Restaurant Brands International

Restaurant Brands chalked up 3.8% comparable sales growth, led by Burger King US (up 8.5%) and consolidated international (5.5%), while Tim Hortons lagged the group (0.1%). Adjusted operating margin improved 130 basis points to 27.3% because of a greater mix of higher-margin franchise royalties.

Why it matters: Against a challenging backdrop, RBI's push on menu development and remodels is paying off at Burger King, while strong franchisees and scaled promotions fuel its international banners. Tim Hortons was softer, but a slew of innovations should help it regain its footing. Burger King outpaced the quick-service restaurant burger category by 9 percentage points, according to RBI. Still, ongoing investment looks critical just to remain relevant, and we're skeptical the brand can improve unit economics enough to reverse store declines over the long haul amid steep competition. We posit a light marketing cadence and stretched consumers left Tim's comps flat (below our 1% estimate), but recent dirty soda and matcha launches should lift results. Longer-term, the banner's brand clout and procurement scale in Canada should help blunt pressures from Dunkin's reentry.

The bottom line: We don't plan to materially adjust our USD 79/CAD 112 per share fair value estimates for narrow-moat Restaurant Brands. From where we sit, shares trade within a range we'd consider fairly valued, despite a low-single-digit decline on Aug. 6. Comparable growth beat our 1.9% estimate, though macro uncertainty and slowing spending could crimp the back half. Still, we remain steadfast that RBI can average 3.2% comparable growth over the next five years, buoyed by investment and strong international master franchisees. With higher-margin international markets leading the growth, we model adjusted operating margin expanding to 35% in 2035 from 26% in 2025. Also, we still expect over half of Restaurant Holding's BK units to be refranchised by 2028, despite a slower start than we had expected.

We've raised our fair value estimate for Restaurant Brands to $81 per share from $79, largely attributable to the time value of money benefit and better-than-anticipated results at domestic Burger King. We now forecast 5.7% comparable sales growth for the banner in 2026, up from 3.7% prior. All in, our valuation implies a fiscal 2027 EV/adjusted EBITDA of 15 times.

While the restaurant landscape has dealt with its share of headwinds recently, we expect RBI to serve up strong growth over the next 10 years, fueled by investments in its brands and its international franchisee prowess, which should propel unit development. As such, we expect systemwide sales to grow 6% annually on average over the next 10 years, driven by unit growth of 3.6%.

Underpinning our thesis, we expect the higher-margin international segment (27% of operating profit) to lead the charge, supported by well-capitalized master franchisees committed to investing in and expanding RBI’s brands. As such, we project 8.9% international system growth through the decade, underpinned by 5.9% annual unit growth, outpacing the broader cohort. With RBI’s franchisees carrying more than 12,800 Burger King, 1,600 Tim Hortons, 1,800 Popeyes, and 47 Firehouse Subs locations across international markets, we see global white space for the latter three banners, which have seen greater franchisee appetite in recent years. As such, in 2025, Burger King accounted for 29% of net new international openings, down from 87% in 2019, while the other brands commanded a larger share. Even so, we still see a meaningful runway for Burger King's footprint in Asia Pacific, Australasia, and Western Europe, where its unit count is only about 25%, 33%, and 67% of McDonald’s, respectively (according to Euromonitor). This should be complemented by mid-single-digit comparable sales growth internationally, fueled by a combination of premium menu innovations, such as the UK’s wagyu burger, and robust digital investments from well-capitalized franchisees. When put together, these efforts should lift average ticket and drive incremental traffic, reinforcing the brand's cachet abroad.

Meanwhile, we expect solid results from Tim Hortons in the US and Canada, which accounts for an outsize share of operating profit (43%) due to its vertically integrated supply chain. As such, we expect the banner to grow comparable sales around 2.5% annually, while defending franchisees' unit-level profits. Our estimate should be supported by improved engagement among its seven million loyalty members and by management’s commitment to menu development, with a focus on quality, daypart expansion, and beverage customization. Meanwhile, we forecast net units to grow in the low single digits, versus stagnant growth over the last few years. Although it already has a sprawling Canadian footprint, with roughly one store per 10,000 people in most communities, we suspect there’s room for incremental expansion in more rural communities. That said, we think Tim Hortons' US story remains more challenging. With a fully integrated supply chain in Canada and intense competition south of the border from Starbucks, Dunkin’, and emerging players like Dutch Bros and 7Brew, we’re skeptical that US unit economics can replicate Canada’s success to support a long growth runway.

Ultimately, with a faster-growing international franchise base that boasts higher margins (69%), we forecast adjusted operating margins rising to 34.9% in 2035 from 26% in 2025. We also expect RBI to refranchise a large portion of its Restaurant Holdings units, replacing lower-margin company-operated sales with higher-margin royalty revenue and further supporting margin expansion.

We assign Restaurant Brands a narrow moat, underpinned by intangible assets and a cost edge. With roughly $47 billion in systemwide sales, the firm ranks among the top four players in the global foodservice industry with a 1.4% dollar share. Its leading position is anchored by a strong international portfolio spanning 120 markets, supported by top-tier franchisees and well-known brands including Tim Hortons, Burger King, Popeyes, and Firehouse Subs. Beyond the brand set, we suspect Restaurant Brands leverages its scale to spread technology and marketing costs across its global sales base, while exhibiting a procurement edge relative to smaller peers in select markets. As a result, average returns on invested capital, including goodwill, have exceeded our 7% weighted average cost of capital estimate over the past decade, and we expect this to persist for at least the next 10 years.

We believe Restaurant Brands’ core strength comes from its compelling international segment, which represents 27% of operating profit and encompasses over 16,000 restaurants delivering over $20 billion in systemwide sales. In our view, international portability is a testament to the brands’ resonance and ability to forge master franchise agreements with well-capitalized operators such as Jubilant FoodWorks, which we believe indicates strong returns on new openings. While catering to local tastes is no easy feat, its brands have nonetheless delivered an impressive 7.4% net unit growth rate worldwide annually over the last five years, evidence of the system’s international health; we expect this impressive standing to persist. Further, constant currency comparable sales growth of 9.3% each year (buoyed by a step up in premium product incidence to 39% of sales from 26% prepandemic at Burger King) further corroborates the intangible asset that has emergedfrom the brand’s international arm over the past five years. But Restaurant Brands is also keen to keep pace with evolving trends, as its digital mix rose to over 60% of sales from 27% in 2019. We posit this underscores Restaurant Brands’ capacity to leverage its scale to deliver high-return innovation and technology upgrades to franchisees that are investing in its units, with roughly 80% of its international footprint already modernized.

These investments have manifested in an improving share position in several markets. Impressively, Burger King, while challenged in its home market, lifted its burger share in India to 28.7% in 2025 from 11.6% in 2016 at the expense of McDonald’s, which has fallen to 63% share from 88.1% over the same period, according to Euromonitor. Meanwhile, in France, Burger King’s share has climbed to 22% from 5.8% a decade ago. Ultimately, we see the attractive international segment contributing an outsize portion of operating income growth over time (to 39% in 2035 from 27% in 2025), supported by a highly attractive 69% adjusted operating margin in 2025.

In our view, Tim Hortons (42% of operating income) demonstrates brand strength through a leading Canadian market position and compelling unit economics. Tim Hortons boasts a 75% dollar share of the Canadian cafe market, well ahead of Starbucks’ 12% share. Admittedly, the brand faced operational missteps following 3G Capital’s formation of Restaurant Brands in 2014, such as underinvestment in its core coffee offerings and its digital experience, which somewhat eroded its brand standing and pressured franchisee profitability. However, the 2020 push to elevate marketing, its core food and beverage quality, and the introduction of digital displays and loyalty upgrades has led to over 20 consecutive quarters of comparable sales growth in Canada (averaging about 4% since 2020, besting the Canadian cafe market’s 3.2%). We posit this has supported average unit volumes of about $1.7 million across the combined US and Canada segment, helping restore compelling unit economics, with franchisees now seeing payback periods of roughly three years (according to the firm) from a precipitous 30% decline in franchisee restaurant-level EBITDA in 2018-2022. Ultimately, we see menu innovation and customer engagement as key drivers of customer loyalty and brand clout, which in turn drive traffic and attachment. As such, its cold coffee mix has increased to about 40% from roughly 15% in 2019, broadening customization, while Restaurant Brands has invested in food offerings across multiple day parts, aiding traffic and ticket. Active loyalty members reached seven million in the third quarter of 2025, making it the largest food and beverage loyalty program in Canada, and they visit 5 times more than non-members. In turn, continued engagement, supported by digital, loyalty, and product innovation, should help the firm deliver positive comparable sales growth throughout our forecast, while defending franchisee profits.

Supporting its brand strength, we see Restaurant Brands’ ability to roll out technology improvements systemwide, leverage advertising scale, and secure volume discounts and favorable supplier pricing as central to its cost edge. We think the digital and operational benefits for each segment translate into higher returns than those of smaller players by virtue of scaled deployment, including leveraging data insights across brands. Additionally, we note that $1.8 billion in advertising spending, while below McDonald’s roughly $2.2 billion in just the US and behind Yum Brands’ $1.8 billion, still provides meaningful scale benefits and the ability to pool purchasing across banners. We further think the firm’s scale enables more advantageous supplier agreements, with Burger King and Popeyes leveraging purchasing cooperatives to capture discounts and Tim Hortons benefiting from direct procurement advantages. Meanwhile, its dense Canadian footprint likely supports efficient last-mile delivery for its proprietary distribution network.

A strong, well-capitalized international franchisee base should allow Restaurant Brands to reinvest in existing units and further expand its banners abroad.

On the heels of efforts to reignite the Tim Hortons chain (which has resulted in enhanced unit-level profitability), we believe continued menu innovation across dayparts and deeper digital engagement can drive positive average comp growth over the long term.

A franchisee-heavy portfolio helps insulate RBI’s results from store-level profit pressure, with a greater skew toward royalty income.

Financially stretched consumers remain disgruntled with restaurant offerings, as value propositions remain out of whack relative to grocery stores, while inflation in coffee, beef, and labor remains stubbornly high.

Reigniting long-term unit growth at Burger King US will be challenging amidst resource-rich competition.

Popeyes plays in a hotly contested domestic chicken category, which could weigh on unit economics and, in turn, crimp development prospects.