Restaurant Brands International, a key holding in Bill Ackman’s Pershing Square Capital portfolio, reported mixed second-quarter results. While revenue surpassed estimates, driven largely by Tim Hortons, the stock has not reflected the optimism, with bearish technical indicators suggesting a bumpy ride ahead for investors.
Restaurant Brands International’s Executive Chairman Patrick Doyle discussed the company’s plans for Burger King in the face of inflation. Doyle said that the chain will offer a variety of menu items at different price points to attract customers. He also noted that the company is feeling good about its performance despite the challenging economic environment.
Burger King is investing $300 million to remodel about 1,100 of its U.S. restaurants as part of a broader turnaround effort. This investment is part of a $2.2 billion plan to revitalize the chain’s U.S. business. The remodels will include drive-thru pickup for mobile orders and self-order kiosks, and are expected to encourage customers to order more. Burger King will incentivize franchisees to remodel their locations with cash and discounts on royalties. The company expects 85% to 90% of its roughly 7,000 U.S. restaurants will have the same modern design by 2028.
Restaurant Brands International (QSR), the parent company of popular chains like Burger King, Tim Hortons, and Firehouse Subs, offers potential for growth through its international expansion plans. Despite strong competition, conservative estimates indicate an achievable mid-single digit growth rate in the number of total restaurants, driven by the expansion of Tim Hortons and Firehouse. Financially, RBI has strong EBITDA margins and a stable cash flow, although its debt position warrants some attention. Overall, RBI presents an investment opportunity with a potential return of 12%, considering its stable business model, brand recognition, and international growth prospects.
