You should read the following discussion together with our unaudited condensed
consolidated financial statements and the related notes thereto included in
Part I, Item 1 "Financial Statements" of this report.
The following discussion includes information regarding future financial
performance and plans, targets, aspirations, expectations, and objectives of
management, which constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and forward-looking
information within the meaning of Canadian securities laws as described in
further detail under "Special Note Regarding Forward-Looking Statements" set
forth below. Actual results may differ materially from the results discussed in
the forward-looking statements. Please refer to the risks and further discussion
in the "Special Note Regarding Forward-Looking Statements" below.
We prepare our financial statements in accordance with accounting principles
generally accepted in the United States ("U.S. GAAP" or "GAAP"). However, this
Management's Discussion and Analysis of Financial Condition and Results of
Operations also contains certain non-GAAP financial measures to assist readers
in understanding our performance. Non-GAAP financial measures either exclude or
include amounts that are not reflected in the most directly comparable measure
calculated and presented in accordance with GAAP. Where non-GAAP financial
measures are used, we have provided the most directly comparable measures
calculated and presented in accordance with U.S. GAAP, a reconciliation to GAAP
measures and a discussion of the reasons why management believes this
information is useful to it and may be useful to investors.
Operating results for any one quarter are not necessarily indicative of results
to be expected for any other quarter or for the fiscal year and our key business
measures, as discussed below, may decrease for any future period. Unless the
context otherwise requires, all references in this section to "RBI", the
"Company", "we", "us" or "our" are to Restaurant Brands International Inc. and
its subsidiaries, collectively.
We are one of the world's largest quick service restaurant ("QSR") companies
with approximately $33 billion in annual system-wide sales and over 27,000
restaurants in more than 100 countries as of June 30, 2021. Our Tim Hortons®,
Burger King®, and Popeyes® brands have similar franchised business models with
complementary daypart mixes and product platforms. Our three iconic brands are
managed independently while benefiting from global scale and sharing of best
Tim Hortons restaurants are quick service restaurants with a menu that includes
premium blend coffee, tea, espresso-based hot and cold specialty drinks, fresh
baked goods, including donuts, Timbits®, bagels, muffins, cookies and pastries,
grilled paninis, classic sandwiches, wraps, soups, and more. Burger King
restaurants are quick service restaurants that feature flame-grilled hamburgers,
chicken, and other specialty sandwiches, french fries, soft drinks, and other
affordably-priced food items. Popeyes restaurants are quick service restaurants
featuring a unique "Louisiana" style menu that includes fried chicken, fried
shrimp, and other seafood, red beans and rice, and other regional items.
We have three operating and reportable segments: (1) Tim Hortons ("TH"); (2)
Burger King ("BK"); and (3) Popeyes Louisiana Kitchen ("PLK"). Our business
generates revenue from the following sources: (i) franchise and advertising
revenues, consisting primarily of royalties and advertising fund contributions
based on a percentage of sales reported by franchise restaurants and franchise
fees paid by franchisees; (ii) property revenues from properties we lease or
sublease to franchisees; and (iii) sales at restaurants owned by us ("Company
restaurants"). In addition, our TH business generates revenue from sales to
franchisees related to our supply chain operations, including manufacturing,
procurement, warehousing, and distribution, as well as sales to retailers.
The global crisis resulting from the spread of coronavirus ("COVID-19") impacted
our global restaurant operations for the three and six months ended June 30,
2021 and 2020. While the impact of COVID-19 on system-wide sales growth,
system-wide sales, comparable sales and net restaurant growth was severe for the
three and six months ended June 30, 2020, in the 2021 periods these metrics were
affected to a lesser extent for the entire period, with variations among brands
and regions. During 2020 and the six months ended June 30, 2021, substantially
all TH, BK and PLK restaurants remained open in North America, some with limited
operations, such as drive-thru, takeout and delivery (where applicable), reduced
if any dine-in capacity, and/or restrictions on hours of operation. During the
three months ended June 30, 2021, on average 96% of our restaurants were open
worldwide, including approximately 97% of our restaurants in North America,
approximately 96% of our restaurants in Asia Pacific, approximately 94% of our
restaurants in Europe, Middle East and Africa, and approximately 91% of our
restaurants in Latin America. By contrast, during the three months ended June
30, 2020, on average 81% of our restaurants were open worldwide, including
approximately 94% of our restaurants in North America, approximately 87% of our
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in Asia Pacific, approximately 57% of our restaurants in Europe, Middle East and
Africa, and approximately 56% of our restaurants in Latin America. Certain
jurisdictions, such as Canada, Europe, and Brazil, that had eased restrictions
during 2020, re-imposed lockdowns and curfews in the six months ended June 30,
2021. In comparison, during the six months ended June 30, 2020, a number of
other markets required temporary complete closures while implementing lock-down
orders. We expect local conditions to continue to dictate limitations on
restaurant operations, capacity, and hours of operation.
With the pandemic affecting consumer behavior, the importance of digital sales,
including delivery, has grown. We expect to continue to support enhancements of
our digital and marketing capabilities. While we do not know the full future
impact COVID-19 will have on our business, we expect to see a continued impact
from COVID-19 on our results in 2021.
We evaluate our restaurants and assess our business based on the following
•System-wide sales growth refers to the percentage change in sales at all
franchise restaurants and Company restaurants (referred to as system-wide sales)
in one period from the same period in the prior year.
•Comparable sales refers to the percentage change in restaurant sales in one
period from the same prior year period for restaurants that have been open for
13 months or longer for TH and BK and 17 months or longer for PLK. Additionally,
if a restaurant is closed for a significant portion of a month, the restaurant
is excluded from the monthly comparable sales calculation.
•System-wide sales growth and comparable sales are measured on a constant
currency basis, which means the results exclude the effect of foreign currency
translation ("FX Impact"). For system-wide sales growth and comparable sales, we
calculate the FX Impact by translating prior year results at current year
monthly average exchange rates.
•Unless otherwise stated, system-wide sales growth, system-wide sales and
comparable sales are presented on a system-wide basis, which means they include
franchise restaurants and Company restaurants. System-wide results are driven by
our franchise restaurants, as approximately 100% of system-wide restaurants are
franchised. Franchise sales represent sales at all franchise restaurants and are
revenues to our franchisees. 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.
•Net restaurant growth refers to the net increase in restaurant count (openings,
net of permanent closures) over a trailing twelve month period, divided by the
restaurant count at the beginning of the trailing twelve month period.
These metrics are important indicators of the overall direction of our business,
including trends in sales and the effectiveness of each brand's marketing,
operations and growth initiatives.
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Results of Operations for the Three and Six Months Ended June 30, 2021 and 2020
Tabular amounts in millions of U.S. dollars unless noted otherwise. Segment
income may not calculate exactly due to rounding.
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