Restaurant Brands International CEO Jose Cil joins Yahoo Finance Live to discuss investing $400 million in Burger King, company earnings, consumer demand, new menu offerings, and the outlook for profit growth.
Video Transcript
- Restaurant Brands announcing it's making big investments in its Burger King franchises. The company says it's investing $400 million over two years to revamp the brand. Joining us now to discuss this further, we've got Restaurant Brands CEO José Cil, as well as Yahoo Finance's Brooke DiPalma. Jose, thanks for taking the time here with us today. First, break down why now for these investments and what does a new brand look like, especially for a company like Burger King?
JOSE CIL: Well, good morning. And thanks for having me. It's a really exciting moment for us at the Burger King brand here in the US. Obviously, internationally and globally, we've got an amazing business and brand. But specifically in the US, we've spent the last 9 to 12 months with new leadership at Burger King in the US, working closely with our franchisees on building a plan to engage them, the broader system, our team members, and our guests on our path and plan to reclaim the flame.
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And so we were excited on Friday to share the investments that we're making as a company behind this plan. And it's confirmation and validation that we have conviction behind this plan and behind the team and behind the BK US business and brand.
And so we're making an investment behind advertising and digital of totaling $150 million. In addition to that, we're making investments behind restaurant remodels and other upgrades at the restaurant level in the kitchen and the drive throughs of $250 million. So it's a collectively $400 million investment over a couple of years, which is the most significant investment that we've made in the UK US brand at least since I've been with the company, which is north of 20 years.
BROOKE DIPALMA: Good morning, José. Over at Popeyes, foot traffic there is up double digits on a three-year basis. What would you say are the biggest or the top two lessons that you've learned from the success of Popeyes that you hope to bring over to Burger King?
JOSE CIL: Well, we have four amazing brands. Popeye's has been certainly a really exciting journey in the last three or four years. And we launched really compelling products. I think we've made strong connection-- with the chicken sandwich leading the way, we have quality at our core there. And we saw some really exciting progress on the digital front and the image front as well with really cool and long-lasting advertising.
And so I think the plan that we have for Burger King that we shared last week with all of our franchise system in the US in Las Vegas at the convention is a plan that's comprehensive. It's taken 9 to 10 months to put together. It's a plan that's been built in partnership with the franchisees, not something that we cooked up in a lab or a smoke-filled room and then shared with the system. We actually worked together with them, traveled different markets. The leadership team for Burger King had spent a lot of time on the road working closely with franchisees and owners all around the country.
And so it's a comprehensive plan around image, around menu and brand, around digital, and obviously with a really strong focus on operations, which is critical to our success. So we're excited about that. We've learned from some of the other brands. We've learned from our BK US system and some of the better markets that we have in the US. And we've also learned from our international business. So it's got the best of RBI. And it's got investment and support from the company as well.
- Given time of the year right now with back to school as well as return to office for many companies, where are you seeing kind of the biggest uptick in terms of that traffic, and whether that's mobile ordering or whether that's the digital orders that you might see coming through for some of these brands, or just traffic into stores. And particularly, is there anything that you can extrapolate from, at least this interim period, that gives you any insight as to how your brands will continue to engage with the consumers that are making their way back to some of either the school IRL experiences or even the workplaces?
JOSE CIL: So we've seen some really good progress in our business at Tims in Canada. We shared some of that news at the last quarterly earnings update in August. And we've seen strength in Tim Hortons in cold beverages. We've seen strength at breakfast as well as in lunch and some PM dayparts. Snacking has been a strong business as well. And our digital business continues to grow. And so with Burger King in the US, we've also seen some progress there. We made a change to our chicken sandwich recently. Our Royal Crispy was launched a few weeks ago. And we put it on air last week.
We think that's a really strong category and platform for us to be in for the long term and wanted to make sure we brought variety. We have four new builds for that chicken sandwich. Drive-through continues to be strong. Our digital business continues to make progress, as well as we're engaging consumers with our loyalty program Royal Perks at Burger King and offers that we provide on the app.
We've also been focused on having the right value messages for the consumers at Burger King. And we've seen good progress with Your Way Value Meal. And we've made some progress as well removing the Whopper from our core discount platform and really highlighting that as the core offer flagship iconic product that it is to consumers in the US and offering it at the full price that it deserves to be sold at.
- José, speaking of iconic products, let's talk French toast sticks for a moment, shall we? We were having a very hot discussion about them in the break before we came to you about some of our staff members here love of French toast sticks. I won't mention any names, Brad.
- It's me.
- And you guys have had them for a long time. There's been a renewed push. You had a free offer related to them. Wendy's now has them too. Are we going to have French toast stick wars like we had chicken sandwich wars? What's going on here?
JOSE CIL: Look, it's an awesome product. When I was a kid growing up in Miami, which is where BK was founded, every other morning when I had a couple of bucks to spare and I didn't have to use it for fuel prices-- at the time, fuel was much less than it is today-- I would go to Burger King for those French toast sticks. And it's been on the menu for decades and decades. It's a very unique and an iconic product. It drives consumers of all age groups and demographics. So we think it's something that we can lean in.
We've got iconic products at Burger King like French toast sticks, like chicken fries, like our Long Chicken, the original chicken sandwich, which is on a 7-inch bun, which is quite unique, and it kind of stands alone in the category, in addition to our iconic Whopper. So over time, you'll see us investing and doubling down on these iconic products in addition to innovating and bringing in new products that are going to be tailored to different occasions, different segments of the population.
We think there's an opportunity over time in plant-based. Impossible Whopper was one that I think shook up the industry back in 2019 and I think over time will be able to continue to drive that platform for growth at Burger King. So that's who we are. It's what we've been built on since 1954. And we're excited to continue to drive our innovative menu items to consumers in the US for years to come.
- José Cil, thank you so much. Restaurant Brands International CEO. And thanks to our Brooke DiPalma for sitting in as well. Thanks, José.