Finance Franchise

Restaurant Brands International Inc. Reports Full Year and Fourth Quarter 2022 Results

February 19, 2023
Joseph Deering

Global fourth quarter system-wide sales grow nearly 12{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} and over 13{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} for 2022
Consolidated comparable sales up nearly 8{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} in Q4, led by 11{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} growth at Tim Hortons Canada and Burger King International
Digital sales grow over 30{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} year-over-year to over $13.5 billion in 2022, representing over a third of system-wide sales
Restaurant growth accelerates to 1,266 net new units with Popeyes delivering its strongest development year since joining RBI
RBI returns nearly $1.3 billion of capital to shareholders in 2022 while investing for growth and reducing net leverage
RBI Board of Directors appoints Joshua Kobza to become CEO on March 1, 2023

TORONTO, Feb. 14, 2023 /PRNewswire/ – Restaurant Brands International Inc. (“RBI”) (TSX: QSR) (NYSE: QSR) (TSX: QSP) today reported financial results for the full year and fourth quarter ended December 31, 2022.

Restaurant Brands International Inc. Logo (CNW Group/Restaurant Brands International Inc.)

Restaurant Brands International Inc. Logo (CNW Group/Restaurant Brands International Inc.)

José Cil, Chief Executive Officer of RBI commented, “We rounded out an exciting 2022 with another strong quarter, including nearly 8{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} consolidated comparable sales and 4{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} net restaurant growth, reflecting the strength of four iconic, global brands.

Tim Hortons Canada capped off an impressive year with comparable sales of 11{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} in the fourth quarter, benefiting from strong sales momentum as the team executes against its strategic priorities. At Burger King US, we saw sequential improvement in comparable sales in the first quarter of our Reclaim the Flame plan while driving further underlying improvements in operations across the system. On the Burger King International front, we once again delivered double-digit comparable sales with strong digital capabilities helping drive results.

Popeyes delivered its strongest year of restaurant growth since we acquired the brand in 2017, reaching nearly 4,100 restaurants worldwide. Meanwhile Firehouse Subs wrapped up its first full year in the RBI family, making important progress to position the brand to accelerate development and digital growth in the years ahead,” continued Cil.

“We are focused on being guest-led in everything we do, setting our franchisees up for long-term success and as a result, setting ourselves, and our shareholders, up for long-term value creation. I’d like to thank our employees, franchisees, and team members for all their hard work and dedication throughout 2022,” concluded Cil.

2022 Highlights:

  • System-wide Sales Growth of 13.4{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

  • Net Restaurant Growth of 4.3{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

  • Diluted EPS of $3.25 versus $2.69 in prior year

  • Adjusted Diluted EPS of $3.14 versus $2.82 in prior year

  • Net Income of $1,482 million versus $1,253 million in prior year

  • Adjusted EBITDA of $2,378 million increased 7.5{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} organically versus the prior year

  • Net Cash Provided by Operating Activities of $1,490 million and Free Cash Flow of $1,390 million

RBI Board of Directors Appoints Joshua Kobza as CEO

RBI’s Board of Directors announced today in a separate press release that it has appointed Joshua Kobza as the company’s CEO effective March 1, 2023, as part of its ongoing succession planning process. Mr. Kobza will undertake his new role reporting to, and working together with, Patrick Doyle, a well-known industry veteran and Executive Chairman of RBI. José Cil will remain with the company for one year as an advisor and assist in the transition.

Consolidated Operational Highlights

Three Months Ended December 31,

Twelve Months Ended December 31,

2022

2021

2022

2021

(unaudited)

(unaudited)

System-wide Sales Growth

    TH

12.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

14.0 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

13.7 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

12.5 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    BK

11.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

15.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

14.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

15.9 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    PLK

11.2 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

7.2 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

9.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

7.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

Consolidated (a)

11.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

13.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

13.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

13.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    FHS (b)

3.9 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

18.1 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

4.2 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

25.1 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

System-wide Sales (in US$ millions)

    TH

$

1,825

$

1,736

$

7,164

$

6,526

    BK

$

6,552

$

6,182

$

25,482

$

23,450

    PLK

$

1,533

$

1,397

$

5,951

$

5,519

    FHS

$

301

N/A

$

1,154

N/A

Consolidated (a)

$

10,211

$

9,315

$

39,751

$

35,495

    FHS (b)

N/A

$

273

N/A

$

1,091

Net Restaurant Growth

    TH

5.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

6.9 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

5.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

6.9 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    BK

2.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

3.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

2.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

3.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    PLK

10.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

7.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

10.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

7.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    FHS

2.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

N/A

2.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

N/A

Consolidated (a)

4.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

4.5 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

4.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

4.5 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    FHS (b)

N/A

1.6 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

N/A

1.6 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

System Restaurant Count at Period End

    TH

5,600

5,291

5,600

5,291

    BK

19,789

19,247

19,789

19,247

    PLK

4,091

3,705

4,091

3,705

    FHS

1,242

1,213

1,242

1,213

Consolidated

30,722

29,456

30,722

29,456

Comparable Sales

    TH

9.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

10.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

10.0 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

10.6 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    BK

8.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

11.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

9.7 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

9.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    PLK

3.8 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

(0.4) {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

1.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

(0.4) {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

Consolidated (a)

7.9 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

9.3 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

8.5 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

7.9 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

    FHS (b)

0.4 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

14.7 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

0.6 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

20.9 {194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}

(a) Consolidated system-wide sales growth and consolidated comparable sales do not include the results of Firehouse Subs for all of the periods presented. Consolidated system-wide sales and consolidated net restaurant growth do not include the results of Firehouse Subs for 2021.

(b) For 2022, FHS system-wide sales growth, system-wide sales, comparable sales and net restaurant growth are for the period from December 27, 2021 through December 31, 2022. Firehouse Subs figures for 2021 are shown for informational purposes only, consistent with its 2021 fiscal calendar.

Note: System-wide sales growth and comparable sales are calculated on a constant currency basis and include sales at franchise restaurants and company-owned restaurants. System-wide sales are driven by sales at franchise restaurants, as approximately 100{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} of current restaurants are franchised. We do not record franchise sales as revenues; however, our royalty revenues and advertising fund contributions are calculated based on a percentage of franchise sales. Additionally, if a restaurant is closed for a significant portion of a month, the restaurant is excluded from the monthly comparable sales calculation.

Consolidated Financial Highlights

Three Months Ended December 31,

Twelve Months Ended December 31,

(in US$ millions, except per share data)

2022

2021

2022

2021

(unaudited)

(unaudited)

Total Revenues

$                    1,689

$                    1,546

$                    6,505

$                    5,739

Net Income

$                       336

$                       262

$                    1,482

$                    1,253

Diluted Earnings per Share

$                      0.74

$                      0.57

$                      3.25

$                      2.69

TH Adjusted EBITDA(1)

$                       263

$                       259

$                    1,073

$                       997

BK Adjusted EBITDA(1)

$                       246

$                       266

$                    1,007

$                    1,021

PLK Adjusted EBITDA(1)

$                         63

$                         57

$                       242

$                       228

FHS Adjusted EBITDA(1)

$                         16

$                           2

$                         56

$                           2

Adjusted EBITDA(2)

$                       588

$                       584

$                    2,378

$                    2,248

Adjusted Net Income(2)

$                       326

$                       340

$                    1,430

$                    1,308

Adjusted Diluted Earnings per Share(2)

$                      0.72

$                      0.74

$                      3.14

$                      2.82

 

As of December 31,

2022

2021

(unaudited)

Net cash provided by operating activities

$                    1,490

$                    1,726

Net cash used for investing activities

$                       (64)

$                  (1,103)

Net cash used for financing activities

$                  (1,307)

$                  (1,093)

Free Cash Flow(2)

$                    1,390

$                    1,620

Net Debt

$                  12,210

$                  12,396

Net Income Net Leverage(3)

8.2x

9.9x

Adjusted EBITDA Net Leverage(2)

5.1x

5.5x

(1)  TH Adjusted EBITDA, BK Adjusted EBITDA, PLK Adjusted EBITDA, and FHS Adjusted EBITDA are our measures of segment profitability.

(2)  Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted Earnings per Share, Free Cash Flow, and Adjusted EBITDA Net Leverage are non-GAAP financial measures. Please refer to “Non-GAAP Financial Measures” for further detail.

(3)  Net Income Net Leverage is defined as net debt (total debt less cash and cash equivalents) divided by Net Income (Compliant with SEC guidance regarding non-GAAP financial measures).

Commencing upon the acquisition of Firehouse Subs in December 2021, we have four operating segments: Tim Hortons (TH), Burger King (BK), Popeyes Louisiana Kitchen (PLK) and Firehouse Subs (FHS). RBI financial results for the full year and fourth quarter of 2021 include the financial results of FHS from the acquisition date of December 15, 2021 through December 26, 2021, the 2021 fiscal year end for FHS. RBI financial results for the full year of 2022 include the financial results of FHS from December 27, 2021 to December 31, 2022.

The year-over-year increases in Total Revenues on an as reported and on an organic basis for the full year and fourth quarter were primarily driven by an increase in system-wide sales at Tim Hortons, Burger King and Popeyes. On an as reported basis the increases were also driven by the inclusion of Firehouse Subs, partially offset by unfavorable FX movements.

The increase in Net Income for the full year was primarily driven by an income tax benefit in the current year compared to an income tax expense in the prior year, increases in organic Adjusted EBITDA in our TH, BK and PLK segments, the inclusion of FHS Adjusted EBITDA for a full year, partially offset by unfavorable FX movements, an increase in share-based compensation and non-cash incentive compensation expense, an increase in loss from equity method investments, an increase in Corporate restructuring and tax advisory fees, an increase in interest expense, net, an increase in other operating expenses (income), net, and an increase in expenses in connection with the FHS acquisition and integration.

The increase in Net Income for the fourth quarter was primarily driven by an income tax benefit in the current year compared to an income tax expense in the prior year, increases in organic Adjusted EBITDA in our TH and PLK segments, an increase in Adjusted EBITDA in our FHS segment reflecting a full quarter of results, partially offset by an increase in other operating expenses (income), net, a decrease in organic Adjusted EBITDA in our BK segment, an increase in Corporate restructuring and tax advisory fees, an increase in interest expense, net, an increase in loss from equity method investments, an increase in share-based compensation and non-cash incentive compensation expense and unfavorable FX movements.

The year-over year changes in Adjusted EBITDA on an as reported basis for the full year and fourth quarter were primarily driven by increases in TH, FHS and PLK Adjusted EBITDA, partially offset by a decrease in BK Adjusted EBITDA and unfavorable FX movements. The year-over year change in Adjusted EBITDA on an organic basis for the full year was primarily driven by increases in TH, BK and PLK Adjusted EBITDA. The year-over year change in Adjusted EBITDA on an organic basis for the fourth quarter was primarily driven by increases in TH and PLK Adjusted EBITDA, partially offset by a decrease in BK Adjusted EBITDA.

The year-over-year increase in Adjusted Net Income for the full year was primarily driven by the increase in organic Adjusted EBITDA in our TH, BK and PLK segments, an increase in Adjusted EBITDA in our FHS segment reflecting a full year, and a decrease in adjusted tax expense, partially offset by unfavorable FX movements, an increase in share-based compensation and non-cash incentive compensation expense and an increase in interest expense, net.

The year-over-year decrease in Adjusted Net Income for the fourth quarter was primarily driven by unfavorable FX movements, an increase in interest expense, net, an increase in share-based compensation and non-cash incentive compensation expense, and a decrease in Adjusted EBITDA in our BK segment, partially offset by increases in Adjusted EBITDA in our TH and PLK segments, an increase in Adjusted EBITDA in our FHS segment reflecting a full quarter of contribution, and a decrease in adjusted income tax expense.

Burger King US Reclaim the Flame

In September 2022, Burger King shared the details of its “Reclaim the Flame” plan to accelerate sales growth and drive franchisee profitability. As part of the plan, we will enhance ongoing franchisee investments by investing $400 million over the next two years, comprising $150 million in advertising and digital investments (“Fuel the Flame”) and $250 million in high-quality remodels and relocations, restaurant technology, kitchen equipment, and building enhancements (“Royal Reset”).

As of December 31, 2022, we have funded a total of $13 million toward the Fuel the Flame investment and $17 million toward our Royal Reset investment. The Fuel the Flame investment resulted in a 5{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} negative impact on Burger King organic Adjusted EBITDA growth and a 2{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6} negative impact on organic RBI consolidated Adjusted EBITDA growth for the fourth quarter ended December 31, 2022.

War in Ukraine

During the first quarter of 2022, we shared a number of actions that we have taken as a result of the events related to Russia’s military invasion of Ukraine. Burger King is our only brand with restaurants in Russia, all of which are operated under a master franchise arrangement. We suspended all corporate support for the Russian market, including operations, marketing, and supply chain support in addition to refusing approvals for new investment and expansion. During the fourth quarter, the non-recurrence of 2021 profits from these restaurants had an estimated $11 million, or 2{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}, negative impact on our year-over-year organic adjusted EBITDA growth, and an estimated $46 million, or 2{194d821e0dc8d10be69d2d4a52551aeafc2dee4011c6c9faa8f16ae7103581f6}, negative impact on our full year organic adjusted EBITDA growth.

While for 2022 we include results from our franchised restaurants in Russia in our key performance indicators, we did not generate any new profits from restaurants in Russia in 2022 and do not expect to generate any new profits in 2023. Consequently, beginning in the first quarter of 2023, we intend to report our key performance indicators excluding the results from our franchised restaurants in Russia for all periods presented. Below are the RBI consolidated and BK segment operational highlights excluding the results from Russia for the three and twelve months ended December 31, 2022 and 2021. Refer to page 24 for the RBI consolidated and BK segment quarterly operational highlights excluding the results from Russia for 2021.

Consolidated Operational Highlights

Three Months Ended December 31,

Twelve Months Ended December 31,

(excluding Russia)

2022

2021

2022

2021

(unaudited)

(unaudited)

System-wide Sales Growth