

Sami Siddiqui: Hey, Chris, I can take the first or second part of that question regarding sort of some of the costs we're seeing in the business. You've obviously seen the reported sales that we're seeing in the Burger King business and really roughly flat for the quarter on the top line. As you think of sort of some of the commodity impacts, we haven't seen a ton of impact in terms of commodity inflation from beef, which was widely reported on, I think, earlier this year.

Sami Siddiqui: We do expect in the second half of the year to see some beef inflation. And so I think as you think about the Burger King commodity basket for the full year, we'll see low single-digit commodity inflation in that range, primarily driven by beef. There are some other items that are also impacting that. And then on the labor side, I think nothing dissimilar from what we're seeing across the rest of the industry, also with low single-digit inflation on the labor side. So those are probably the cost elements. I don't know, Josh, if you have anything to add to that. Now, as you mentioned, we'll share the update at the end of the year.

Operator: Great, thanks so much. Thank you. Our next question comes from Gregory Francfort from Dunningham Securities. Gregory, your line is now open. Hey, thanks guys for the questions.

Josh Kobza: Great.

Operator: Our next question comes from Gregory Francfort from Dunningham Securities. Gregory, your line is now open.

Josh Kobza: Well, thanks everybody for joining us today. We really appreciate the time and the great questions. We look forward to trying again. We'll update you here in a few months with our Q3 earnings. Have a great day.

Joshua Kobza: And that's been the case for a while now, and it's certainly been the case in the year to date and in the second quarter. In terms of value offerings, you know, two thoughts on this one. One, I think that Tim's business, what it does so well, is provide incredible everyday value.

Joshua Kobza: You see that in our menu prices, but we also hear it back from guests. And all of our brand surveys were number one in value for money. So I think we've been really disciplined in our everyday pricing, which has been paying really good dividends. Though, you know, we also do have value mechanisms from time to time up here. Right now, we have a $3 breakfast sandwich with the purchase of any coffee. I had that this morning for breakfast, which is great.

Speaker Change: www.larryweaver.com

Joshua Kobza: And you know, and that's all been really effective and is great for the business, and guests are really enjoying it. So I think we're pretty well positioned up here. And you kind of see that in the results. And the one thing I would add to that is that

Patrick Doyle: One thing I would add to that is that what's generating growth at Tim's in Canada is just relentless improvement across the business. What builds a great restaurant business is continually improving your food, improving your service, making your restaurants look great, and having a great relationship with terrific motivated franchisees, focusing on success for them and for us. And we're seeing that with Tim's, and it is, frankly, the template for success everywhere for us.

Patrick Doyle: If we continue to give better service, Deliver Better Food, you know, the price part is an element of that, um, but it's not the only thing, and, frankly, it's less important than most of the other things, which are continually giving a better experience to your customers. And that's the lesson from the success that Tim's is having in Canada and their outperformance versus, you know, the industry. And frankly, their great absolute performance given, you know, given the overall economy in Canada right now, and it's the model for how we grow Burger King and all of our businesses. Thank you both. Thank you. Our last question comes from Christine Cho from Goldman Sachs. Christine

Operator: Thank you. Our last question comes from Christine Cho from Goldman Sachs. Christine, your line is now open. Thank you.

Joshua Kobza: Christine, Josh, it's a great question. And I think that's something you know that we talked about a lot of just the value. A great value proposition is one important part of the business. And it is important all over. And you've seen us in a lot of our international markets as well, bringing compelling value. And that can mean a little bit of something a little bit different in each market. What exactly we focus on, whether it's a meal or, you know, two burgers for a fixed price, that can be a little bit local, but wherever we've had really great value for our customers, everyday value, and promotions.

Joshua Kobza: Those are the things that I think are really satisfying guests in the US and Canada and in a large number of our international markets. So it's something that we're focused on. And all of our international teams try to work with the local master franchisees to make sure that we've got the right balance of that in each of our markets.

Operator: We have no further questions on the line. I will now pass back to Josh for his closing remarks.

Speaker Change: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect the lines.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect the lines.

Q2 2024 Restaurant Brands International Inc Earnings Call

Request a DemoDemo

QSR

Restaurant Brands International

Earnings