Q1 2025 Restaurant Brands International Inc Earnings Call
Good morning and welcome to the Restaurant Brands International First quarter, 2025 earnings conference call. All participants will be in listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. You will hear a tone to confirm that you are in the queue.
Speaker Change: To exit the question here, you may press star, then T. All callers will be limited to one question. Please note, this event is being recorded. I'd now like to turn the conference over to Kendall Peck, RBI's Head of Investor Relations. Please go ahead.
Kendall Peck: Thank you operator. Good morning everyone and welcome to Restaurant Brands International's earnings call for the first quarter and did March 31st 2025. Joining me on the call today are Restaurant Brands International's Executive Chairman, Patrick Doyle, CEO Josh Kobza, and CFO , Sami Siddiqui.
Kendall Peck: Following remarks from Josh, Sami, and Patrick, we will open the call to questions.
Kendall Peck: Today's discussion may include forward-looking statements which are subject to risks detailed in the press release issued this morning and in our SEC filings. We will also reference non-GAAP financial measures, reconciliations of which are available in the press release and trending schedules available on our website.
Kendall Peck: As a reminder, following our acquisition of Carol's Restaurant Group, which closed on May 16, 2024, and our acquisition of Popeyes Trina, which closed on June 28, 2024, we introduced a sixth reportable segment, Restaurant Holdings, which comprises the Popeyes Trina business and the Burger King Carol's restaurants.
Kendall Peck: The Consolidated Growth Metrics discussed on this call, including Organic Adjusted Operating Income Growth and Organic Adjusted EPS Growth, Exclude Results from the Restaurant Holding
Kendall Peck: In addition, on February 14th, 2025, we acquired substantially all the remaining equity interests in Burger King China from our former joint venture partners [inaudible]
Kendall Peck: Commencing with our first quarter 2025 results, BK China has been classified as held for sale and reported as discontinued operations in our financial statements as we are actively working to identify a new control and shareholder. That said, BK China KPIs continue to be included in our international segment KPIs.
Kendall Peck: A breakdown of BK China's KPIs and its impact on our 2024 financial statements can be found in the trending schedules available on our website. And now I'll turn the call over to Josh.
Good morning everyone and thank you for joining us [inaudible]
Speaker Change: Through the first few months of 2025, we've been navigating a highly dynamic macro backdrop, one that's evolving differently across each of our key markets.
Speaker Change: As a global franchise or offering convenience and everyday value for the S, we're certainly better positioned than many others to navigate this evolving environment, but we're not immune and our Q1 results reflect that.
Speaker Change: First quarter, consolidated comparable sales were 0.1%, or just over 1%, excluding the impact from and that restaurant growth was 3.3%.
Speaker Change: This translated into system-wide sales growth of 2.8 percent, an organic adjusted operating income growth of 2.6 percent.
Speaker Change: We anticipated that Q1 would be our softest quarter of the year and believe that some of the macro noise may have driven further softness.
Speaker Change: That said, we continue to perform reasonably well compared to many of our global peers.
Speaker Change: Reflecting the underlying strength of our brands and the quality of the plans we are executing to improve on the fundamentals that our guests care about most.
Speaker Change: We know relative performance alone isn't enough and doesn't pay the bills for us or franchisees though, which is why we're focused on delivering improved absolute result through the balance of the year.
Speaker Change: In any environment, our guests are focused on quality, service, and convenience at a fair price.
Speaker Change: And our teams are focused on exactly that, improving the value proposition for our guests at each of our brands and making that experience better each time they come in.
Speaker Change: Whether that is newly remodeled restaurants of Burger King and Popeyes, or improved service standards at Tim Hortons in the PM Day Park, we're spending our time on what matters most.
Speaker Change: That's why, despite the slower start of the year, we were encouraged to see improved sales momentum in April . Combined with our continued discipline on costs, which Sami will address later, we're confident we'll deliver at least 8% organic up adjusted operating income growth in 2025.
Speaker Change: With that, let's turn to our results, starting with Tim Hortons in Canada.
Speaker Change: Tim Hortons, Canada, experienced relatively flat, comfortable sales of 0.1%, or approximately 1.2% after adjusting calip day, while lapping one of our strongest first quarter nominal sales results ever last
Speaker Change: While our results were masked this quarter by the tougher comparison, the lead day impact, and macro pressures, it's clear the underlying plan is working.
Speaker Change: The Tim's team executed thoughtful calendar initiatives like the introduction of our 100% Canadian Freshly Cracked Rambled Eggs, the $1 doughnut with a coffee promotion, and the return of physical roll-up room cups, a much-loved Canadian tradition.
Speaker Change: Importantly, although Canadian consumer confidence remains challenged, trends have improved in April as year-over-year comparisons normalize and we build momentum with a strong marketing calendar and can continue to operational improvements.
Speaker Change: Looking ahead, we will continue providing Canadians great everyday pricing for their favorite Tim's products while innovating across state parts and categories.
Speaker Change: For example, in breakfast, we recently launched our scrambled eggs, loaded breakfast box, in collaboration with Ryan Reynolds.
Speaker Change: In the PM, we expect to expand share through new loaded platform and flatbed bread pizza flavors, like our hat trick pizza, as well as innovation and sandwiches inside.
Speaker Change: Axel and Team just wrapped up Spring Regionals in Canada, and there's a ton of enthusiasm from restaurant owners around the opportunity to continue growing in the PM Depart through strong menu initiatives and execution.
Speaker Change: We also continue to enhance our beverage portfolio, particularly cold and espresso-based beverages to complement our leading market share position in our hot brew coffee.
Speaker Change: We're excited about our summer beverage lineup, including the introduction of frozen quencher's in April .
Speaker Change: Later this year, we'll begin rolling out new espresso machines to further elevate our espresso quality and credibility.
Speaker Change: Operational Excellence remains a cornerstone of Tim's success, and our restaurant owners continue to demonstrate this with average morning drive-through times improving year-over-year for nine consecutive quarters, and reaching one of the highest guest satisfaction levels of all time in the first quarter.
Speaker Change: Finally, we're accelerating our development efforts in Canada. We're on track to return to positive net unit growth in 2025, with a focus on under penetrated regions such as Western Canada, where we have approximately one restaurant per 13,000 Canadians versus the national average of one per 10,000.
Speaker Change: In summary, despite a noisy start to the year, Tim Hortons continues to build on its strong foundation and its underlying plan is clearly working.
Speaker Change: With its number one brand love, affordable everyday pricing, engaging marketing and relentless commitment to operational excellence, we are confident the brand will deliver solid growth in the quarters in years ahead.
Speaker Change: Shifting down to international, we're pleased with our relative performance this quarter, delivering 2.6% comfortable sales, or roughly 3.7% excluding the headwind from Leap Day, and 8.6% system-wide sales growth.
Speaker Change: We saw solid growth in many of our largest markets, including the UK, Germany, Brazil, Japan, and Australia.
These markets share a few common traits.
Speaker Change: Compelling everyday value, exciting menu innovation, modern restaurant image, strong digital capabilities, and a focus on restaurant level execution.
Speaker Change: In the UK, Burger King continued to take share through growing delivery, expanded core value platforms like the 499 pound Kingbox, and premium innovation with products like the Memphis BBQ King Double.
Speaker Change: I have the opportunity to visit several key international markets this quarter, including France and Spain, two of our largest businesses. I'm always impressed when I spend time at the Burger King France and Spain teams. They have beautiful, modern and well-run restaurants and demonstrate the power and importance of having well-capitalized local partners.
Speaker Change: Both have done a great job navigating more difficult consumer backdrops in recent quarters, and have set their businesses up for continued success.
Speaker Change: Thiago, Sammy, and I also spent time in India, one of our most important growth markets.
Speaker Change: Burger King, India recently crossed the 500 restaurant milestone just 10 years after market entry.
Speaker Change: We also spent time with the Popeye steam in India, which is earlier in its growth journey, but it's benefiting from a wonderful partner in Juvelin, which has deep local knowledge and a committed long-term mindset.
Speaker Change: In China, our teams have acted quickly since taking over the Burger King business in mid February , solidifying a strong local leadership team and implementing early sales driving initiatives.
Speaker Change: Samuel and I were in Shanghai in March, and were encouraged by early signs of progress, including an improvement in comparable sales.
Speaker Change: We expect to close a number of unprofitable restaurants over the next 12 months in order to have a more sustainable base for restarting growth.
Speaker Change: While we don't have a final count yet, the average sales lines of these restaurants are relatively low, less than $300,000 US dollars.
which means the impact a system might sales will be limited.
Speaker Change: Importantly, we view this portfolio clean up as a critical and a necessary step to reposition the business for long-term success.
Speaker Change: Progress on operations. We just finished franchisee road shows and it's clear there is strong alignment across the system around raising standards.
Speaker Change: We're continuing to take steps to transition restaurants into the hands of more engaged operators and we're seeing those efforts translate into improvements across key metrics not just at underperforming stores, but across the system.
Speaker Change: These improvements coupled with an ongoing effort to expand hours of operation are driving better guest experiences and contributing to the outperformance we've seen relative to the industry.
Speaker Change: Importantly, as we sustained this momentum over time, we believe it will result in stronger unit economics for our franchisees.
Speaker Change: Modernizing our restaurant base will be another important driver of franchisee profitability, we expect to complete about 400, Remodels this year, including many with our new civil image and average sales uplift sales uplifts are holding in the mid teens net of control.
Speaker Change: Between Remodels and the net impact of openings and non modern image closures. We are on track to reach over 85% modern image by the end of 2028.
Speaker Change: Our carol's Refranchising efforts are also underway, we're in the process of placing restaurants with more engaged smaller owner operators, whether that's high performing existing franchisees strong new entrants or internal talent within the system ready to take on ownership.
Speaker Change: The team and our franchisees remained focus on navigating the current environment with discipline and doing all the right things to build a healthier more competitive Burger King system.
Speaker Change: Turning now to <unk> in the U S and Canada, we saw net restaurant growth of 3% and comparable sales declined 4% or down roughly two 9% adjusted for leap day.
Speaker Change: This followed a five 7% increase in comparable sales in the prior year, which benefited benefited from the brand's first ever Super Bowl AD.
Speaker Change: Results were softer than we would like we just returned from Popeye's convention in Orlando, where Jeff and the team reiterated they're easy to love strategy to build a healthier higher performing system.
Speaker Change: The plan is focused on delivering our world famous fried chicken more consistently to our guests. We will continue to bring exciting innovation like our pickle menu and relevant partnerships like our Don Julio collaboration from February.
Speaker Change: These messages are being supported by a step up in national advertising spend that began in April and will continue for the next three years of performance targets are met.
Speaker Change: Over the medium term our incredible food is going to be increasingly paired with foundational work, we're doing to strengthen the system.
Speaker Change: We know modern well run restaurants deliver much stronger results with remodeled restaurants that achieve an a grade generating 30% higher profitability than the system average that's why we're going to rollout our easy to run kitchen upgrades over the next few years, while we are remodeling our stores to reach a consistent modern image by 2030.
Speaker Change: And we will focus on moving more of our restaurants two in <unk> operations level much like we have at Burger King we are being more intentional about prioritizing operational consistency over new development by prioritizing top operators, who share our focus on operational excellence.
Speaker Change: Our field teams are raising the bar on operations and our company restaurant portfolio has expanded to approximately 100 locations, which we aim to make the example for the entire system.
Speaker Change: Theres a lot of energy in the Popeye's system today, the chicken segment of <unk> has compelling growth dynamics, but as increasingly competitive requiring us to raise the bar again on how we bring popeye's amazing chicken to our guests.
Speaker Change: With a sharper focus on fundamentals better marketing support and a more modern high functioning base of restaurants, we're confident in our ability to perform in the quarters and years ahead.
Speaker Change: Finally, firehouse subs in the U S and Canada grew comparable sales by 0.6% or nearly 2% excluding leap day net restaurants grew five 9% in system wide sales seven 3%.
Speaker Change: We continued to outperform the broader sub sandwich category in Q1 supported by fan favorites like our delicious French dip sub and our recent hot ones collaborations.
Speaker Change: Digital remains a strength for the brand with a digital mix of over 45% the highest of our home market brands and on the development front. We are building on the momentum we created in 2024 with hundreds of new store commitments from both new and existing franchisees.
Speaker Change: It is encouraging to see that energy translate into a growing pipeline and it gives me confidence in another year of improved unit growth in 2025.
Speaker Change: With that I'll turn it over to Sami to walk through our financial results for the quarter semi.
Sami: Thanks, Josh and good morning, everyone.
Sami: Today I'll discuss our Q1 financial results capital structure, and 2025 financial guidance and I'll also provide an update on our Burger King China acquisition.
Sami: But before that I want to address the long term growth algorithm, we introduced last year.
Sami: While we exceeded our 8% plus AOI growth target in 2024, we came in below expectations on NRG. This reflected a more complex operating environment than we had initially anticipated one that has only intensified in 2025 as.
Sami: As a result, we believe it's prudent to reframe, our long term outlook to better reflect today's reality.
Sami: We're maintaining our targets for 3% plus comparable sales and 8% plus organic NOI growth on average through 2028.
Sami: However, we are updating our net restaurant growth expectation in the near term primarily due to Burger King China.
Speaker Change: As Josh mentioned since acquiring China in February we've seen encouraging early results the sales at BK, China has improved under our refocused marketing plan and an energized local management team.
Speaker Change: That said the portfolio need some cleanup to set the business up for long term for success long term in the hands of a new partner.
Speaker Change: Because of this transition at Burger King China, We expect total reported 2025 NRG growth to be slightly down from last year in the plus or minus 3% unit growth range down a bit from the mid 3% growth we reported in 2024.
Speaker Change: Once this transition is behind US, we're confident PK, China will return to positive growth, allowing us to ramp back of 5% global NRG growth towards the end of our algorithm period, which will equate to around 800, net new restaurants per year.
Speaker Change: When we think about the building blocks that have 1800, we continue to believe in the path that we laid out last February.
Speaker Change: While the makeup of our growth in North America has shifted slightly we remain confident that our home market businesses will reach roughly 400 net restaurants per year, driven by positive net restaurant growth at tims in both Canada and the U S.
Speaker Change: Stabilizing and returning to modest growth at Burger King U S.
Speaker Change: Steady development at Popeye's, North America, and accelerating momentum firehouse.
Speaker Change: Internationally, we're targeting about 1400 net units per year.
Speaker Change: There may be puts and takes over time, but based on where we sit today. We continue to expect roughly 600 net units from EMEA, including higher RF markets like the UK, France and Italy.
Speaker Change: APAC outside of China will contribute around 300, with India, Korea, Japan, and Australia as important drivers and lack is expected to deliver roughly 200 per year with Mexico, and Brazil are strong contributors.
Speaker Change: For perspective. These levels are generally in line to slightly ahead of what we delivered over the past few years in each region, so very achievable, especially as we add new brand market combinations for Popeye firehouse and tims around the world.
Speaker Change: The remaining 300 units will come from our brands in China with Popeye's accelerating BK, China, returning to its growth potential in the outer years, and Tim's, making a positive contribution as well.
Speaker Change: China is the primary swing factor and if we're firing on all cylinders, meaning all three businesses around the right path. We believe 300 net new units per year.
Speaker Change: The surface of our potential.
Speaker Change: Now shifting to Q1 results.
Speaker Change: As I mentioned on our year end call. We expected the first quarter would be the lowest in terms of absolute comparable sales.
Speaker Change: And EPS, while our performance came in softer than anticipated we have been encouraged by a stronger start to Q2 and remain confident we will deliver improved top and bottom line results for the balance of the year.
Speaker Change: In Q1 comparable sales were relatively flat global system wide sales grew two 8% year over year and organic NOI grew two 6%.
Speaker Change: There are a couple of items that impacted our year over year results, which I'll walk through now.
Speaker Change: First we estimate calendar timing, including leap day, and tougher weather in North America reduce our AOI by about $10 million in the quarter or just over 150 basis points.
Speaker Change: And second as we are actively working to find a new partner for the Burger King China business, we are treating it as held for sale, which with results reported in discontinued operations.
Speaker Change: Our international segment will therefore, not recognize revenue from BK, China until our new partners in place in.
Speaker Change: In Q1, this resulted in a $9 million year over year headwind to revenues and AOI.
Speaker Change: And for the full year, assuming no change in ownership, we expect a $37 million impact to revenue and a $19 million impact to NOI on a year over year basis, given that we recorded approximately $18 million of bad debt expenses in 2024.
Speaker Change: We offset these headwinds in Q1 through system wide sales growth $10 million of organic gross profit dollar growth in our 10th supply chain business and continued cost discipline, including a $7 million reduction in segment G&A.
Speaker Change: I'd also note that we recorded around $7 5 million in net bad debt expenses in line with the prior year period, primarily related to international royalties and cost of sales within the supply chain business tied to coffee sales to certain international partners.
Speaker Change: Now turning to EPS.
Speaker Change: Adjusted EPS increased to 75 per share from <unk> 73 per share last year, representing nominal growth of three 3% and organic growth of nine 9%, excluding our <unk> and <unk> FX impact.
Speaker Change: The increase was primarily due to a decrease in adjusted net interest expense of approximately $11 million year over year, reflecting the benefit from our Upsized cross currency swaps, our 2020 for refinancings and our interest rate swaps.
Speaker Change: We continue to expect that 2025, adjusted net interest expense will be in the $500 million to $520 million range, assuming an average silver rate of four 1% flowing through approximately 15% of our debt.
Speaker Change: Our adjusted effective tax rate was approximately 16, 5% in the quarter and included a onetime benefit of over two points from discrete non cash tax items for the full year 2025, we continue to expect our tax rate to be in the 18% to 19% range.
Speaker Change: Now turning to free cash flow and our capital structure.
Speaker Change: We generated $89 million of free cash flow inclusive of approximately $35 million in cash benefits from our hedges.
Speaker Change: Q1 is typically our smallest cash flow quarter, largely due to working capital seasonality, including the timing of advertising payment gift card redemptions and cash tax payments.
Speaker Change: This quarter, our free cash flow was further impacted by $77 million of cash tax payments largely related to new iPhone Canadian interest tax deductibility rules.
Speaker Change: During the quarter, we spent approximately $10 million on reclaimed the claim related investments, while returning $262 million of capital to shareholders through our dividend.
Speaker Change: In February we acquired we acquired the remaining equity interest in Burger King China for roughly $150 million.
Speaker Change: We also capitalize the business with approximately $105 million to fund operations hire an experienced local management team and enhanced marketing efforts as we work closely with Morgan Stanley to find a new local partner.
Speaker Change: Overall, we ended Q1 with $2 1 billion of liquidity, including approximately $900 million of cash and a leverage ratio of four seven times.
Speaker Change: Looking ahead, we remain focused on investing in our brands and businesses, while continuing to deleverage.
Speaker Change: I'll now wrap up with four additional topics, our long term capital intensity FX exposure tariff impact and our G&A guidance.
Speaker Change: First we've had several questions about our capital intensity, so I'd like to offer some perspective.
We expect total capex tenant inducement and remodel incentives, what we referred to our Capex and cash inducements to be in the $400 million to $450 million range for 2025, and 2026 up from over $330 million in 2024.
Speaker Change: From 2027% to 2028, we'd expect this amount to step down to the $350 million to $400 million range as we find long term partners for <unk>, China, and firehouse, Brazil, and we re franchise carol's restaurants.
Speaker Change: After 2028 with reclaim the plan complete.
Speaker Change: With reclaim the claim complete and carol's restaurants, largely re franchise, we expect to settle at around $300 million.
Speaker Change: Our capex and cash inducement this should generate a nice tailwind to our free cash flow growth as we reduced capital intensity and realized returns from the investments we're making today.
Speaker Change: Second given the recent fluctuations in FX rates I'd like to remind you that for every one cent change in the USD CAD and USD Euro, we see a roughly $8 million and $4 million annual.
Speaker Change: Impact respectively.
Speaker Change: Last quarter, we told you we expected a $45 million FX headwind in 2025, we're now expecting that to improve to a headwind of $15 million based on current rates.
Speaker Change: Third we wanted to provide a preliminary view on the potential impact from tariffs.
Speaker Change: The vast majority of our Cogs are localized and we are working closely with our suppliers and franchisees to localize for those inputs that are not.
Speaker Change: Based on what we know today, if our efforts Pan out we will see a cogs impact of around 100 basis points or less in most cases across our home market franchise businesses and our company owned restaurants. This is a point in time estimate and we'll continue to reassess as needed.
Speaker Change: Finally, as CFO one of my priorities has been driving operating leverage across our P&L, while continuing to invest in our business to build sustainable sales.
Speaker Change: As we've integrated carols redeployed capital behind new growth initiatives and assess the current operating environment. We've taken a closer look at our resources and identified opportunities to run our business more efficiently.
Speaker Change: As a result, we now expect 2025 segment G&A, excluding <unk> to be in the $600 million to $620 million range down from the $650 to $670 million range previously.
Speaker Change: We think this is a healthy baseline that allows us to continue investing in our people and strategic plans, while driving operating leverage and delivering 8% plus organic NOI growth in 2025 and beyond.
Patrick: And with that I'll hand, it over to Patrick.
Patrick: Thanks Sami.
Patrick: We can't control the macro environment, but we can control our complexity.
Patrick: We're operating in a moment of peak complexity, but our business will get simpler from here what does that mean.
Patrick: First we've started the process of Refranchising carols to internal candidates from within carols, two existing strong franchisees and to great external franchisees, we will only put these restaurants in the hands of people, who we believe will run them very well, while it will take.
Patrick: A number of years to complete the process you will start to see our owned restaurant count decline this year.
Patrick: We took on BK, China, we've made great progress in the three months since we bought it and we've now hired Morgan Stanley to help us find a great new partner.
Patrick: Third, we're making real progress on BK in the U S. We've moved on from some partners who worked the right long term answers our operations are improving and we're on track to have the vast majority of our restaurants be modern image by the end of 2028.
Patrick: It has taken meaningful investments some tough decisions and it won't always be a straight line of progress, but we are on track.
Patrick: Finally, the net effect of what will be decreasing complexity is decreasing capital commitments from us over the coming years and a more stable cost structure that drives operating leverage as Sami just spelled out.
Speaker Change: In the end success is defined by franchisees generating great returns from committing their time and capital to our brands and I'm confident our franchisees' success will happen when they consistently make great food deliver great service and an attractive clean restaurant all at a good value.
Speaker Change: Tim Horton said its restaurant owners in Canada are a great example of this winning formula.
Speaker Change: All the complexity we've taken on has been about setting this up everywhere to be able to do just that where we felt like there wasn't a convincing path to get that done we've made changes and committed capital when needed.
Speaker Change: As our investors. We appreciate that we've asked for some patience as we make these investments.
Speaker Change: And the return on those investments is coming.
Speaker Change: It came in 2024 by generating adjusted operating income growth of over 8% and we believe it will continue this year and into the future as we have set ourselves up to continue delivering adjusted operating income growth of 8% or better.
Speaker Change: We've been managing through the hard stuff to unlock a much stronger more resilient business in the future.
Speaker Change: And when I look across our organization I see the right people working on the right priorities for all the right reasons.
Speaker Change: Im excited for what's ahead and grateful to our franchisees and teams who are consistently providing better experiences to our guests every day.
Speaker Change: With that let's take your questions.
Speaker Change: Thanks Kim.
Speaker Change: If you'd like to ask a question. Please press star followed by one on your telephone keypad now.
Speaker Change: If you change your mind, Please press star for my team.
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Speaker Change: Please note all questions will be limited to one question at a time.
Dennis Geiger: Our first question comes from Dennis Geiger from UBS. Your line is now open.
Speaker Change: Good morning, guys. Thank you wondering if you could talk a little bit more about what youre seeing with Tim Hortons in Canada, how much do you think youre being impacted by the kind of the macro environment right now and maybe expectations for the brand's resiliency in the market if the challenging backdrop persists I don't know if there's anything to kind of share on the value.
Speaker Change: <unk> held the back to basic strategy that will help you take share or just overall remained resilient in the market. Thank you.
Speaker Change: Good morning, Dennis It's Josh Thanks for the question I think you hit on a lot of great points.
Speaker Change: For me it really does go back to the back to basics plan that we've been executing for I think five years or more now and I think excellent team are doing an incredible job across all the fundamentals and that's why you've seen Tim's in Canada performed so well over the last few years and it's why we're so confident that it's going to continue performing well.
Speaker Change: The coming quarters and years.
Speaker Change: In Q1.
Speaker Change: We had it more of an inline quarter with the other big.
Speaker Change: <unk> in the market.
Speaker Change: To your point, we did see a little bit of a dip in consumer confidence. If you look at the Canadian consumer confidence index, but importantly, we've seen that come back in the second quarter to date, so far you've seen a bit of an improvement in consumer confidence and I also mentioned that Tim sales had come back really strong we've got some awesome things went on in the business you just saw us launch.
Speaker Change: Our new loaded scrambled eggs box with Ryan Reynolds, that's doing great and we have a lot of exciting stuff for the rest of the year. So we're feeling really good about the tims business its been doing wonderful and we're very confident that we'll continue to do that in the future.
Speaker Change: Great. Thanks, Josh.
Speaker Change: The next question.
Western: Western is from David Palmer from Evercore ISI. Your line is now open.
David Palmer: Great. Thank you good morning.
Speaker Change: Looking outside.
Western: The U S rest of world.
Western: Market.
Western: Our train formal eating out market in your key markets.
Western: Coming out of the first quarter and as you look out into the year.
Western: How do you view the consumer in your key markets and then separately how are you looking at your market share trends in key markets around the geographies around the world. Thank you so much.
Dave: Good morning, Dave.
Dave: So a few thoughts on the international business and some of the trends there maybe a few kind of stepping back thoughts in international business too.
Dave: I would tell you that we were really pleased with the results in Q1, we had same store sales of positive two 6% and that gets up into the high threes, excluding the impact of leap day. So I think that's a pretty good absolute result, and also a pretty good relative results. When you look at some of the other global brands out there, it's really an incredible business that we have in a very.
Dave: Very diversified business, we're in around 200 brand country combinations.
Dave: And our top 10 markets are about 60% of our international system wide sales. So a lot of the a lot of different dynamics in each of those countries I think when you look at the Burger King brand in international.
Dave: A bit different as some some really great qualities.
Dave: Or that position it to grow so well we've got a strong brand positioning we've got modern restaurants in almost all of our markets.
Dave: We have a lot more digital business as well.
Dave: Because of a lot of those things.
Dave: We have pretty great brand perception and really good food quality perception in those markets, where we balanced some of our kind of our favorites like the whopper with strong localization that each of our teams spring. We also have a different level of execution and guest service I think we're much more consistent across our international markets that allows us to perform.
Dave: Much better and we have some incredible partners I mentioned, a couple of them earlier, but across the globe.
Dave: Places like France, Spain, and so many others, we have some of the best International Master franchisees that you could ask for it.
Dave: If you if we start with just kind of go through a couple of the major markets I'll do it.
Dave: By region and share a few thoughts on what's going well.
Dave: We'll need some work if we start with EMEA, which is by far our biggest market.
Dave: We reformed, particularly well in Germany, and the U K, where we had really good both menu innovation and some good value proposition. So I think we outperformed a bit in those two markets and.
Dave: On the other hand places like France, probably underperformed a little bit.
Speaker Change: But I would say the business in France is incredible I was just there a few weeks ago with Alex Simone and live a better trend.
Speaker Change: Who run the business they are terrific. They built a wonderful business and Theyre doing all the basics right. So I'm very confident we're going to get back to the right place in terms of same store sales performance in France.
Speaker Change: Moving to APAC, a couple of the standout markets, there, where I think we're taking share or places like Australia, Japan and Korea. So those have been some of the biggest performers for US Australia in particular has been very consistent over the last few years.
Speaker Change: Thank Chris Green and the team there are doing awesome. So that's been good and then over the last couple of years than in recent quarters. We've had a softer performance in China. That's a lot of the reason that.
Speaker Change: We stepped in and took over the business here in February and as I mentioned, we're already seeing some progress. So I think we're making progress on the underlying fundamentals kind of fixing the business getting local team in place, but we're actually already seeing some improvement in sales trends there as well and then finally.
Speaker Change: There are two biggest markets in Latin America, or Brazil, and Mexico and in Brazil performance has been really good.
Speaker Change: Team's done a really nice job of increasing our share of voice in media and bringing some pretty compelling value propositions there things like our two for 25 has.
Speaker Change: Promotions have allowed us to perform well on a relative basis, Mexico has been a little bit softer.
Speaker Change: Or would that more to do kind of a market wide softness, though we're doing some good things for.
Speaker Change: For me one of the greatest highlights there that I had a chance to see a month or two ago was our tims business, which is just doing fantastic growing really quickly and taking a lot of market share.
Speaker Change: Stepping back a little bit from Dk, just one last thought on international business performance.
Speaker Change: We talked about when we talk about international as I. Just did we tend to talk about our Burger King business given its our biggest global brand and I think we're going to be talking increasingly about popeye's overtime, we've grown that business tremendously since we acquired it. We're now at about 500 international restaurants, and we think thats going to keep growing at a really rapid clip over the next.
Speaker Change: Few years, we've got some fantastic markets places like the UK increasingly places like Brazil, and Spain. So we've got some great in fast growing markets across the globe and I think that's going to be an increasingly large part of our business mix and our growth mix.
Speaker Change: Over the next few years. So overall I think good performance as we mentioned with the rest of the business.
Speaker Change: We've seen further improvements as we stepped into Q2, so international business has been and continues to do well.
Dave: Thanks, Dave.
Dave: The next question is from Brian Bittner from Oppenheimer. Your line is now.
Brian Bittner: Thanks, Good morning, as it relates to Burger King U S. It was very encouraging to see the first quarter same store sales much better relative performance versus your peers I realize this is the culmination of a lot of work, but is there anything more specific that allowed you to win more clearer.
Dave: In the first quarter.
Speaker Change: How would you frame your outlook for Burger King U S for the rest of the year just given the challenges from low and middle income consumers that we've heard a lot about from your peers.
Speaker Change: Hey, Brian This is Patrick.
Speaker Change: Let me step back a little bit answer around BK, but also broadly around the business.
Speaker Change: Outperformance over the medium and long term is driven by consistently improving your guest experience.
Speaker Change: Not just from promotional activity and.
Speaker Change: Across our business I know, we're making really strong games on execution.
Speaker Change: Tim's has the best run restaurant chain in Canada, and it continues to get better it's why I'm incredibly confident about it but.
Speaker Change: In the case of Burger King.
Speaker Change: In the U S.
Speaker Change: It's winning by running restaurants better.
Speaker Change: And that is often bandwidth with <unk>.
Speaker Change: Through new ownership.
Speaker Change: It's through now rapidly re modeling.
Speaker Change: Our restaurants to a great new image.
Speaker Change: It is it is really through executing the fundamentals and as.
Speaker Change: As you look at we've talked about with the kind of the mid teens lift from Remodels.
Speaker Change: We're starting to see enough of those being done on a consistent basis.
Speaker Change: Essentially one a day getting remodeled in the U S and I think youre starting to see execution flow through into results and I think thats. The big reason, you've seen relative outperformance from BK in the U S over the last year and in the first quarter.
Speaker Change: And you look at international as Josh was just talking about on average, it's really well run and where we don't see a path we make a change like we did with <unk> China.
Speaker Change: We're already making progress so literally the same path ultimately popeye's and firehouse and sold the foundational work is being done and that's why I'm more optimistic about our business than ever and I think thats really the foundational work that you are seeing being done in Burger King in the U.
Speaker Change: The us is whats starting to show up on our relative performance.
Speaker Change: The only thing I would add to I agree very much with what Patrick said I think we've made significant progress on operations and we've started to make progress on Remodels I would say I still think we have a long way to go.
Speaker Change: Still a whole lot of Remodels to get done we've got a lot of restaurants that arent at the modern image and while we have some we have pockets of restaurants that are dramatically improved operations and are doing much better than the average there. We still have the buckets of operations that aren't where we want them to be that we need to turnaround and so I think.
Speaker Change: Those those couple of things will continue to be the undercurrent.
Speaker Change: That can drive relative outperformance.
Speaker Change: But as I mentioned in the prepared remarks, we want to see absolute performance too and we need to get better from where we were in Q1 and I've been happy to see that we have seen improvement in the absolute same store sales coming in into Q2, and we will look to build on that as we get through the rest of this year, we've got some really exciting calendar stuff coming up including one of these.
Speaker Change: Great family promotion that we're going to launch here in the next month or so.
Speaker Change: And some great additional focus on the whopper some refreshes on value. So we've got a very thoughtful and comprehensive calendar approach for the rest of the year that can help us continue to build on that momentum.
Speaker Change: Thanks sure. Thanks, Patrick.
Speaker Change: The next question is from John <unk> from JP Morgan. Your line is now open.
John: Hi, Thank you.
Speaker Change: A couple of questions firstly on the on the capital intensity that you gave through 2009 and thank you. So much for that certainly that's going to be very helpful for the model.
Speaker Change: But let me ask a couple of things I haven't my notes you are expecting to do 3000 Burger King Remodels I think that's the number through the end of 2008 so.
Speaker Change: It's obviously, a pretty big number from 25 to 28 on a per year basis. So can you give us the number of remodels that you're expecting at least in 'twenty five 'twenty six so thats. The first question and the related question.
Speaker Change: In the longer term $300 million of Capex in 2009, and beyond is that just kind of a placeholder number or can you help us think about where some of the major buckets of that $300 million will be especially and I guess I'm going to make the assumption that new company store development isn't a major <unk>.
Speaker Change: Part of that number.
Sam: Hey, Jon its Sam good morning, and thank you for the question and thank you for it.
Speaker Change: Question in the push on the last earnings call.
Speaker Change: I think as we serve reflected we thought it would be helpful to give give everyone a little bit more long term visibility into kind of what the capex looks like so kind of it takes some of the pieces of your question first on on the Burger King Remodels I think as we think about the pace. We think we'll do about 400 Remodels this year.
Speaker Change: In 2025, and we think that number will accelerate in 2026 I think your aggregate number of Remodels I think when you when you do the math I think the way to think about it is that we're at today at around 50% modern image in our system and we wanted to be at 85% modern image by by the end of 2020.
Speaker Change: So there's a couple of puts and takes to that certainly the number of Remodels. We do in a year adds to that the number of new restaurants, we opened.
Speaker Change: Growth in a year, we will add to that and then the closures of older image restaurants will kind of take that percentage up. So I think that's sort of the bridge to getting to around 85% modern image by age by 2028.
Speaker Change: I think it's more like 2000 remodels versus maybe the 3000 Remodels that you had in your notes, but but.
Kendall Peck: But thats the bridge and Kendall and I can can share show that share that with you later.
Kendall Peck: As you think about what the $300 million looks like on a run rate basis. After kind of the guidance period in 2029 and beyond I think for $300 million I think a good chunk of that actually continues to be our Tim Hortons system. So our Tim system, we're on a healthy pace of Remodels, where we're.
Kendall Peck: <unk> caught up with.
Kendall Peck: With our modern image percentage in every year. If you if you kind of think about the way that system works, if it's roughly 4000 restaurants.
Kendall Peck: And you want to be remodeling restaurants every 10 years call it give or take that means youre doing about 400, Remodels every year and those are those are typically a little bit smaller because they are more frequent remodels, but keep in mind. We are we are we have property control and about 80% of those situations. So there is an ongoing capital commitment and we.
Kendall Peck: That's the right investment to make to keep our tims brand strong in the restaurants looking really appealing to gas I think the other piece of the business that we play in as I mentioned is the real estate. So as we think about new units at tims accelerating a little bit there is some capital that goes into.
Kendall Peck: New leases and being on head leases. So I think a good chunk of that $300 million is is it related to Tim as you think about the other bucket in that in that number we do have a larger company ops portfolio than we had in the past.
Kendall Peck: But we do think that this will rationalize over time, though we want to make sure that that that that portfolio stays up to date and we're doing the right repairs and maintenance and then as you think about kind of other buckets, it's sort of a natural other buckets.
Kendall Peck: Exist corporate buckets bucket things like that but we think the right kind of long term run rate for the business is around $300 million and that will start in 2029 and beyond.
Speaker Change: Extremely helpful. Thank you.
Speaker Change: The next question is from Gregory Frank Paul It's from Guggenheim. Your line is now open.
Speaker Change: Sammy Sammy not to throw another one your way but.
Speaker Change: Can you maybe just expand on the cost savings that you mentioned in your prepared remarks.
Speaker Change: When you looked at the organization, what which youre doing strategically from what departments, maybe that that'll hit or what the reorganization looks like thanks.
Speaker Change: Hey, good morning, Greg Yeah, I think as we took a step back and.
Speaker Change: Sort of nine months or so into our into our <unk> acquisition, and we look to integrate carriles as well as pop is China firehouse, Brazil, which we recently launched and then as we kind of look at the current operating environment. It seem like a natural time to evaluate opportunities to run our business more efficiently I think the.
Speaker Change: Areas that kind of this exercise covered was.
Speaker Change: Head count.
Speaker Change: Some technology and services contract things like stock based compensation, taking a fresh look at that and it ultimately drove approximately around $20 million a year over year savings as you think about kind of ending last year around $630 million of G&A and then the midpoint of our guidance range being around $610 million.
Speaker Change: So as you think about that kind of low single digits in terms of a year over year decline I think around $600 million that number it's a healthy baseline level of G&A for our business a good baseline for us to kind of grow off of it but I think if you take a really big step back if you think about <unk>.
Speaker Change: Five or six years ago, our business was running at around $400 million of G&A and they're kind of 2019.
Speaker Change: Timeframe.
Speaker Change: And so as you think about going from $400 million too.
Speaker Change: Two kind of low $600 million.
Speaker Change: 50% increase in G&A over the last five or six years and most of that had been head count I think as you think about that that's a very healthy level of growth I think now with this kind of low $600 million G&A level, we think we're able to invest in the right areas do the right things and ultimately position our business to drive operating leverage.
Speaker Change: Over the long term.
Jamie: Thanks, Jamie.
Speaker Change: Okay.
Speaker Change: The next question is from <unk> <unk>.
Speaker Change: From Bernstein. Your line is now open.
Speaker Change: Thank you.
Speaker Change: And one more for you.
Speaker Change: So can you can you help us understand maybe the comp sales contribution in the past quarter and in the past year, perhaps due to the remodeled Burger King U S and how much are you expecting that to be 475.
Speaker Change: Then if you don't mind, Josh you also mentioned that you are planning to invest in value more for Burger King U S and we heard from one of your competitors.
Speaker Change: But the other promotions are not matching the results generated by the five butter meal deal, which is no longer available to Burger King. So is the $5 to $7 three year performed to the level that you expected and how you're planning to evolve your body offering. Thank you.
Speaker Change: Yeah.
Speaker Change: Just quickly on on the question around sort of the comp sales impact of Remodels at this point, it's going to be relatively small I think as you think about the number of kind of Remodels. We've done we want to do 400. This year I think last year, we did closer to 300, but it.
Speaker Change: Mix, a little a little bit of time for these to settle down and to sort of normalize from a sales impact perspective. So I think most of sort of the sales upside from the remodel impact is sort of to come.
Speaker Change: Down the line and we're still really pleased with the mid teen sales uplift, we're seeing as that starts to flow through the system and you think about remodeling for 500 restaurants per year.
Speaker Change: Kind of the math as to sort of flow through that proportion. So.
Speaker Change: Hopefully we have more to update it as kind of what we do more of our of our Remodels.
Danilo: And Danilo.
Danilo: Maybe if I can maybe I can try to clarify a little bit what I meant on the value side for <unk>.
Danilo: What I intended to say was less that we're going to invest further into value than we have been currently but rather what I think you'll expect you should expect to see from us over the course of the year. It's just continuing to refresh some of those.
Danilo: <unk> value offerings. So we might have new promotions like you saw us move.
Danilo: From the $5 meals to the $5 $7 trios, we'll look to continue to refresh some of those mechanics and bring new ways to talk about it in new offerings to guess so thats more of the plan then.
Danilo: And kind of pushing further in terms of the relative weight in the business.
Speaker Change: Great. Thank you.
Speaker Change: The next question is from Andrew Charles from TD Cowen. Your line is now open.
Andrew Charles: Great. Thank you you talked about returning to 5% portfolio net restaurant growth towards the end of the 24 through 2008 timeframe and so I'm curious if the messages that can be achieved in 2027 or is it more prudent to assume this will take place beginning in 2008 and really I'm just kind of curious about the confidence in returning to this just given requires the <unk>.
Speaker Change: Contribution from BK, China, which hasn't yet found a permanent owner.
Andrew Charles: Hey, good morning, Andrew Thanks for the.
Speaker Change: I think as we think about.
Speaker Change: The path to 5% unit growth.
Andrew Charles: We talked about getting there towards the end of our guidance period.
Andrew Charles: And I think at this point sitting sitting in 2025, I don't think we can predict exactly if it will be in 2027 or 2028, but around that time timeframe I think as we think about the confidence level is actually we're very confident in our ability to hit 5% overtime I think when we take a step back and look at sort of where.
Andrew Charles: The buckets of growth will come from I kind of look at it in sort of three categories. I think the first category is our home market.
Andrew Charles: And what we're doing in our North American markets and we want to do we want to do around <unk>. As you think about the total bill to 800 units, we want to do around 400 units.
Andrew Charles: By the end of that forecast period from our home market I think.
Andrew Charles: As you Peel that back you look at firehouse and you look at Tims, particularly at Tims in Canada.
Andrew Charles: Accelerating that will lead to a nice tailwind in our home market decay will likely go from.
Andrew Charles: From a negative net position net unit position two to flat to modestly modestly growing which will be a nice tailwind and then as you look at popeyes in the U S. We've stepped back a little bit as we've really focused on fortifying our operational capabilities in our restaurants, but we think we can get back to.
Andrew Charles: 250 units plus over time, so I think when you take all of those together in the home market.
Andrew Charles: You see a path to around 400 net new units there as you kind of thinking about the big the second big category of restaurants, I would say, it's our international business, excluding China, and we wanted to be able to do around 1100 net new units per year.
Andrew Charles: That buildup.
Andrew Charles: I think as you think about that a good chunk of that Tim.
Andrew Charles: Can come from Popeye's right I think historically Burger King due to the strength of the international business has has been the big driver of NRG, but and it will continue to be it'll be about probably 50% of that but pop out will be over a third of it and as you think about where we're growing and Popeye it's markets like the.
Andrew Charles: The UK if markets like India, and it's really exciting.
Andrew Charles: Actually look in our trending schedules that we posted online the system wide sales growth in international from Popeye.
Andrew Charles: Just off the charts, we did 60% in 2023, 50% in 'twenty, 435% in the most recent quarter. So we're really excited there and then to your question on Burger King.
Andrew Charles: And the model, we have around 300 restaurants from China in aggregate.
Andrew Charles: As you think about 300 restaurants from China in total we think that's very achievable by the end of this forecast period just for context.
Andrew Charles: Even without all of our brands firing on all cylinders in China. In 2022 23, we were already at 300 restaurants from China in Burger King alone in 2019 did close to 300 units in China, and so we think there's a ton of potential here, we have some cleanup to do in the short term, particularly at <unk>.
Andrew Charles: Which Josh talked about but once we move past that we see a very clear path to acceleration in the business.
Speaker Change: Thank you.
Speaker Change: The next question is from Sara Senatore from Bank of America. Your line is now open.
Speaker Change: Thank you.
Sara Senatore: I guess two parts. One is could you just talk you talked about the backdrop could you talk about the consumer and whether youre seeing any broadening of weakness from low income middle income just that was something that we've heard reference I wanted to note is that something you can but then.
Speaker Change: But one of the I guess a question on Tim you mentioned.
Sara Senatore: Growth in our core market.
Sara Senatore: Optically it looks like just the unit growth is stable or positive same store sales are slowing and I know some other cancers and cited strength in Canada.
Speaker Change: Do you have any evidence that there's a tradeoff between unit growth and same store sales, maybe looking at regional trends like where the unit growth is what same store sales. It looks like just some confidence that you don't have to train those Kim Thank you.
Speaker Change: Thanks, Eric Good morning, I'll take both of those so just in terms of consumer environment and behavior of different cohorts.
Speaker Change: We actually arent seeing in our data at least a big difference in the performance like directional performance of different income cohorts in the U S. So we haven't seen that pattern as much at least in the data set.
Speaker Change: That we have what we did see is that consumer confidence. If you look at the kind of the main indices, whether in Canada or in the U S that did take a bit of a dip from Q4 into Q1 and that seems to have correlated with some overall market softness.
Speaker Change: We definitely want to see that go the other way.
Speaker Change: I think the good news is that we're seeing some of that in Q2. There are some early signs of Canadian consumer confidence coming back a little bit and then the last couple of weeks and then that does seem to correlate with some improvement that we've seen in our overall business and both.
Speaker Change: Both in Canada, and the U S. So far in Q2.
Speaker Change: And your second question on Tims.
Speaker Change: We don't see that trade off of same store sales versus.
Speaker Change: Thats stabilizing yes.
Speaker Change: I don't have any data that suggest that's what's happening I would just zoom out again and tell you I think this business has done so well over the last few years and for all the right reasons.
Speaker Change: And we're very confident it's going to continue to do well and like I said, we're seeing that again in Q2, so far.
Speaker Change: A lot of really compelling things going into market and we have a lot more to come over the summer. So we're pretty confident in the direction of the turns business.
Speaker Change: Yeah.
Speaker Change: The next question is from John <unk> from Citi. Your line is now open.
John: Thanks, Hey, Sammy I was hoping I know you guys had spoke to earlier.
Speaker Change: On the fourth quarter call that the <unk>.
Speaker Change: <unk> is going to be the low point for the year for growth I was hoping maybe you could walk us through kind of the puts and takes for how you get to that 8% adjusted operating profit growth for the year, obviously, knowing first quarter was kind of a low point.
Speaker Change: How much of a contribution you expect from this lower G&A growth on the year and maybe other factors as we think through the models.
Speaker Change: Hey, good morning, John Thanks for the question, Yes, as we think about it first off I'd say, we feel good about our ability to deliver 8% plus NOI growth. This year I think it is it's sort of a combination of top and bottom line I think Josh mentioned, it but I'll reiterate we are seeing improving sales trends in the business.
Speaker Change: Hopefully those continue in <unk>.
Speaker Change: From a unit growth perspective, we think it will be around plus or minus 3%, which I think both translate into kind of a healthy system wide sales top line and then as you think about driving operating leverage in the business Yeah, a big chunk of that is the G&A I think we are.
Speaker Change: We're going to see kind of a low to mid single digit year over year decrease in segment G&A call it roughly $20 million or so year over year at the midpoint of our guidance range. But then we also have a structural tailwind of around $60 million of AD spending that rolled off at Burger King U S that kind of moved over to.
Speaker Change: Our franchisees are investing in the AD fund and so that $60 million kind of rolling off also helps drive the operating leverage year over year and I'd say the only other thing to call out is there is a partial offset there.
Speaker Change: At BK, China, I talked about it now sitting in discontinued operations until we find a new partner so with that kind of accounting treatment. There is a $19 million headwind from the loss of royalties and fees at Burger King China. They were in the prior year and 2024.
Speaker Change: But they won't be in 2025, so when you kind of put and take take all those together we feel good about the ability to drive 8% plus growth this year and beyond.
Speaker Change: Got it thank you.
Speaker Change: The next question is from Eric Gonzalez from Keybanc capital market. Your line is now open.
Speaker Change: Hi, Good morning, this is Chris on for Eric.
Speaker Change: Could you maybe expand a little bit more on the recent performance you've seen at Popeyes.
Speaker Change: The implementation and progress of the.
Speaker Change: Easy to love strategy, and maybe specifically.
Speaker Change: Quickly can you talk a little bit more on operations, maybe ahead of the step up in advertising, Josh I think you cited earlier.
Speaker Change: Hey, Chris Good morning, and happy to chat a little bit about <unk>.
Speaker Change: So we did have a bit of a softer same store sales quarter, we expected that to some degree given what we knew we were lapping over with our first ever Super Bowl commercial in the prior year, which didn't repeat.
Speaker Change: This year.
Speaker Change: That said, we're very focused on driving improved momentum in the business across a number of fronts that are covered in the easy to love Glenn I think part of that is an increase in advertising spend that started now in April. So we're stepping up our national advertising, which will give us increased share of voice and we definitely think that should be helpful.
Speaker Change: We're also starting to remodel our restaurants, and we talked about our plan to have fully modern assets by 2030 and as we've seen with Burger King that definitely starts to give you a tailwind in the business.
Speaker Change: But on top of that.
Speaker Change: We think increasing operational consistency of guest experience is also a very important part of the path forward for <unk> and I think we're doing we're making some progress there through rolling out are easy to run kitchens, and we're now in a couple of hundred restaurants and will be progressively rolling that out over the next few years to have a more standardized operating system in the kitchen.
Speaker Change: Both the layout the operational flows and the technology. So we're very encouraged by that and we know we'll make progress there.
Speaker Change: Lastly.
Speaker Change: As I mentioned, we're going to be raising the bar a bit on operating standards.
Speaker Change: Across the franchisee base similar to what we've done at Burger King over the last few years, where they've made a lot of progress.
Speaker Change: We're going to be stepping up standards at Bob is I think.
Speaker Change: Those are all the things that drive the fundamentals of the business and I think add on top of what is already by far the best culinary team.
Speaker Change: Team and the best food and the chicken space. So I think if we can bring all that together, we should see progressively better performance over the coming quarters and years of file buys them.
Speaker Change: Okay.
Speaker Change: Great. Thanks, so much.
Speaker Change: The last question, we have time for today is from Christine Cho from Goldman Sachs. Your line is now open.
Christine Cho: Thank you so much for taking my question.
Speaker Change: If you can provide some level of concern.
David Palmer: Sure Charles.
Speaker Change: Darryl categories, and Kim Martin Luther King.
David Palmer: And our plan calls that base et cetera.
David Palmer: So let me kind of elevated pressure.
Michael: Hi, Michael.
David Palmer: Okay.
David Palmer: Thank you.
David Palmer: Yes.
David Palmer: In terms of the market share trends.
David Palmer: We're still doing well in terms of market share and hot brewed coffee.
David Palmer: We actually grew our.
David Palmer: Our hot brewed coffee dollar share year on year.
David Palmer: So things are going pretty well and that part.
David Palmer: We might see a little bit of softness in things like breakfast sandwiches, but I think we'll see a lot of progress with that now here as we get into Q2 and the rest of the year. We brought a lot more focus now in the calendar.
David Palmer: With things like our new promotion with Ryan Reynolds So those.
David Palmer: Or some of the kind of the main trends and I think what youll see us focus on for the rest of the year.
David Palmer: As we get into summer, we're going to be focused a lot on pull beverages. We just had some new launches there and youll see more over the course of the summer and we're also going to be very focused on some of our PM food. So you'll see a lot of that in the calendar over the next couple of months into the back half of the year that will help us to take more share.
N P M food anything that Sami you want to add to that I would just add that the PM food share did increase in the quarter as you saw the impact of Flatbreads and loaded so going to Josh as point, we continue to build that that day part and are pleased with the market share increases we've seen in that category.
David Palmer: Thank you so much.
David Palmer: This is the end of today's Q&A session I'd now like to hand, the floor back to Josh placing remarks.
David Palmer: Thanks.
David Palmer: To close I'd like to extend our sincere thanks to both our franchisees and our teams for doing a great job this quarter in a tough environment I'd like to thank you all for joining us today for the call and we look forward to updating you again with our Q2 earnings. Thanks.
David Palmer: Okay.
David Palmer: This concludes today's call. Thank you for joining you may now disconnect your lines.
David Palmer: [music].
David Palmer: Okay.