Restaurant Brands International Inc. (NYSE:QSR) Q3 2018 Earnings Conference Call Transcript

Oct 24, 2018 • 08:30 am ET


Restaurant Brands International Inc. (NYSE:QSR) Q3 2018 Earnings Conference Call Transcript


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Daniel Schwartz

comparable sales and profitability growth for all three of our iconic brands for many years to come. Our focus remains on the 2018 priorities outlined earlier this year, most of which we have already made good progress against, but some of which we hope to improve in the fourth quarter.

Let's start now by reviewing our results for Tim Hortons. In the third quarter, adjusted EBITDA was $299 million or $294 million under prior accounting standards, which represents a year-on-year organic increase of 4%. Our comparable sales at Tim Hortons this quarter continued to improve sequentially, but they do not yet reflect several important initiatives in Canada that we plan to launch through our Winning Together plan in the coming months and quarters.

This quarter, global comparable sales were 0.6%, reflecting Canada comparable sales of nearly 1%, partially offset by softer results in the US. Our improving comparable sales in Canada reflect growth in breakfast foods, driven by our Breakfast Anytime launch, while softer results in the US were driven by weaker sales of brewed coffee and baked goods, partially offset by strength in breakfast foods and cold beverages.

Our improved results in Canada reflect continued progress that we've made against our Winning Together plan, which centers around guest satisfaction and franchisee profitability through a focus on three main pillars product excellence, restaurant experience and brand communications.

Under product excellence, we have several initiatives underway to elevate or product quality with a commitment to offer our guests the absolute best product in the industry for every single item on our menu. Some of our efforts in this regard are more near term in nature, whereas others will take a little bit more time to perfect. But we are committed to getting it right. One of the more immediate initiatives within our product excellence pillar was Breakfast Anytime, which we launched nationally across Canada. We've seen healthy levels of incrementality from this program, both for restaurant level sales and profitability. While we are pleased with the results of the program, Breakfast Anytime is only the first of many steps we're taking to improve comparable sales in Canada.

Another more immediate initiative we are exploring under our product excellence pillar is a kids menu. Our Tim Hortons restaurants are already heavily visited by families. And despite that, our current menu has virtually no dedicated kids offering. As a business that is highly ingrained in local communities across Canada, we believe that we have an opportunity and responsibility to do better than that. Our goal is to offer a kids menu with products that are both exciting for kids, but that also have the right nutrition for parents to feel good about serving them to their children. We plan to launch our kids menu in the coming months.

We're also making good progress in our restaurant experience pillar. Only a few short months after announcing our new Welcome Image, we have now completed roughly 100 renovations under the new image, and we anticipate