Restaurant Brands International CEO José Cil joins Yahoo Finance Live to discuss the company’s latest earnings report and weigh in on the outlook for restaurants in 2021 & beyond.
Video Transcript
MYLES UDLAND: Continue our exploration inside the C-suite. Fresh off the company's latest earnings call, we're joined now by Restaurant Brands CEO José Cil. Company just finishing up its latest quarterly report in fiscal year. José, always great to speak with you. I just want to start with how you guys finished 2020. Sales still down in the fourth quarter, but down less than the full year. So what kind of momentum have you seen coming through the end of 2020 in the beginning of this year?
JOSE CIL: Hey, Myles, great to see you, and thanks for having me. Yeah, we saw sequential improvement in the fourth quarter versus Q3 and Q2 before, which were kind of the height of the pandemic. We were excited and encouraged by progress that we made with each of our brands in our home markets as well as our international business. On the home market front with Tim Hortons, we saw some of our best performance since the onset of the pandemic, especially in our drive-thru business in December.
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We've made a lot of investments in that business around the quality of our coffee with fresh brewers. We've made investments on the quality of our core offerings at breakfast. We launched fresh cracked eggs and a new dark roast blend, all of which is aimed at addressing what the consumer in Canada is asking for, which is, hey, we want Tim's to do what it's been famous for for decades, which, be great at the basics. And so we've been making investments with our owners in Canada. And we're beginning to see some progress on guest satisfaction.
We're seeing progress in certain day parts from a market share standpoint. We have a long way to go and obviously the restrictions in the market have an impact on our performance. But we feel confident and encouraged about the long term prospects of our business in Canada. And the same goes for Burger King and Popeyes in the US. We had some positive performance and improvements in our core offering, lunch day in particular was really strong. And we have exciting news and exciting initiatives that we have for the business for both Burger King and Popeyes, especially in the digital side for 2021, which we think will have a big impact long term.
BRIAN SOZZI: José, when do you think Popeyes and Burger King US, when will they get back to same store sales growth this year?
JOSE CIL: Yeah, so with Popeyes, Q4 2019 was when we launched the now famous chicken sandwich. We elevated the game as it relates to chicken sandwiches. And we drove a 38% same store sales in Q4. So the performance in Q4 2020 was really just a function of lapping over an incredible Q4 2019. The nominal sales continue to be very healthy. We've reached $1.8 million in average restaurant sales for Popeyes in the US over the last 12-15 months, which is an incredible amount of growth from $1.4 million before the launch of the chicken sandwich. Our four wall restaurant profitability has reached record levels at Popeyes, so the momentum continues. We had an incredible run with Popeyes and we think we're going to have continued growth in 2021.
We elevated the game of chicken sandwich and now we've launched a fish sandwich that we think will be a game changer in the quick service restaurant space. It's a flounder. It's a fish sandwich with a Cajun twist-- a Cajun flounder. We think it'll be an incredible limited time offer for the business as it takes hold now during the lent season. And with Burger King, we made some important improvements and long term investments in the business around value, around our core offering. The Whopper-- we launched the 100% real Whopper. We continue to invest in digital.
We've now started to test our loyalty program for the Burger King brand here in the US. And we think the combination of all these investments and initiatives, we'll see some really good growth in 2021 and beyond.
BRIAN SOZZI: Yeah, José, I think our Myles Udland is good for three of those Cajun flounder sandwiches for breakfast. But I do want to go back on the chicken. We've seen a lot of fast food players really come out with a lot of new chicken offerings, new chicken tenders. Hardee's, Carl's Jr., come out with these giant chicken tenders. You have had a special promotion on chicken tenders. How concerned are you about maintaining your position with Popeyes in that chicken sandwich?
JOSE CIL: Look, it's not a surprise the chicken protein has been a big part of growth in the chicken QSR space, but really for others in the QSR space. So we're not surprised. And we welcome all competitors to go out there. But more importantly, we welcome our guests and new guests to come out and try the Popeyes chicken sandwich. And they can choose for themselves which is the one that they want to go to. We have an incredible everyday value proposition with that chicken sandwich at $3.99 a la carte. So we feel confident with the Popeyes chicken sandwich, that it'll continue to be the standard bearer, if you will, for chicken sandwiches in the space.
And we think there's opportunities with Burger King to continue to invest in and expand its chicken offering as well and be part of what's a growing category in the quick service restaurant space. We also think, as it relates to Popeyes, a big opportunity in handheld chicken with nuggets, tenders continuing to grow that part of the business, which is one of the fastest growing parts of the chicken QSR space-- handheld chicken beyond the bone in which we already do quite well with.
JULIE HYMAN: José, it's Julie here. I want to ask you about input cost, specifically labor costs. As you know, there's been a debate in the US Congress about raising the federal minimum wage. It doesn't seem like it's going to be in this stimulus bill, or if it is, perhaps not as high as some Democrats would have it. There's been a lot of academic papers on the effect of higher minimum wages. I'm sure that you will have studied it. What would the effect be on your business of a $15 minimum wage?
JOSE CIL: Hey, Julie. Thanks for the question. Look, we've been seeing increases in minimum wage across the country in many markets in many states. Just recently, Florida voted it in, in a staged approach over the next several years to get the $15. So it's not new. I think the new idea here is that there may be federal oversight on that. And that might bring a little more consistency to the discussion into the topic. We've been working on it for a long time. We're in several states already.
I think it's north of 20 states today that have minimum wage statutes that are staging their way to $15. Our business has been accustomed to dealing with labor inflation and commodity inflation for decades. It's part of the business. The focus we have is to continue to work with our owners and our franchisees to ensure that they have really good teams, that we have productivity tools that help them be more efficient with their labor in the drive-through. We've introduced the mobile apps, pre-order mobile order and pay, which has helped from a labor standpoint as well.
We continue to be more efficient in the drive-throughs and in service modes, which helps productivity and throughput, all of which helped drive the top line and help ensure a balanced flow through to the bottom line. So we'll continue to work with our teams on that and keep working on tools to help ensure that we continue to serve great food and do so efficiently and productively, so that our franchise owners can continue to make a profitable living with the business they have.
BRIAN SOZZI: José, I liked your annual letter that you wrote this morning, also out with your earnings release. I actually tweeted part of it. But what's the biggest challenge your leadership team has on its plate this year?
JOSE CIL: Look, I think we've made, Brian, some incredible advances in 2020 in the face of unprecedented challenges. Our team has come together incredibly well. I think we're collaborating better. Any walls that might have existed beforehand, I think everyone's putting everything aside and working more closely together and more focused on priorities that we think are critical for the long term health and growth of our business. My focus and my prioritization is around ensuring we have great teams, that we keep investing in our tech teams, we're investing in our marketing teams, we're investing in our operations teams, our development teams.
We continue to invest in the business on the people front as well as on the technology front. Because we think it's critical for the long term health of the business. So I'm focused on teams and I'm focused on engagement. I'm focused on our franchisees, ensuring that they have the tools and they have the clear vision of where we're going so that they can focus on the guest, which is ultimately the most important aspect of our business. So, people-- investment in those areas as well as focusing on engagement and keeping everyone energized. That's my focus. That's what keeps me up at night.
And I'm excited because we've got great brands, great opportunities in front of us. And we're excited about heading into 2021 with aspirations for growth for the long term. So we're looking forward to keeping you updated on our progress and we're excited about what's to come.
MYLES UDLAND: All right, José Cil is the CEO at Restaurant Brands. José, it's always great to talk with you. Stay safe and I know we'll talk after the next quarter.
JOSE CIL: Great, thanks so much Myles, Julia, and Brian.