Restaurant Brands International Stock

Good morning, everyone. Thank you for joining us for day 2 of our Global Consumer Conference. My name is Jeff Bernstein. I'm the Restaurant and Foodservice Distribution analyst here at Barclays. We are thrilled to have our next presenting company with us, Restaurant Brands International.

With us on stage from Miami, Florida, we have Josh Kobza, to my far right, the CEO; and Sami Siddiqui, my immediate right, the CFO. By way of background, for those not familiar, Restaurant Brands International or RBI is a multinational quick service portfolio comprised of 4 brands: Tim Hortons, Burger King, Popeyes, Firehouse Subs.

Their long-term annual guidance is for 8% plus system sales growth, supported by 3% plus comp and 5% plus net unit growth. With that said, we have lots of questions from management.

We want to thank Restaurant Brands for joining us this morning, and I'm going to kick it off with some questions for the team. So Josh, Sami, thank you so much for joining us.

Thank you for having us.

Thanks very much for having us.

Thank you for coming out of retirement for this.

Yes. So I have still another 3 weeks for official retirement. So -- but it has been an honor and a privilege to cover you guys for so long through so many different phases of the Restaurant Brands portfolio.

How many years has it been now?

So I joined as the restaurant associate in 2000. 25-plus years of looking at restaurants, 4 quarters a year, that's 100 quarters of Burger King.

And you still have us beat by a bit.

Yes. Well, I look forward to [indiscernible] but specific to Restaurant Brands and the industry because you guys have a look at so many different brands in so many different countries, you guys are a great intel for us as we think about our consumer conference. The first thing people usually talk about for your portfolio is Burger King U.S. I think I just saw over the past couple of days, a new nuggets commercial, which is very exciting.

You guys seem to be coming outside of the box and really attacking different products of yours and trying to upgrade. So I'm wondering anything you can share on that new nugget launch or how that's performing? And -- but just more broadly, I mean, the share gains, where are you in that transformation of the Burger King portfolio, whether it's more value, franchise economics? This is obviously a world to talk about, but start with kind of an overarching Burger King view.

Yes, absolutely. So Burger King has been doing great. You've seen that over the last few quarters. And as you pointed out, we just launched new and improved nuggets. We did it together with a Dragon Ball Z promotion. So another one of these IP collaborations that we've been doing a number of over the last couple of years and have been a tremendous success for the business. We're thrilled with how the nuggets are doing.

We upgraded the quality of the product. It's juicier, full white meat chicken. We improved the crispiness of the coating on the nugget. And also importantly, everybody who loves nuggets knows that nuggets go well with sauces. So we've been on a journey to upgrade our sauces. It's actually been a project that's been going on for a few years.

I particularly am passionate about -- and I'm thrilled with how the sauces came out. My favorite one is the honey mustard, which I've been excited for us to upgrade for a while. And I think the combination of the upgraded core products and this Dragon Ball Z partnership with a really cool special sauce, the Super Saiyan Sauce has gotten our guests pretty excited. And you've probably seen that in some of the online chatter.

But I think you step back a little bit, the journey we've been on with Burger King has been fantastic. It's been a multiyear thing. We had to go and we had to fix a lot of the fundamentals. We had to do work on the assets. I think Tom and the rest of the team did an awesome job really improving the baseline level of consistency of operations within Burger King. And you saw that in every metric we look at over the last 3 to 4 years.

So I think that improvement in the underlying fundamentals set the stage for the marketing elevation and the product elevation that we started to do this year. We've also done a service elevation window over the summer with the Whopper Guarantee and Your Way Champions. And I think what's so exciting about what we're doing there is you asked the question kind of where are we in that journey.

I still think there's a long way to go. Burger King has improved, but it can be much, much better. We have a whole kind of calendar for a couple of years of further things that we want to do to elevate the menu across the entire menu, and that will take us a little bit of time to get through. And -- but we also have opportunities on some of the things I talked about, our assets aren't completely remodeled yet. There are still places where there are old Burger Kings, and we still need to work through that. And there are still places where I think we can operate even better and even more consistently in certain patches of the country.

So I think we're -- we still have like a number of years to go in this journey, but it's really fun to see some of the payoff happening so far. And the last one I would say is underpinning all of that is working together with our franchisees. And I think Tom and the BK team have done a really nice job really getting the whole system on board with the journey that we're on, where we're going and how we're going to go about it, getting people excited about investing in product upgrades and making the products even better for our guests, focusing on our franchisees' profitability and trying to keep moving that forward.

And I think that alignment of the vision and where we're going has been really important to the progress we've been able to make so far. So it's been pretty good, but I think we have quite a bit to go in front of us.

And I do want to give you a lot of credit because there -- when you have a turnaround of a big brand like Burger King, it's hard to do, and there's been past attempts at it. But if you don't give it multiple years and have the conviction and the Board support, obviously, Patrick and team to say, we're going to give you several years to do this the right way, it can have sustained flywheel success. So...

I think it's a great point. And if you think about the journey with Reclaim the Flame, we had a pretty good first year. And then things got a little bit tough for a while. Beef prices went up, and it took a while for that underlying work, the work on the assets and the work on the operations to really come through. And you have to have the patience and you have to have the support of your Board to keep making those investments. And I think we're all really thankful to our Board and our shareholders to kind of see through the good times and the bad. And I think we're now starting to see some of the payoff from that patience.

Obviously, the broader quick service segment, if I could just touch on that. I mean that is where you have a very strong foothold across your portfolio. Just maybe talk about the strengths and/or weaknesses as you see it for the quick service segment in the current environment, maybe the rise of nontraditional competition, which gets a lot of attention these days, but obviously, it's smaller scale, but moving upward and becoming larger.

Yes. I think overall, the quick service restaurant segment is a great segment. If you look at the historical growth trajectory, it's been pretty stable. It's been a consistent grower over time. And I think that's because we provide something really important to our guests. We provide good value, good quality, convenient meals.

And that plays a really important life -- important role in the lives of our guests. It has and it continues to do that. And I think when I think about competition, you're going to have it in any of these consumer sectors. And I'd say it's a good thing. It pushes us to evolve the category and make the category better and more relevant.

And I think what's incumbent upon any of us, whether you have a newer brand or a brand that's been around for a long time, is to think about how you continue to evolve that brand in a way that's true to what the founders wanted for the brand and what really differentiated it and gave it a place to win in the marketplace.

But it's increasingly relevant to your guests. And I think what we're doing with Burger King is a perfect example of that. Let's stay true to flame grilling the Whopper, but let's be figuring out how we can make everything about this concept better and more relevant to our guests today.

We have a saying internally, I have to give Patrick credit for this one. He's the one who first brought this up. And the best test you can give yourself is for my core guest, am I making the experience on the product better this year than it was last year?

If you're doing that, you're probably going to grow your sales and traffic. And so we keep that test in our minds as kind of a limit test of whether we're working on the right things and whether we're making progress. And I think you've got to keep your focus there. And if you do, you're going to do pretty well.

And obviously, quick service focuses more on the lower to middle income versus others that focus on the middle to upper income. Thoughts on that more broadly. It seems like lower income has been a little bit more challenged for some in quick service, but yet you're putting up very strong results. So how do you kind of think about that income dichotomy here?

I think the consumer environment for us has been more or less stable over the past few quarters at least. I feel like the environment we've been in hasn't changed on us too much. And what we've been focused on within our business is making sure that we've got the right balance of more premium innovation.

You can think about things like our Whopper by You that where we're letting guests innovate and doing premium offers that build on that core equity while having consistent value those folks who are looking for a specific price point. We want to have that price point available to them every day consistently. And that's what our $5 Duos, $7 Trios, we've been on that for quite a while. And I think our guests who are looking for that price point really appreciate that consistency.

And taking a step back, obviously, you meet with investors pretty regularly, and we all appreciate that. I'm just curious, like what question do you get that surprises you or perhaps on the flip side, what question don't you get that you're wondering why people aren't asking more about based on what you know about the company?

Yes. It's funny you asked this question, I think, last year. And my answer is probably the same, but slightly changed in a nuanced way, I guess. We get a lot of questions about Burger King U.S. as we were just talking about. And Burger King U.S. is about 17% of our operating income. But I'd say it dominates probably the majority of the conversation. And I think the questions we were getting maybe a year ago were really around when is the turnaround coming, what's happening?

I think for all the reasons that Josh provided, people are starting to see the results, right, through the first 2 quarters, I mean, Q2 being at an 8.5% same-store sales in an environment like this, really something amazing that Tom and team are doing.

So the questions are still on Burger King U.S., but they've shifted to how sustainable is the turnaround. And I think to Josh's point, this is not some flash in the pan success, right? I think Tom and team have been at it really maniacally executing for 4 years now. And I think this is sort of the beginning results of all that hard work and all that execution.

And that's why I think we firmly believe it's sustainable because not only has a lot of work been put in, but there's still so much work to be put in, in the future, right? When you think about remodels, right? A little over 50% of the system is remodels. That means we have almost half the system to go, about 40% of the system to go.

Refranchising, we've just started refranchising restaurants. We have about 1,000 restaurants to get into the -- or a little less than 1,000 to get into the hands of the right operators. The remodels, like I was saying, was they're showing good returns and consistent sales uplift, so promising results there.

You think about just elevation, as Josh was mentioning, we've elevated our Whopper. We're selling more Whoppers now. We've elevated our nuggets. There's more products in our core menu that we will continue to elevate and build on that latent brand love for Burger King.

So I think I get excited because I know we're still in early innings, and there's so much opportunity on the horizon such that we will continue to -- we feel good about continuing to be able to drive results there.

I think to the second question around what are the questions we don't get asked. And Josh and I talk about this a little bit. I think one of the interesting questions that doesn't come is really around sort of the aggregate of RBI. People tend to focus on the individual brands, which is great. But I think when you think about aggregate RBI and what we're able to do, this is a multi-branded diversified company.

We're in over 100 countries all around the world, little concentration risk, I'd say, it's really exciting what we've been able to do with these brands and how much growth potential they have on the horizon. And I think we firmly believe that having them under the RBI umbrella is the right place for brands to be.

I think for a few reasons. I think one is when you think about the synergy of having multiple brands under one house and under one roof, right, everything from procurement synergies, from talent and moving people around from just the scale of what we can provide. And I think the biggest one being our global growth model, right? I think our ability to take brands and plug them into the global growth model is, I think, pretty differentiated.

I think if you look at Popeyes and what we've been able to do with Popeyes in just 7 or 8 years, it's been a really incredible global growth story. We're one of the top 10 international -- or Western brands on an international basis now. And Popeyes wasn't very relevant before we had acquired it on an international stage.

And so I think there's a ton of value to that. And I'd say the last thing about RBI is when you have this kind of global diversified platform, you don't need every brand to outperform every quarter to still hit the algorithm. And I think like just like all of you kind of construct balanced portfolios, this is a portfolio, right? And ultimately, we're able to -- we've done it this year, right? There are some brands that have outperformed like Burger King and some brands have fallen a little bit short for us. Popeyes is probably namely Popeyes. But year-to-date, we've grown aggregate comps 3.5%, and we've grown aggregate operating income year-to-date 8.5%, so above our algorithm. And so that is another powerful aspect of the model.

And then lastly, I'd say is just the strength of our balance sheet and our ability to put capital, put resources, put investment behind brands when they may need it. So I would love for folks to focus more on the aggregate RBI story as time goes on because I think it's one of the most compelling stories in our industry.

I guess everyone tends to focus on the individual brands. It's hard to think about the whole portfolio. But from your seat, I would hope that right. It's the message of the entire RBI portfolio. Josh, you mentioned -- well, Sami just mentioned elevation and taking the brands up and Burger King gets a lot of attention there. But yet value remains such a focus across QSR right now. Just wondering how you think about value, how you message at each of your brands to say, how do we balance the value strategy to make it effective. But at the same time, we don't want everyone coming in and just buying off the value menu. So how does that balance come into play?

Yes. I think value always has been and always will be one part of the business. I think if you look in the media, it tends to go through cycles of kind of prominence that I think are bigger than the actual variations in its relevance to the business. If you look at kind of value mix within our businesses, especially for the, let's say, the U.S. burger business, it'd be around 30% of the menu.

It doesn't really change that much. It goes up and down a point here, 2 points there. And it is important to have, but it can't be your whole strategy. So I think that's why we've always had the perspective, we need to be working on premium stuff. We need to work on core. We need to have some value offering. And ideally, like I was saying a little bit ago, it needs to be consistent. People want to know that when they go to one of your concepts, they're going to have access to a certain price point, a certain value construct.

And I think also just from a media efficiency standpoint, you don't want to have to educate your guests on a new construct every couple of few months. It's expensive to do that. So the best kind of place you can get to is where you have something that's consistent over time, where you create the awareness of this construct and then you stick with it and you don't have to overinvest media and you can invest some of that media in other places of your business.

So that's sort of where we've tried to get to. It's a little different for every business, though, whereas Burger King might have a $5 Duo and a $7 Trio. Our Tim Hortons business probably has a different view of value, which is more of an everyday price point. We have guests coming to us. Many of our loyal guests come 4 or 5 times a week. So for them, it's an everyday price point that they get and maybe some personalized offers in the app. It's a little bit different for each of those businesses, but I think the goal is figure out what it means within each of your businesses and try to stick to something more or less consistent if you can.

Yes. Shifting gears a little bit to Tim, Tim Hortons in Canada. Maybe you could just -- most of us being here in the U.S., provide some color on the competitive dynamic in Canada. It seemed like you had some confidence on this last quarterly call on reaccelerating comps in the second half of '26. Maybe just the broader state of the Canadian consumer keeping Tim's best-in-class, I'm sure there is no easy task.

So the Tim's business is amazing. It's one of the best restaurant businesses, I think, anywhere in the world has incredible average tickets. If you go through a Tim Hortons drive-thru in Canada from like 6:00 to 10:00 a.m., cars are going through the drive-through every like 23 seconds. It is an incredible business that we have up there.

I would say the comps were a little bit softer last quarter. And I think the macro up there it's been kind of stable over the last few quarters. So not changing too much. What we're focused on is making sure that our marketing calendar is being really impactful and driving the business forward.

And we've had a couple of new things that we've been working on in the last couple of months. We obviously did a big partnership with Harry Potter that got everybody really excited. We did -- we had all kinds of merch with wands and donuts and special drinks that matched up with all the houses from Hogwarts.

So that was a lot of fun. And we also recently launched Matcha. And I think one of the things that everybody has been focused on is cold beverage and the pace of innovation. So we were really pleased with the response that we got to Matcha. It's an interesting one for us because if you think about our core business, like I said, that 6:00 to 10:00 a.m. kind of morning peak is very routine.

We're like max throughput in a lot of our drive-thrus. And so some of this cold beverage innovation and things like Matcha, they're an interesting addition to it in that you get more of a P.M. business. It can be more of an afternoon beverage, which is great.

That's a lot of where we're trying to take our innovation pipeline is cold bev, P.M. food, get more folks coming back into the restaurants through other dayparts. So we found some really interesting things there. And I think if you look over the next few months throughout the back half of the year, you can expect to see an even faster pace of cold beverage innovation to go -- to lean into some of the categories where I think you're seeing guests go to in both the U.S. and I think increasingly in Canada.

What is the mix of A.M. versus P.M. because obviously, it seems like there's a tremendous opportunity if you're so busy 6:00 to 10:00 but you're paying for rent 24 hours a day.

Yes, it's meaningfully over-indexes on the A.M. piece, and we're quite a bit quieter in the P.M. as you go off into the evening. So that is the big opportunity to use the assets even more and bring people back later in the day. Around half of the business is before 11:00 a.m.

Half of the business before 11:00 a.m. Okay. Thinking more beyond Canada, but just the international aspect of the portfolio outside of North America. Maybe you could just share and again, it's difficult when you got 100-plus countries.

So generalizations, I can totally understand are not often helpful. But maybe color on the strongest few markets that you're most proud of. And maybe not everything is rosy, I can imagine. So maybe a couple of markets where there are some challenges and structural changes that are required. Like how do you think about that over the next 12 months or so?

Yes. Going back to one of the original questions when you talk about sort of underappreciated parts of the business, I similarly think our international business doesn't often get the type of credit that it should. It's almost half of our business, a little more than half of our business from a restaurant count perspective and almost up getting closer to 50% of our system sales and growing incredibly, right, growing system sales year-on-year double digits, growing operating income double digits. So a large, fast-growing business for us.

I think when we think about kind of the broader sort of international growth story, we tend to focus on paybacks, right? Ultimately, top line AUVs relative and bottom line profitability relative to the capital invested. And we look at often our top 10 markets. And our top 10 markets from a growth perspective, they have roughly 4- to 5-year paybacks right now.

And those are unlevered paybacks, which is really strong, right, when you think about 4- to 5-year paybacks and improving kind of every year. So our goal is to continue to kind of get that 4.5-year payback down to ultimately kind of drive that flywheel of growth. When you think about these top 10 markets, there are markets like France, there are markets like India, Korea, Japan, a bunch of kind of markets really all around the world, which kind of just highlights how diversified it is in terms of an international business. When you think about kind of some of the opportunities, I think because of that point on diversification, there's not really a sort of a single point of failure or anything like that in the model.

I will say the one that we spent a lot of time on over the last couple of years was China, which, as you know, for Burger King in China, it was a big focus area for us. We stepped in and took control of that business and are so pleased with kind of the results we've seen in really less than a year through the first 2 quarters of this year, comping double digits, getting those paybacks to a better place and ultimately kind of kicking off that growth flywheel. So I think we continue to be excited about it. Josh spends a lot of time. I think you were in Korea last week.

I was in Korea and Japan week before last. But that's interesting -- it's an interesting window into this business on both markets actually. The Korea business, we have a similar amount of units to our biggest competitor. So we go head-to-head there, and we've got a number of -- increasing number of markets where that's the case. But also Japan has been one of the most incredible stories that we've seen over the last 10 years.

When we brought in a new partner there a little bit less than 10 years ago. And at that time, I think we were sub-100 locations, and our biggest competitor was a few thousand. And we've now turned that into one of the best and fastest-growing markets anywhere in the world.

We're pushing towards 400 restaurants today on the way to 600 in a couple of years. And to one of Sami's points from earlier, the paybacks are down to like 2.5 years. So it's incredibly compelling for our local partner. They've done a great job building the brand and the business. I think I've shared a couple of anecdotes on the same-store sales there, but we've been double digits on double digits on double digits.

So I say that just to point out, we've got some really big markets across international for Burger King and for the other brands that are still relatively small versus what their ultimate potential will be. And so our focus is on building the brand in those markets, making sure that our partners have compelling paybacks and then supporting them to build the business out to its potential, and we've got 125 markets of that.

But I've got a long way to go. We've got a lot of those still to work on. And that's exciting to us because it means we have a long runway ahead of us of structural growth in the business.

With 100-plus countries, I'd love to borrow some of your frequent flyer miles, I imagine where you're going every week.

Josh's wife Holly would like that, too. He is always on the road.

That's a tough one. You mentioned that one of the brands that had been a little softer recently was Popeyes in the U.S., but yet since your acquisition, you're very proud of the direction it's gone, especially with the international growth. I was hoping you can give us an update just on how that turnaround is progressing, having a multi-brand portfolio, the ability to hopefully say, hey, Burger King has done really well turning around these 3 aspects.

Let's share our best practices from Burger King with Popeyes. So what's working well? What still needs to be revamped? Kind of what's the -- I think you said return to positive comps in the second half of the year was kind of the line in the sand. So any color you can share on Popeyes U.S.

Yes. Look, I think we still feel good about returning to positive comps in the second half of the year, most importantly. I think as we look at the business, we're seeing a lot of early kind of leading indicators of things getting better in the business. I know folks like to draw the parallels to Burger King.

And I think there are some parallels, though I think the 2 sort of big distinctions in my mind is, number one, as you think about the profitability and the health of the franchise system, the Popeyes franchise system is fundamentally healthy when you think about the balance sheet.

It was just a few years ago that average 4-wall profitability was over $300,000 per box. So it's come down a little bit since then, but our franchisees have made money and their leverage really continues to be under control, which was sort of a different story when we first started the turnaround at Burger King.

I think the second really important point as you kind of think about the Popeyes system is the vast majority of the restaurants have been built in the last 10 to 15 years. So when you think about the asset base, the average asset -- the average restaurant at Burger King was over 30 years old when we started the Reclaim the Flame plan, right? That's a big difference.

And I think it then sort of dictates the capital requirements for the franchisees. So those are kind of the differences. I think Peter, who was Chief Operating Officer at Burger King and is now President of Popeyes, really did work closely with Tom and learned a few things. I think it kind of comes down to probably consistency in value, which Peter has been working on, consistency in operations and then probably consistency on the core menu.

And so when you think about value, and Josh just hit on this, it's really expensive to introduce new value mechanics every 3 or 4 months. So one of the first things Peter did about 9 months ago is introduce this $5 Faves. And we've stuck with the $5 Faves menu for quite some time now. And we're actually seeing our value perception get better. Our value perception, our value for money perception has improved 3 points year-over-year, just kind of from launching that consistent value platform.

I think on the second piece around consistency of operations, similar to Burger King, we've expanded field resources. We've added more touch points to the restaurants, to the franchisees, more trainings for restaurant general managers, a lot more hands-on field activity. And what you're actually starting to see is guest complaints, which we track very closely, guest complaints are trending down in the Popeyes system, which is great to see. It's an early sign that the turnaround is really underway.

And then lastly, kind of on core execution, I think Peter has really leaned into we have 3 core platforms that we're known for, our Bonafide bone-in chicken, our tenders, and our chicken sandwich. And we want -- back to the operations point is we want to be the best at those.

We already know we have the best tasting product, but we want to be the best at executing that product. And what we're seeing there is actually product satisfaction in those 3 categories is getting better on a year-over-year basis. So all of these stats putting together, which we track regularly are showing us and giving us confidence that guests are starting to see changes in the restaurant.

It will, of course, take time, but like I think this is fundamentally different than the Burger King turnaround. And we're really excited. And I think that's just highlighted by our confidence in kind of returning to positive comps in the second half.

Yes. No, it's exciting to see different brands at different stages and to see what brand we will be talking about next year, I'll be listening to you talking about next year is exciting. Taking a step back because you said that you don't get as much appreciation for the broader RBI portfolio rather than individual brands, your algorithm calls for 3% plus system-wide comp growth on an annual basis. I think you said you were running just 3.5% for the first half of this year. So it seems like a reasonable target. But your confidence in sustaining that.

Obviously, there are better years, more difficult years. And within that comp, how you think about maybe traffic versus check? Obviously, people would love to see just endless traffic growth. But just a high level, the ability to sustain 3% plus global comp growth across the portfolio.

Yes. So as you both pointed out, we feel pretty good about the year so far. We're above that 3% and did that in both of the quarters. So I think you can see kind of the net of all the things going on in the portfolio is a pretty good outcome.

I think we said on the last earnings call that we felt good based on where we were about how the rest of the year looked. So I think we're doing pretty well this year and hope to continue that. In terms of the check versus traffic, I think we're always going to want to be mindful of CPI kind of market inflation rates.

Those are generally targeted at less than 3%, 2% to 3%. So the way we always thought about that was we want kind of flat to a little bit positive ticket growth or kind of transaction growth, sorry, and then to have our pricing be more or less aligned with inflation because we're cognizant that there will be some inflation in those core inputs. So that's sort of how we've always thought about that target.

And being that you're not running most of these restaurants that franchisees are running these. I'm just curious, conversations you have with franchisees their confidence, their partnership with you? And would you say the overall health of the system and the franchisees kind of the alignment?

I think it's pretty good. We've spent a lot of time over the last few years, I would say, even deepening our relationships with our franchisees. I think it's been core to the success that we've had, especially going through tough situations like we had at Burger King. And I think the alignment of that system is better than it's ever been.

I think if you go back, there were a few structural things that we did that really helped that. When Patrick joined, we started publishing our franchisee profitability every year. We're one of very few companies that does that. And we also put our franchisees' profitability in our own team's bonus targets.

And that creates a lot of alignment, a lot of trust. People know that we're going to be publicly held accountable to what's happening with the franchisees' profitability. And our team's economic outcomes are tied to the franchisees' economic outcomes. Incentives aren't the only thing. There is a lot to the relationships. And I think people also just -- after we did that, we've built trust through cycles.

Folks work together through years and different campaigns and initiatives, and they start to -- you earn trust over time through how you do things. And I think our teams have done a really nice job building the trust with their respective franchise systems. So a lot of things coming together to generate, I think, really productive dynamics in our franchise networks.

And as you all know who work in this business, that's one of the most important things you can possibly have in a nearly fully franchised system. You need to be growing in the same direction. People all need to be excited about the plan and the elements, and that's what allows you to deliver big results like we're seeing in some of our businesses today.

We think of a franchise system as kind of a house of cards. So if you don't have a strong foundation, you can have all the best ideas in the world at corporate. But if the franchisees aren't executing it and aren't feeling good about the system, what's the point of that?

For sure. The more excited the franchise system and the restaurants, the managers, the team members are, that makes stuff go. And that's one of the -- I would tell you that's one of the magical things about some of the elevation work that we've done this year at Burger King.

When our teams are more proud because they're still -- they're serving a beautiful Whopper that looks great. It's in a box. It's tall -- they're serving nuggets that they know that they're better, they're more proud of the products that they're serving. That changes the interaction at the point of sale. And that's going To change your sales and the effectiveness of all these new initiatives we're doing. So I think really in these systems, you can't underestimate the power and the importance of bringing the whole system along.

And investors tend to focus a lot on comp or same-store sales growth. That tends to be a little bit more volatile, obviously, demonstrates the health of the business. So you want to focus on that. But what we often feel is underappreciated is the unit growth side of things, which is the more stable.

You have pretty good line of sight for multiple years. And that actually comes up a lot on RBI because the unit growth has slowed down for a bit as a portfolio. Just wondering if you could talk about your confidence in reaccelerating that unit growth from '26 to '27 and ultimately getting back to, I believe, the 5% plus in '28. I mean, obviously, the consumer environment is challenged.

So you make a promise, but then it's hard when you're surprised by things. But what are you most excited about and your confidence to getting back to that 5% net unit growth in '28?

Yes. If you look over the last 2 years at our net unit growth, the biggest swing factor had really been BK China. And Sami referenced it earlier. We had a tough time there, and we ended up stepping in and now found a local partner. So that is -- if you kind of -- if you pull that out, the net unit growth was actually much more stable than you would see in the aggregate.

So that's why we focus a little bit on what's going on with BK China. And I think the good news is now that we brought in a new partner, we're doing fantastic. We're doing much better than we had even hoped. And the same-store sales and the profitability of the restaurants in that overall business have improved considerably. And I think that really reinforces kind of our excitement and our local partner, CPE, their excitement about the trajectory of unit growth.

And I think that will be the biggest single swing factor from last year to this year and future years. And we feel really good about it. We had cleaned up some restaurants a couple of years ago. We're starting to get the benefit of lapping that. You're starting to see that in the sequential changes in the net unit growth.

And as we look into the back half of this year and into the future years, now I think we can start to see the big ramp-up in net unit openings. I think we shared when we did our Investor Day that we expect to get to just over 200 net new units in 2028, and we're feeling really good about that. Hopefully, we can go even further if we continue to see really good momentum in the business, but we've been very pleased with what we've seen so far there.

That's 200 net new in China and then in aggregate by 2028, around 1,800 net new units across the business, which is around 5%.

Yes. I've got another 10 questions here, but I have 60 seconds. So I just wanted to ask about capital allocation. It's an asset-light model. It sounds like you're refranchising the almost 1,000 Burger King units, and that's going well. But you talked about at your Investor Day, big topic was leverage easing, getting towards an investment-grade credit rating. How do you think about that progress on that, future use of free cash in that regard?

Sure. Yes. No, quickly on capital allocation. I think when we last spoke about it, and I think really for the last couple of years, we've had a pretty balanced capital allocation strategy where we've been able to invest in our brands, even with some of this more ramped up investment in Burger King with Reclaim the Flame.

We've still had ample cash flow to have a healthy and growing dividend. We've been able to actually take leverage down on the company, and we've been able to buyback shares. I think our big announcement at our February Investor Day was really twofold. I think number one was our desire to keep deleveraging to get to between low and mid-3x net leverage, which solidly positions the company as an investment-grade company.

And number two was to start using excess cash flow to repurchase shares. So on the investment-grade side, we just think this is the best, deepest, most stable pools of capital, largest pools of capital really in the world. And from the rating agency side, we've had great conversations with all the rating agencies. S&P and Fitch already have our first lien debt as investment grade rated. And our corporate rating will kind of -- we're one notch away from being corporately investment grade with those 2 rating agencies.

And you may have seen yesterday that Moody's upgraded us as well. So we made one step closer to investment grade with them. So we are making progress on this. We expect to be at these investment-grade leverage levels by 2028. And then sort of the second part of that is using excess cash flow and really returning the bulk of cash flow to shareholders.

So we've had, I think, over 50 consecutive quarters of growing dividends now, and that's around a 60% payout ratio on our earnings. And the remainder of cash flow for this year, around $500 million, is now going into repurchasing shares. We think it is a compelling time to be buying back our own shares.

And especially as we see the path to simplification and the business is simplifying, we anticipate that by the time we get to 2028, it's a really exciting time from a capital allocation perspective. You can imagine a world where we're continuing to grow earnings and EBITDA, we're investment grade and we can use excess leverage capacity to effectively return that to shareholders, keeping our dividend payout in place and also with the share buy back. So it's a pretty exciting time to be a shareholder.

Yes. I think that's what has us, I think, very excited is this vision of where we can be in 2028, which is not that far away of getting back to this 5% unit growth, delivering consistent 3% plus same-store sales. So you get that organic kind of 8% AOI growth. So you've got consistent organic growth, distributing a lot of capital back to shareholders through both dividends and share repurchases.

That gives you a pretty compelling total shareholder return and a stock that has a very low beta. So it's really uncorrelated from a lot of other things. And we think that's a pretty compelling vision of the world and a pretty compelling place to be invested.

Well, I mean, congratulations on this year thus far. I mean you've been one of our best-performing names this year. And we are out of time, but we wanted to thank Restaurant Brands International for joining us.

Hopefully, you get a chance to meet with management at some point during the day today. But we want to very much thank Josh and Sami and the team for joining us, and thank you all as well. Have a good day.

Thank you.

Good morning, and welcome to Restaurant Brands International's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kendall Peck, RBI's Vice President of Treasury and Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Restaurant Brands International's Earnings Call for the quarter ended June 30, 2026.

Joining me on the call today are Restaurant Brands International's Executive Chairman, Patrick Doyle; CEO, Josh Kobza; and CFO, Sami Siddiqui. Following remarks from Josh, Samy and Patrick, we will open the call to questions.

Today's discussion may include forward-looking statements, which are subject to risks detailed in the press release issued this morning and in our SEC filings. We will also reference non-GAAP financial measures, reconciliations of which can be found in the press release and trending schedules available on our website. As a reminder, organic adjusted operating income growth is on a constant currency basis and excludes results from the Restaurant Holdings segment. For calendar planning purposes, our preliminary Q3 earnings call is scheduled for the morning of October 29, 2026.

And now I'll turn the call over to Josh.

Thank you, Kendall, and good morning, everyone. Q2 was another strong quarter. We delivered 3.8% same-store sales growth and 2.9% net restaurant growth, driving 6.4% system-wide sales growth, 6.7% organic adjusted operating income growth and 12.9% adjusted EPS growth.

Last quarter, we said our results were early proof that the 2028 vision we laid out at our Investor Day was taking hold. Q2 built on that momentum. We accelerated same-store sales, exceeding our long-term 3% algorithm for the third consecutive quarter, delivered double-digit earnings growth and returned $435 million of capital to shareholders. We also advanced our other key priorities, strengthening our path to becoming an investment-grade company and making progress towards 5% net restaurant growth, all while being the partner of choice for the best franchisees and the employer of choice for the best talent.

Just as importantly, our results highlight the strength of our diversified portfolio and disciplined operating model. By investing behind each of our brands while executing consistently against our long-term strategies, we've built a portfolio capable of delivering durable top line and earnings growth across a variety of consumer environments. Those strategies continue to drive results with Tim Hortons and International each delivering their 21st consecutive quarters of positive same-store sales growth. Burger King U.S. was a standout performer this quarter with our elevation strategy driving another major step forward in sales and expanding our outperformance versus the industry to the high single digits.

I'm incredibly proud of what our teams and franchisees have accomplished so far this year. Through the first half of 2026, we've delivered above algorithm same-store sales of 3.5% and organic adjusted operating income growth of 8.5%, along with nearly 14% adjusted EPS growth. These results highlight the power of strong alignment with our franchisees and consistent execution every day in our restaurants. We're excited about the opportunities still ahead as we look to build on this momentum in the second half of the year.

With that, let's turn to our segment results, starting with Tim Hortons, which represents roughly 41% of our operating profit. At Tim Hortons, Canadian same-store sales were relatively flat at plus 0.1%. While we maintained our leadership positions in coffee, breakfast and baked goods, our calendar didn't drive the growth we've come to expect from Tims and was unable to lap last year's major platform launches.

However, there were encouraging signs as the quarter progressed. In late May, we introduced melts, one of the most requested items that guests wanted to return to the menu, and we saw continued growth in cold beverages. As we look ahead, Axel and the team have an exciting marketing calendar, kicking off next week with our Harry Potter Back to Hogg Worth campaign, featuring magical baked goods and beverages designed to appeal to fans of all ages and celebrate 25 years since the release of the first film. We'll follow this with new flavors across our core breakfast offerings and an exciting holiday partnership later in the year.

Our recent Mata launch also unlocks an entirely new beverage innovation opportunity, while the continued rollout of fountain equipment is enabling us to further expand our cold beverage offerings like Soda Swirls, which is Tim's version of a dirty soda, while also improving back-of-house efficiency. We're also excited about our upcoming loyalty partnership with Canadian Tire, which will allow guests to link their Triangle Rewards and Tims Rewards accounts, earning Canadian Tire money with every Tims transaction and extending the reach of our digital ecosystem through one of Canada's largest loyalty programs.

Beyond marketing, we're on track to accelerate development in Canada with approximately 80 gross openings this year compared to over 50 last year, spanning every Canadian province, including Ontario, Alberta and Quebec. These will primarily be standard drive-thru restaurants, which deliver paybacks of under 3 years, one of the strongest in the industry. And just as importantly, our restaurants continue to make a meaningful impact on the communities that they serve. This year's Smile Cookie campaign raised a record $23 million for more than 600 charities and community organizations across Canada and the U.S. And in July, our annual campaign raised nearly $13 million to support Tims Foundation camps.

Taking a step back, while our marketing did not perform as anticipated in Q2, we were encouraged by stronger business performance as the quarter progressed and are excited about the back half calendar. Tim Hortons remains one of the strongest and most loved restaurant brands in Canada. Canadians continue to rank us #1 in brand trust and affordable pricing, a testament to the unique role Tims plays in the everyday lives of our guests. We're focused on building on those strengths by delivering delicious food and beverages, reliable everyday value and a great experience to our guests.

I'm confident these fundamentals position us well for the years ahead. Now on to our international business, which drives roughly 29% of our operating profit and remains one of the most important growth engines of the business. This quarter, International delivered comparable sales of 5.5% and net restaurant growth of 5.1%, resulting in system-wide sales of 10.7%. Growth was fueled by strong execution across many of our largest markets, including BK Germany, Spain, Brazil, China, Korea and Japan.

Our teams continue to launch exciting innovation tailored to local preferences across both our core offerings as well as emerging platforms like chicken and beverages. At Burger King China, value chicken innovation and exciting Lopper collaboration with Michelin Chef, David Lye and the continued success of our whole muscle Double Patty Chicken burger drove another great quarter of results.

Germany's strong performance was supported by the dessert innovation and a new iced beverage platform, while in Spain, guests enjoyed our new Wild Ranch burger. These innovations were complemented by a variety of family partnerships around the world. Our Mandalorian collaboration extended across over 70 markets, including Spain, Germany and the U.K., while our Toy Story 5 kids meal helped drive traffic in countries like Brazil and Argentina. Underpinning all of this is a strong base of everyday value, creating a balanced offering for guests across a wide range of occasions. Earlier in the quarter, Thiago and his team hosted their annual Burger King CEO Summit in France, bringing together leaders across the global Burger King system.

Together, we aligned on priorities to drive long-term growth, strengthening restaurant operations, simplifying our technology platforms and improving unit economics. Those priorities continue to translate into results with average paybacks of around 4.5 years across our top 10 growth markets, and we remain committed to improving those over time. Delivering attractive returns supports new unit growth and market expansion, such as the recent successful launch of Firehouse Subs in Australia. In July, I visited our Firehouse business in Brazil with Thiago, Yuri and our local team, where transactions per restaurant are up over 60% just this year.

While in Brazil, we also toured Burger King and Popeyes restaurants. Popeyes continues to perform very well with comparable sales up over 20% year-to-date on top of roughly 20% growth in 2025, resulting in improving unit economics. Meanwhile, our Burger King team has accelerated investments in restaurant image and operations, and they're seeing incredible results there so far. I'm also very encouraged by Burger King's performance in China under CPE's leadership. The team has hit the ground running with another quarter of double-digit comparable sales and a sequential improvement in unit economics. Their operational expertise, local market knowledge and fast pace of execution are very exciting to see, especially given the important role Burger King China plays in our path back to 5% net restaurant growth. International's performance in Q2 once again demonstrated that our growth is broad-based and repeatable.

Across markets, our experienced local teams are executing a proven playbook that continues to generate attractive results in a wide range of consumer environments. After more than 4 years of consistent outperformance, this business remains one of the strongest long-term growth opportunities across our portfolio.

Moving now to Burger King, which represents nearly 19% of our operating profit. The business delivered another exceptional quarter with comparable sales of 8.6%, driving system-wide sales growth of 8.2% for the second quarter in a row, we're seeing years of our team's hard work translate into strong absolute results and accelerating outperformance with U.S. same-store sales of 8.5% beating the burger QSR industry by over 9 points.

In Q2, we continued building on the momentum established by the launch of our Whopper and brand elevation campaigns earlier this year. Those campaigns were just the first of many chapters in our multiyear elevation road map, all of which is anchored in listening to guest feedback to make the Burger King experience even better and more consistent across the country.

More recently, we introduced the next phase of our journey, service elevation with the launch of the -- your Way Champion and Whopper Guarantee. Together, these initiatives reinforce our commitment to ensuring guests get their order their way every time. Every Burger King restaurant now has a dedicated -- your Way champion, a reimagined restaurant general manager devoted to putting the guest experience first and making things right whenever needed. And if a guest whopper isn't up to our standards, we'll remake it with the next one on us.

Importantly, we have many more chapters in our elevation road map ahead of us from culinary improvements to operational initiatives to image, all of which supports durable outperformance. At the same time, we remain focused on the core pillars of our Claim the Flame by executing remodels, refranchisings and marketing centered around the Whopper, families and kids and consistent everyday value. Our Q2 marketing built on the momentum from the elevated Whopper with platforms like Whopper Wednesday and Whopper by You, featuring the loaded Halapenña Whopper, driving even more engagement with our flagship burger platform. We've seen Walker platform AUVs grow by over 20% since launching our elevation campaign, reinforcing our confidence that these initiatives are creating lasting behavior change. In May, we also strengthened our connection with families and kids by collaborating with Disney's Mandalorian, helping drive Q2 kids meal AUVs above $28 per day. That's up nearly 50% since 2022.

We're excited about this achievement, but there is still significant opportunity to grow the category as we remain well below historical kids meal levels. Lastly, underlying all of this is our steady base of everyday value with $5 Duos and $7 Trios continuing to provide guests with consistent value and choice. This quarter is more evidence that Tom, his team and our dedicated franchisees have built and are continuing to build a better Burger King. We invited guests back earlier this year to experience the improvements we've made over the past 4 years, and our results year-to-date reinforce that those investments are resonating. What excites us most, though, is that we're still early in our journey with more chapters of marketing and menu elevation to come alongside continued restaurant remodels and operational improvements that will further strengthen the Burger King experience.

Moving on to Popeyes, where U.S. net restaurant growth of 0.3% was more than offset by a same-store decline of 5.2%, resulting in system-wide sales of negative 3.3%. While sales remained soft during the quarter, we're encouraged by the improvement we saw and continue to execute against the same priorities we've discussed, improving operations and service, refocusing on our core menu and strengthening our value proposition. During the quarter, we completed the rollout of an improved tender spec across the system and continued leveraging our increased field support through operations coaching visits and training. These efforts contributed to improved product satisfaction across our core offerings.

And moving forward, we'll continue innovating around those core platforms while ensuring operational simplicity. On value, the $5 phase platform introduced in January continues to perform well, driving higher repeat purchase behavior and helping to support traffic. In Q2, we layered on the $6 big box in our $20 family meal to serve additional occasions, and we'll continue to focus on maintaining consistent, easy-to-understand value for guests moving forward.

Overall, Peter and his team are focused on the right things, and we remain confident in a return to positive comps in the second half of this year. By working closely with our franchisees, I'm confident Popeyes will deliver the best tasting, best value chicken in America. Finally, at Firehouse Subs, Q2 system-wide sales grew 7.5%, driven by 8.1% net restaurant growth and 0.4% comparable sales growth.

Our new steak and cheese melt was well received by guests and unlocks future flavor innovation opportunities like our recently launched Smoke Honeymelts. I was just at our convention in Nashville with Mike and the team, and it was great to see the enthusiasm from our franchisees. They were especially excited about our July announcement naming Firehouse Subs as the official subpartner of Major League Baseball across the U.S. and Canada. As Firehouse's first national professional sports league partnership, it provides another meaningful platform to build awareness and support long-term growth. We also introduced our new ladder up training program for restaurant general managers, which began rolling out this summer and reflects our continued investment in developing great restaurant leaders.

Separately, we continue to see excellent momentum across our development pipeline and remain on track to accelerate unit growth this year. With that, I'll hand it over to Sami.

Thanks, Josh, and good morning, everyone. Today, I'll discuss our Q2 financial results, capital structure and our 2026 financial guidance. In Q2, comparable sales of 3.8% and net restaurant growth of 2.9% drove system-wide sales growth of 6.4%. We translated that into organic AOI growth of 6.7% and nominal adjusted EPS growth of 12.9%.

This was another exciting quarter of accelerating top line growth, led by double-digit growth in our international business and high single-digit system-wide sales growth at Burger King and Firehouse. We also saw sequential improvement in net restaurant growth, led by a diverse mix of markets. We continue to expect net restaurant growth to accelerate through the second half of the year as we progress toward our 5% unit growth target by 2028. We converted our strong top line performance into double-digit earnings growth while returning capital to shareholders through both dividends and share repurchases.

At the same time, we made further progress toward our goal of achieving corporate investment-grade leverage, which I'll update you on in a few moments. This quarter, adjusted EPS increased 12.9% to $1.07 per share from $0.94 last year. This was driven by our AOI growth as well as a $6 million year-over-year decrease in adjusted net interest expense. In addition, our adjusted effective tax rate this quarter was 16.8%, bringing our year-to-date tax rate to 17.6%. We continue to expect our full year adjusted effective tax rate to be between 18% and 19%.

Now moving to cash flow and capital allocation. We generated $501 million of free cash flow in Q2, including the impact of $62 million of CapEx and cash inducements and a $22 million benefit from our swaps and hedges. We returned $435 million of capital to shareholders through our dividend and share repurchases, including repurchasing a total of $137 million of stock in the quarter.

Importantly, we remain on track to repurchase approximately $500 million for the full year. We ended Q2 with total liquidity of approximately $2.3 billion, including $1.1 billion of cash and a net leverage ratio of 4.1x, down from the prior quarter. As we shared at our Investor Day, we remain committed to becoming an investment-grade company. And in May, we achieved an important milestone on that path by receiving a ratings upgrade from S&P to BB+.

As our business grows, we will continue to naturally work our way down to corporate investment-grade leverage by 2028 or the low to mid-3x net leverage range. Finally, I'd like to discuss our 2026 financial guidance. First, we continue to expect segment G&A, excluding restaurant Holdings of about $600 million to $620 million for the full year. Second, we continue to expect net adjusted interest expense to stay approximately flat year-over-year in the $500 million to $520 million range based on a high 3% average SOFR rate, which flows through to less than 15% of our debt.

Third, we continue to expect 2026 CapEx and cash inducements, including capital expenditures, tenant inducements and incentives to be around $400 million. Fourth, we continue to expect Tim Hortons supply chain margins to be roughly in line with 2025 levels. And last, we continue to expect total RH AOI of roughly $10 million to $20 million for the full year, reflecting the impact of Carrols restaurant refranchising, continued beef inflation and incremental investments in our international start-up businesses that we expect to continue until we transition ownership to new local partners.

Lastly, I'd like to address FX rates, given recent movements in currency markets and U.S. dollar appreciation. Based on current rates, we expect an approximately $10 million headwind to AOI and a $0.02 to $0.03 headwind to adjusted EPS for the second half of 2026. To close, I'd like to take a step back. Year-to-date, we've delivered above algorithm same-store sales growth of 3.5%, above algorithm organic AOI growth of 8.5% and nearly 14% adjusted EPS growth.

On top of that, we've returned $750 million of capital to shareholders through our dividend and buybacks, and we've made clear progress on the path to corporate investment-grade leverage. Those are great results that demonstrate the strength of our business model and show we're executing against the plan we outlined at our Investor Day. And importantly, they keep us on track to deliver 8% organic adjusted operating income growth.

And with that, I'll turn it over to Patrick to provide his perspective on the quarter.

Thanks, Sami. Three months ago, I said I didn't believe our Q1 consolidated results were an outlier. I believe they reflected years of work that we're finally beginning to show up in our top line. Q2 has only strengthened that conviction. Burger King's performance this quarter was exceptional. Growing same-store sales by high single digits in today's restaurant environment is an outstanding outcome, especially following the momentum we delivered in Q1.

What's really encouraging to me is what those results tell us about guest behavior. Today, guests have more choices than ever before for where to eat and where to spend their dining dollars. And every day, more and more of them are choosing Burger King. That's the clearest indication that the work we've been doing is resonating. We're winning because we're delivering a better guest experience, and that's exactly what Tom and his team set out to accomplish when they launched Reclaim the Flame 4 years ago.

One thing I've learned over the years is that businesses rarely change overnight. They change because thousands of people make thousands of better decisions every single day. That's what's happened at Burger King. The effects of better operations, better culinary, better marketing, better restaurants and better franchisees have been compounding for several years. This quarter is an important milestone, but I see it as the results of that compounding work, not as the beginning or end of anything. The Burger King team and our franchisees have accomplished a tremendous amount, but they'd be the first to tell you we aren't close to finish.

We continue to see opportunities to elevate the menu, strengthen operations and keep raising standards across the system. That's the mindset you want after delivering results like these because it means they're focused on building a better business for the long term, not just celebrating a strong quarter.

And the reality is there are still meaningful parts of the business we haven't yet transformed, which gives me confidence there's plenty of runway ahead. More broadly, I think our year-to-date results say something important about RBI as a whole. We built this company around 4 iconic brands in 4 of the fastest-growing global QSR categories. Each of our brands has different opportunities and is at different stages of their journey. That intentional diversification allows us to continue growing sales and earnings while investing for the future. We don't need every brand to have the same results each quarter or be at the same point in its journey for RBI to deliver strong consolidated results. What matters is that we're consistently strengthening each business over time. I think that's one of the defining advantages of this company, and it's that balanced strength and consistent top line growth that continues to give me confidence in our ability to grow adjusted operating income by 8% and EPS at an even faster rate.

Our international business is another great example of that diversification. I continue to believe we have the strongest scaled international business in the restaurant industry. We are the only global QSR to grow our international system-wide sales by double digits each of the last few years. Our growth at scale is unmatched in consistency and in the absolute. And with Burger King China back on track, my confidence in our ability to continue outperforming is high.

At Tim Hortons, while our comparable sales performance wasn't our best this quarter, I remain incredibly confident in Tims, its strength and love with our Canadian guests and most importantly, in Axel, his team and our restaurant owners in Canada. Tims is a stunningly strong business and brand, and we will continue to drive this going forward. We're proud of what we've accomplished in the first half of the year, but we also know that our shareholders expect consistency and sustainable strength. The bar we've set for ourselves is higher today than it was a year ago, and that's exactly how it should be.

Our job is to continue earning investor confidence quarter after quarter. We have a lot of work left to do, but I couldn't be more confident in our people, our plans and our ability to keep executing.

With that, operator, let's open the line for questions.

[Operator Instructions] Our first question comes from the line of Brian Brittner with Oppenheimer & Co.

Congratulations on the year-to-date results. Congratulations on Burger King's standout quarter. As it relates to Burger King, I can certainly attest that my 3 boys are definitely helping that kids meal growth. They love their Burger King. And clearly, years of hard work seems to be showing up in the results. this year, and it's created some momentum. But you also said that you think you're still very early on in your journey, which suggests you still see a runway for above-average growth moving forward. And I think you gained the credibility to say it. And I know you're winning because you've tackled and improved the underlying fundamentals, but I would love to hear what you believe at this point in the journey may be the most overlooked drivers that you can still unlock for this brand moving forward to drive more outperformance.

Brian, thanks for the questions. And mostly, I think you just -- thank you because I think you just put a smile on the face of everybody in this room. So we appreciate it. I appreciate your voice love for Burger King. I would just echo a little bit of what you said. We do very much feel that there's a lot in front of us. We feel great about the sustainability of what we're doing because it's built on improving the fundamentals.

We see operations having improved tremendously over the last 3 to 4 years. We've started to make some progress on image, and we're starting to execute all the menu items that we serve even better. And if I can just take a fren seat, I think our team has done a great job, but I would like to say thank you as well to our franchisees because for as much money as we're investing in the system, they've been investing even more in bringing their restaurants up to modern image. And I think it's that alignment that we have with the franchisees that's been so powerful in the journey that we've been on over the last few years. And all the operational improvements as well, we have a hand in that, but really is our franchisees who have committed to upgrading operations in the restaurants. And so I think we have a lot to thank them for and making sure that we're serving you and your 3 boys better every day at each of the restaurants you go to.

In terms of what we have in front of us, I think we do -- I think Patrick mentioned this, we feel like we have a lot ahead of us. As much as we've made progress on image, we still have a lot of restaurants out there that aren't modern image. So I think we still got a few years left of getting to that point we've all talked about where almost every Burger King across America is a new modern Burger King. So I think there's still a big tailwind that we'll realize over the next few years. I think as well on operations, we've made progress. It was actually -- I think we were tied for the #1 burger chain in the ACSI index, which was a big evolution. But it still feels like we have a long way to go, and we still have spots within the system where we want to get better.

So I still think there's a lot of progress to be made there. And maybe one of the bigger things that we're still working on is we really want to continue to upgrade and elevate the menu. You saw us do this with the Whopper at the beginning of this year, but there's still a lot of other parts of the menu that we think can be made even better. You're going to see another chapter of this coming up in the next, call it, month or so, which we're pretty excited about. And we've got a few more chapters of menu elevation that are going to come over the next year and into 2027. So I would say really happy with the progress, but there is a lot of work left to do over the next couple of years, and we're looking forward to it, and we think there's just a lot more potential for the brand than what we've realized so far.

Patrick, anything you want to add to that?

Yes, Brian, first, congrats on raising your boys correctly. I know you've heard me talk about this before, but growth in this industry is -- happens because you wake up in the morning and you're confident that your average guest is going to have a better experience today than they did a year ago. And the reason I'm confident in Burger King's performance going forward is I know what we're working on in terms of culinary.

There are still things that we know can be better on our menu. I know we're going to have more remodeled modern image restaurants a year from now than we do today. We've got our value layer figured out and it's consistent. And the more people know that they can come to us for great value, it's going to do well. Our franchisees are leaning in and they're aligned with us, and they're committed to working with us to find ways to improve the service in our restaurants every day. So my confidence level that our guests are going to have a better experience a year from now than they do today is high.

And in a similar manner to how they're having a better experience today than they were a year ago. And that's what's going to drive growth. It's not going to be a new promotion that's going to do it. It's going to be that our marketing is talking about the truth, which is you're having a better experience at Burger King now than a year ago, and you're going to have a better experience a year from now than you do today.

Your next question comes from the line of Dennis Geiger with UBS.

Very helpful color on Tims Canada in the quarter. I wanted to ask a bit more about the improvement that you saw through the quarter and whether that was a function of some of the marketing adjustments maybe that you spoke to or something else that you would call out? And as importantly, as it relates to maybe thinking about the back half of the year and the trajectory for the brand through the back half after the improvement you've been seeing through the second quarter. Anything to highlight there? -- anything as it relates to the macro environment in Canada to call out or the competitive environment or anything else as it relates to your own execution and strategy?

Dennis, thanks for the question. I'll try to address a couple of pieces of that -- so in terms of the sequencing through the quarter, I do feel like some of our marketing got a little bit better. We had some stuff that didn't work as well in the first part of the quarter.

And we had some stuff that worked a little better, things like melt that came later on. It was something that guests had asked us for, for a long time. we ride back, they really liked it. So that helped. I would say, overall, the macro picture in Canada has been relatively stable. If you look at things like CPI, it's been around kind of 3%. Unemployment has been in sort of the mid-6s, interest rates in the low 2s. Maybe that CPI ticked up a little bit with gas prices in the beginning part of the quarter, and that could have had a little bit of impact. But I would say the broad macro indicators across the quarter point to like a pretty stable Canadian macro environment. And if you look at kind of foodservice growth overall in Q2 in Canada wasn't so far off the U.S. So I really think a lot of this is in our control, and that's what's encouraging in terms of how we saw things improve as I think we got some better momentum on the marketing side.

I think stepping back and then looking forward, this team led by Axel has an incredible track record, right? We're on 21 quarters now of driving positive same-store sales. So they are incredibly talented and really know what they're doing. And I think they've got some exciting stuff that we've launched recently and some really positive things that are going to come out in the back part of the year. I think we mentioned that we just launched Macha. That's something we were all really excited about, and we're pleased with so far. It's a particularly exciting one because it's a whole new occasion. It tends to skew heavily into cold beverage and also PM, which is one of the dayparts we're really trying to grow. tends to be something that people come in, in the afternoon as an afternoon drink, and that's very complementary to our existing warning business.

So we've got that out there now. I think we have a tremendously good product, and it's a baseline that we can also innovate off of into the future. So we're pretty excited about that. We obviously have big expectations for our Harry Potter partnership. It's something that appeals to all ages, has been out there for a long time. So we think it will bring in a lot of different age groups. And I think our team has done a terrific job on the innovation across both some of the food innovations, the beverage innovations and everything that comes along with it that's going to generate a lot of excitement here in Canada.

On top of that, we're going to bring out more breakfast innovation to reinforce our AM daypart across the back half of the year. We're very excited for the loyalty partnership with Canadian Tire, bringing together some of the most iconic Canadian brands and bring additional benefits to our guests to be loyal Tim's Rewards members. And the last part I would call out just as you look over the next 6 to 9 months is we're making really good progress systematically rolling out our new fountain systems in our -- all of our restaurants across Canada. And that's enabling further innovation pipelines.

You might think of things like Soda World that we've generated some pretty great excitement about. It's a wonderful beverage opportunity for us. So I think we've got a pretty great pipeline for the second half of this year and look forward to sharing the results of that as we get through Q3 and Q4.

Your next question comes from the line of David Palmer with Evercore ISI.

That last answer was really where I was going to go with this because I think the market would love to see, call it, 2% plus comps out of Tims Canada. And if you can get there, it feels like you're going to have to do that with market share gains. It just feels like that market is going to remain soft for a while. I don't know if you would agree with that. And some of the things you mentioned, it do sound like sales layer-ish as opposed to Harry Potter will take those benefits.

But I think right now, people want to see sustainable food, beverage value news. So maybe you can just speak to what you think -- to what degree you feel like you're digging a little bit deeper to gain share in a more durable way up there, kind of questioning how much of a leadership you might have in certain things to maybe on a more sustainable basis, continue to gain share or perhaps accelerate share gains because you kind of need to...

Dave, I'll take that one. In terms of the market share and how the market is growing, I kind of started to mention it but in the prior answer, but I'll go there a little bit further. Actually, the Canadian foodservice market is doing okay. The growth rate for the overall foodservice market was in the 3% range in terms of sales for the quarter, which is very similar to the U.S. market. And I think what's going on within that market is just that some chains are doing better and some chains are not doing as well.

So that's why I really feel this is very much in our control. And we have an incredible business, the best franchisees and restaurant operators in Canada and a wonderful team leading the business here. And I think they've got a lot of things that they're working on here that will allow us to perform well within a market that I think is doing all right. So in terms of the few different categories you mentioned, on value, we are the #1 value leader in Canada.

If you look at any of the brand scores, we have been and continue to be a leader in providing the best value and best value for money across Canada. So I think we're in a good spot there. And to a couple of the other points you made, what we've really been focused on is the food and bev side. And I think our team is doing a really nice job on the innovation front on Cold bev, which has been our big priority. I mentioned Matcha, that's probably one of the most exciting things that we can do, but we've got a couple of other additional innovations that will come up over the next 6 to 9 months to drive sustainable growth. And hopefully, in new dayparts as well. That was -- I think that's an interesting thing about Matcha. It brings guests back in for another visit at a daypart they might not otherwise come. And I think that's how you drive sustainable kind of layers of growth.

And lastly, on the food side, we've had some things that worked well and others that didn't work as well. And I think that's where melts have come back, and that's working really well. And I think we'll come up with some more innovations on the PM food side in the next 6 to 12 months, too, that allow us to add sustainable growth there.

Your next question comes from the line of Danilo Gargiulo from Bernstein.

I want to again ask one more question on Tim Hortons. And specifically, the competitive environment is sharpening in Canada. There is also a notable Northeast chain that plans to reenter the market rapidly. So my question is about the speed of innovation that you think on -- especially on the beverage side, you might need to be adopting going forward to be able to sense off the increased competitive environment and their intention to be gaining share outside of the core coffee. And specifically, if we just look at the menu that you offer compared to your competitors, there are some meaningful gaps, which, on the one hand, might present some opportunity for you because you can build some layers of growth from it.

But on the other hand, might put you at disadvantage compared to others who are already present in that category. So I'm wondering how are you planning -- are you planning to increase the speed of innovation? And if so, what is the trade-off on that? And if not, how are you planning to, again, compete against these new brands that are coming into Canada?

Thanks, No. I think all of the QSR markets around the world are always competitive, and I think that's going to be the case in Canada and everywhere else around the world. So I think that's part of the world we do and always will live with. So I don't think there's anything too new there. In terms of the pace of innovation, I think we to your point, we do have a lot of opportunities of Cold bev innovation. I take that as an exciting thing. And I think we're getting faster in how quickly we're bringing these things to market. I think the pace of new Cold bev innovation has definitely stepped up. And I would take the Matcha launch as one of those examples. We've now launched that nationally and brought, I would say, a whole new offering and a whole new experience to many folks around Canada that were never exposed to it before. And so I think that's a great example. It's one we have clear in our minds amongst the team here of moving quickly. And I think you'll see that same pace of innovation as you look out over the next 6 to 12 months.

Yes, Daniel, it's Patrick. The thing I'd add to it is the culinary team here is terrific. We had our Board here yesterday. We were sampling things that are going to be launching in the future. I'm very excited about them. I had some other beverages this morning when I arrived. I mean there's really terrific work happening here. We really understand the breakfast daypart extraordinarily well. We're maintaining share at least on our core coffee customer, but doing extraordinarily well with cold bev and things that are already on our menu and coming on our menu in the future.

My confidence level on Tims is really high. This -- I go back to the answer I was giving on Burger King. This is a business that has consistently performed over the last 5 years because it is getting better at serving its guests. both in terms of the service of the perception of value in how the restaurants look. We're remodeling hundreds of restaurants this year. We're starting to build new ones up here because the return for the franchisees is great. And our competitive set in Canada 5 years from now is going to be pretty much identical to what our competitive set is today. Announcements aside, I mean, Starbucks, I think, had a very good start to the year. But they're 1/4 of the restaurants that we have. This is all in our control. And the consumer environment, the economy is no different this year than it was last year. This is about continuing to find ways to be more interesting.

We think the loyalty deal that we're doing and combining the program so that -- with Canadian Tires, so that Tim's customers get Canadian Tire points as well is exciting. Getting absolute first-class properties like Harry Potter is terrific. The innovation we're doing is great. Our franchisees are doing a great job on service. There's just a lot that's working well. And if we've got an off quarter, okay, team is moving quickly to make sure that we're going to improve that going forward.

Your next question comes from the line of John Ivankoe Evanko with JP Morgan.

I know, obviously, international is a big segment with a lot of brands and many more countries kind of in it. So I just wanted to focus on the aggregate brand numbers and talk about where you see particular strength from a return on investment perspective and where you see significant opportunities. And I do want to put that in the context of average unit volumes. And I understand it's kind of dangerous to talk about exact average unit volumes considering how different formats and countries can be. But Tim Hortons in the second quarter annualizing around 450,000, Popeyes around $1.2 million, I think, and Burger King at around $1.5 million. And obviously, all 3 of those numbers are less than what you're doing in those brands' respective core markets.

So if we can just highlight a little bit more where there's particular return on investment strength on, I guess, per brand per country basis and where you see significant opportunities to improve to where we could hopefully see improvements in those average unit volumes relative to their core or home markets. And I know it's a big question, but it's an important one.

Thanks, John. I'll try and if I miss you, Sami or Patrick, feel free to jump in here. If I look across our Burger King business in international, and then I'll move on to Popeyes and some of Tim's I think some of the highest return places are some of the places that we're growing the fastest. So I would look to places like France, where we have very strong AUVs and a great return on capital for our partners. That has been our single biggest growth driver, maybe not in NRG KPI, but certainly in terms of system-wide sales over the last 10 years or so now. That returns there are really good. Returns in places like Spain are also really good, and that's -- I think one of the reasons why we have a very large unit count there now. And if I look across places in Asia, we have very strong returns in countries like Japan, which is now one of the biggest unit growth drivers there. Countries like Korea also has really good returns on capital, countries like Australia, New Zealand, also very high ARS. And then I think you have a couple where we have meaningfully improving unit economics. And I put on that list countries like Burger King and China, where we had really good unit economics, they got softer for a while. And now over the last 2 years, given same-store sales performance, we've seen a very material improvement in the unit economics. And I think in China, Johnson and Daniel are doing just a terrific job. And I think they're getting those unit economics close to a place where it's going to be very compelling for them to accelerate the pace of growth, which is, I think, one of the most important things that we certainly have our eyes on.

The other market I would call out in Asia would be India. It's been one of our growth contributors for a while. And I think you probably just saw Raj and team are doing a really nice job. They had a terrific quarter, same-store sales up double digits, and that's starting to put their unit economics to an even more compelling place. So those are probably some of the ones that I would highlight as the biggest ones that will kind of move that are either really good or really improving that are probably some of the influential factors in the pace of our net restaurant growth. I can -- I'll move to Popeyes real quick. If I look at the Popeyes market, I would say places like U.K. have great average unit volumes and are growing a lot. And then you've got a lot of countries who are kind of coming up the maturation curve, countries like Spain or Brazil, for example, who have been growing their same-store sales a lot, and they're now getting unit economics to more and more compelling places to accelerate growth.

Another big market for us is Turkey. It's probably one of our oldest markets in the Popeyes International business. It's been performing extremely well and has very good returns on capital, a little bit lower CapEx there. But we've been growing there well into the double digits for many years now. Actually, I think our biggest competitor exited the market, and we took a bunch of market share. And then you have countries in Asia Pacific like India or China, which may have lower ARS, they also have lower CapEx. And we're now seeing some really strong same-store sales growth in both of those markets that are getting the unit economics to a place where it's increasingly compelling to scale those brands. Sorry, I know this is long, but I'm trying to exhaustively get through all of them. And I'll try on Tims here and then see if Sami he wants to add anything. Tims in terms of our biggest and our kind of most important markets, Places like Mexico already have really good unit economics. Those have good ARS and good margin profiles.

The U.K. is probably one of the bigger system-wide sales markets, which also has pretty high ARS. The Middle East has lower ARS, but has lower CapEx. they tend to be smaller formats. And then I put places like China as places we've got some work to do. We have lower, they tend to be smaller formats, and we're putting in place a plan there, and we put in some capital into that market to change the trajectory and further improve unit economics, just like we did in Burger King in China. I probably missed some stuff though.

So Sami, anything you want to add there?

Yes. Thanks, John, for the question. And I think Josh gave a nice geography lessons there, which is very helpful. I might take it from maybe a different lens. John. And really, as we laid out the path to 5% unit growth at our Investor Day, we talked about roughly 1,100 net new units from international and about 700 of those being from our top 10 growth markets. So if you think about the top 10 growth markets, and Josh mentioned -- and I'm speaking particularly to Burger King, but when Josh mentioned a number of those markets, if you look at actually -- I know you're looking at the ARS, which is one way to look at it.

We look at the paybacks often. And actually, if you look at the paybacks of those top 10 markets, in aggregate, it's between 4 and 5 years on new units, and it's improving. So you're actually seeing, Josh mentioned markets like Japan and Korea and a couple of others that are actually driving a bunch of the improving paybacks. So our goal is to continue working on this because ultimately, if we can drive the payback, it will help support the growth model. I think the other thing to call out when you're looking at the ARS, particularly on kind of a global level, if you strip out China, which as we've talked about, generally has lower ARS, actually, our international ARS for the Burger King business is pretty similar to our U.S. business AR.

And the paybacks actually in our international business, particularly for those top 10 markets is better than the paybacks that we're seeing on Burger King in the U.S. Now Tom and team are doing a great job of improving the unit economics in the U.S. So I think it's a nice little race that we had between Tom and Tiago to get those paybacks to be best-in-class. But I actually think when you back out China out of those metrics, you see pretty exciting and impressive paybacks that support the growth model.

Your next question comes from Sara Senatore with Bank of America.

I guess I wanted to just touch on Popeyes because we haven't really talked about it yet. I know it's not -- it's certainly not the biggest of your segments, but it's still, I think, something like 10% of operating profit. So could you just maybe address kind of -- it seems like the turnaround is going a little bit more slowly than anticipated. Maybe what the issues are there? I think you've said in the past that the problems are more operational in nature. But I guess if I think about the operating model, it actually seems fairly straightforward to me. So maybe is this a value issue? I know you're working on that. Is it a menu innovation or competition? There's some thought that maybe just chicken is saturated at this point. Anything you can sort of pinpoint -- and are you seeing data that suggests that 2H, you're comfortably positive? Or I guess, is the idea maybe it's later in the year and you're optimistic about some of the initiatives you have in place?

Yes, sure. I would say Popeyes is going exactly pretty much as we hoped it would. And that's why I reiterated that we expect 2H to be positive. We're obviously a week into August, and we're kind of thought -- we're where we thought we should be and needed to be for that. In terms of the different priorities, I would say we're tracking well across all of them. The few that I laid out a few months back, and I think Peter addressed at Investor Day were, one, addressing some of the value consistency. And I think we've addressed that very quickly with $5 paves with our $20 family meal and pulsing in the $6 big box.

So that's been very effective and worked exactly as we thought it would and maybe a little bit better, and that's helped to bring traffic back in and stabilize sales. On the marketing side, we've definitely brought focus back to our core menu, focusing on tenders, sandwich and bone-in chicken, and we've seen some of the volumes in those stabilize. We've also seen product satisfaction improve across all of our core SKUs, which is what we were hoping to see.

So I think that's working really well. And we're starting to see some ops progress and more consistency there, things like guest complaints and errors in our stores are starting to move in the right direction. So I think we're seeing some progress on that. That tends to take a little bit longer. So I think there will be -- some of the things are faster like value and while others like operational improvements across the system will take a little bit more time. But we made the big investments that we wanted to make. We've dramatically expanded the field team and those folks are starting to really engage with our restaurants and make progress in some of the ones that were lagging behind a little bit. So I feel very good about the work that Peter is doing. And I think the kind of the recovery is very much on track with what we were hoping for.

Your next question comes from the line of Brian Mullen with Piper Sandler.

Coming back to Burger King in the U.S., can you provide an update on the refranchising process, the demand you're seeing there and if everything is on track with how you discussed it at the Investor Day? And then separately, just on the remodeling front, does the strengthening momentum in the business, is that enough to have franchisees potentially pick up the pace of it? Or would you need to see more time to see a noticeable impact on the modern image pace?

Thanks, Brian. I can take the beginning part of the question, and Josh or Patrick, feel free to chime in. On the refranchising side, sort of as a reminder and stepping back, 2 years ago, when we sort of closed on the Carrols acquisition, we talked about refranchising starting in years 3 through 7 following the acquisition. We were really pleased to start refranchising restaurants much earlier than expected based on the momentum at Burger King. And we started in late 2025 with the refranchising. I'd say the first half of this year, though Q2 is probably a little bit slower than we would have expected, we actually look at the pipeline of potential buyers, and we're actually really, really pleased with what we're seeing.

Since our Investor Day, the top of the funnel pipeline has more than doubled in terms of folks who are interested in acquiring restaurants. And so we still think we're on track. The second half, you will see an acceleration in terms of refranchising. And we'll do a few hundred refranchisings here in 2026. and then the remainder in 2027, really with the goal of sunsetting the RH segment by the end of '27 as we outlined at our Investor Day.

So we're still on track. I think when we talked about this, the path was not going to be entirely linear. These transactions, they take some time, and we're trying to find the right buyers most importantly because ultimately, we think that the best thing we can do is get these restaurants in the hands of the right operators. Taking kind of the second part of your question, which was, I think, on the remodel pace. As we think about the pace of remodels and look, we're very, very pleased with the top line momentum in the Burger King system. And we're pleased with the momentum on the bottom line, though I would say beef costs are still -- I mean, Q2 was still at all-time high beef costs running through the P&Ls of our franchisees.

So when we think about the flow-through to profitability, it will probably be a little bit more delayed as beef costs are just starting to come down. As you kind of look at the futures markets on beef, we are expecting a little bit of relief, but I think a lot more of that relief will come in the beginning of 2027. So as you start to see that relief come through with the top line momentum we're seeing, we think that will be really healthy for our Burger King franchisees.

And look, our franchisees are incredibly supportive and excited about the remodel program. And as they start to see their P&Ls get even stronger, I think you'll see that momentum. But I think it will be on a bit of a lag and you'll see that acceleration a little bit more into 2027 as they see their '26 P&Ls come in.

Maybe I can add just one thought on top of what Sami said about the refranchising. I would tell you that Tom and I have spent basically all of our market visits over the last 6 to 12 months, visiting new franchisees who are buying restaurants and getting into the system or existing franchisees buying restaurants or those considering participating in the refranchising. And our view there is we really want to make sure that we have the right franchisees who are set up for success and that we're going to deliver on the vision that we had to have hands-on local operators running these restaurants because we believe that, that's going to be such a key to our future success. And we also -- we want to make sure that we're being a supportive franchisor and we're really going to support these new franchisees in the way that they need to be successful. So that's been a huge focus for us, and it will be, and that's where we're spending a lot of our time.

I'd add one thing, which is, I mean, I'm excited by great operators coming in. They're seeing a terrific opportunity. And we've got really smart operators that are see this opportunity to grow with this brand with real momentum behind it. And the interesting thing is they're coming from kind of 4 places.

I mean it's existing franchisees in the system who want to grow and see an opportunity to do that. It's coming from external folks who have not been in the system before. It's coming from our Crown -- your career candidates coming up through Carrols and our own corporate operations. But also, it's been from people in our corporate office, people, field team, people who know how to operate great restaurants. So we're seeing a lot of interest. And certainly, as people externally see the momentum in this brand and how we're performing versus versus the industry even in this environment, we're excited about kind of the people who are coming and how they want to grow with us.

Your next question comes from the line of Andrew Charles with TD Cowen.

You guys reiterated the algorithm 8% AOI growth for 2026. And in the first half of the year, you did see portfolio same-store sales up 3.5%. And I'm wondering if you can make the claim or the prediction that 3% plus portfolio same-store sales long-term growth algorithm will be achieved in 2026. I know you talked about how confidence in sustained momentum of Burger King, Kim's got better for the quarter, Popeyes getting back to positive in the back half of the year. Is that enough to get you to 3% plus portfolio same-store sales for the full year this year?

Andrew, what I would say is I think if you look at -- to your point, the business performance has been pretty good through the first half of the year. And I think standing where we do today, we continue to feel good about where we're going in the second half.

The last question will come from Gregory Francfort with Guggenheim.

I kind of just wanted to ask about in the U.S. market. I don't know if it's Burger King or more broadly, where is pricing or check running as a part of your comps? And I ask it within the context of one of your major competitors kind of took up some of their pricing expectations for the year and kind of talked about franchisees maybe pushing ahead of where they want to be on pricing. And I guess those conversations that you're having, particularly maybe entry-level pricing, how are they going? And are you seeing any changes in compliance or those negotiations? Just any thoughts there.

Greg, I would say that we're really trying to be disciplined on menu pricing. We think it's -- we understand very clearly that one of the things we provide to our guests is value for money. I think the kind of menu price increases have been running probably low single digits, but I think we've been pretty restrained on those. There are things like beef inflation that have been a bit of a headwind, but there are some other things that are offsets to it. And we also were cognizant of the fact that beef is at an all-time high, and it looks like there's some signs it might come down.

So we realize we've got to cushion some of those things at some point. So we've tried to be pretty restrained. And I think by and large, our franchisees do understand that, understand what we're trying to deliver, understand the broader brand narrative. And I think we've been able to maintain pretty good alignment on what we're trying to accomplish. I don't know, Sami, if there's anything you want to add to that?

Yes. I think when you look at the numbers year-to-date for the Burger King system, actually, I think we've been quite disciplined on price. And I think as you look at the mix in the business, we've had a pretty healthy mix in the business, right? So as you think about the elevated Whopper and all the great work that Tom and team are doing with that, we're selling a lot more full-price whoppers, and it's a great value on a stand-alone basis, and there's great value in $5 and $7 Duos and Trios. So providing great value across the menu with the right mix is really the formula. And our franchisees are very supportive of that formula. I think they continue to buy in, and they're seeing it in their P&L.

This concludes the question-and-answer session. I will now turn the call back to Josh Kobza for closing remarks.

Great. Well, thank you all for joining today. We wish everyone a great day and look forward to updating you once again on our Q3 call. Thanks so much.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, ladies and gentlemen. My name is Jill Granat. I'm the General Counsel for Restaurant Brands International, Inc., and I'd like to welcome you to our 2026 Annual Meeting. The meeting agenda and the rules of the meeting, conduct are posted on the website. And for those of you attending in person, were handed out to you as you entered the room today. If you still need a copy, raise your hand, and we'll get you one.

I'll quickly review the matters on this morning's agenda. Our Chief Executive Officer, Josh Kobza, will chair the meeting and call the meeting to order. We'll then move on to consideration of the proposals, which are described in our management information circular and proxy statement and then to voting on those matters. The management information circular and proxy statement set forth the voting standard to the Board's recommendations for approval of each of the proposals. And following the voting, I'll announce the initial voting results and the formal business of the meeting will be adjourned.

Josh Kobza will then provide an update on our business performance. Before we get started, I'd like to direct your attention to the safe harbor statement that's included with your meeting agenda and to the rules of meeting conduct. Certain information conveyed this morning is forward-looking information within the meaning of applicable securities laws. And the safe harbor statement includes useful disclosure about the risks we face and the importance of not relying disproportionately on information that may be forward-looking in nature. Please refer to the safe harbor statement to view the full context.

I would now like to introduce Josh Kobza, who will chair today's meeting.

All right. Good morning, everybody. Thank you, Jill. Now the meeting will please come to order. Computershare Trust Company of Canada will act as scrutineer for this meeting. Jill Granat will act as Secretary of the meeting and will now report the number of shares and votes represented at the meeting or by proxy. If legal notice of the meeting has been duly given and if a quorum is present, then the meeting will be lawfully convened for the transaction of business. Jill?

Thank you, Josh. So as of April 8, 2026, which is our record date for the meeting, Restaurant Brands International, Inc. had outstanding 347,282,917 common shares, and 1 special voting share. In addition, on the record date, there were 109,352,921 partnership exchangeable units of Restaurant Brands International Limited partnership outstanding.

Each holder of common shares is entitled to 1 vote per share held and pursuant to our voting trust agreement, Computershare as trustee is the record holder of the special voting share and entitled to vote the number of shares equal to the number of partnership exchangeable units outstanding on the record date that provided instructions.

Consequently, there are a total of 456,635,838 votes eligible to be cast at this meeting. For purposes of today's meeting, voting will proceed by online and in-person ballot. We will allow time for shareholders or their proxies to cast their votes by completing their online or in-person ballots following the description of all matters to be voted on.

Only shareholders or their proxies who have been properly presented to the transfer agent are entitled to take part in and vote at this meeting. To make the best use of our time, certain shareholders have been asked to move and second motions where required. The representatives of the scrutineer have advised that approximately 403,156,328 of the eligible votes are present or represented by proxy and that we have a quorum for today's meeting.

Computershare Trust Company of Canada has provided an affidavit of mailing to show that notice of the meeting has been given. A copy of both the notice and the affidavit will be incorporated into the minutes of the meeting. So as notice of the meeting has been duly given and a quorum is present, the meeting is hereby convened and we'll move forward with the formal business.

Voting will start following my description of the proposals to be considered. Please note that if you or your proxy has already voted, you should not vote during this meeting, unless you would like to change your vote. If you vote again using online or in-person ballot, your vote during the meeting will revoke any previously submitted vote of yours.

So on to the proposals. The first proposal is the election of directors. 10 director nominees are being considered today. Each director elected today will hold office until the close of the 2027 Annual Meeting of Shareholders or until his or her successor is elected and appointed. The nominees are listed on Pages 3 through 12 of your proxy materials.

May I please have a nomination that the following persons be elected as directors of the company to hold office until the close of the next Annual Meeting of Shareholders or until their successor is elected or appointed. They are Alex Behring, Maximilien de Limburg Stirum, J. Patrick Doyle, Cristina Farjallat, Ali Hedayat, Marc Lemann, Jason Melbourne, Daniel Schwartz; Marcia Smith and Thecla Sweeney. Would a shareholder please make this motion?

Madam Secretary, my name is John Damaco, and I so nominate.

Thank you, John. Would a shareholder please second the motion?

My name is David Wallace, and I second the motion. .

Thank you, David.

The company's bylaws require that nominations of directors by shareholders be received by the Secretary of the company in the prescribed manner in advance of the meeting in order to be valid. So as no nominations were received from shareholders prior to the deadline, the nominations for directors are closed. In the second proposal, we're asking shareholders to cast a nonbinding advisory vote for approval of the named executive officer compensation as set forth in the management information circular and proxy statement.

May I have a motion to approve this proposal?

I so move.

I second the motion.

Thank you.

In the third proposal, we're asking shareholders to approve the selection of KPMG LLP as the independent auditors of the company until the close of the 2027 Annual Meeting of Shareholders and to authorize our directors to fix the auditor's remuneration. Representatives of KPMG are here today and will be available to respond to any pertinent questions you may have.

May I have a motion for approval of this matter?

I so move.

I second the motion.

Thank you. So the polls are now open for voting. Those are our 3 proposals.

To vote online, please select 1 of the voting options. Your response will be highlighted. If you're holding a ballot, please raise your hand and someone will collect it when you're done and we'll provide it to the scrutineer. As a reminder, if you or your proxy holder has already voted, you should not vote again during the meeting unless you'd like to change your vote. If you vote again using the online or in-person ballot, your vote during the meeting will revoke your previously submitted vote.

If you're a holder of record of partnership exchangeable units and have requested to vote in person today, you should have obtained from the trustee a proxy that will entitle you to exercise the votes attached to the special voting share you would otherwise be entitled to instruct the trustee to vote.

So we'll give you a few minutes now to complete and submit your ballots. If you need a ballot, please raise your hand and someone will bring it to you. I am going to give you a minute or two.

[Voting]

So if there are any questions from shareholders during this process regarding the voting procedure or if any shareholder wishes to ask a question regarding the proposals being voted on, please submit the question by selecting the messaging icon at the top of your screen. Once you type your question, select the second arrow icon and if you're in person, just raise your hand, and we will recognize you. Please state your name before asking your question and please limit your question to the proposals to be voted on at this meeting.

So for anyone voting online, please electronically submit your ballots now. For those voting on person -- in person, if anyone, please provide your paper ballots. I don't think there are any?

Okay. I will move on, and polling is closed. I can advise based on the scrutineer's preliminary report that each of the 10 nominees for director has received a majority of for votes and has been elected. The advisory vote approving the compensation of the company's named executive officers has been approved by a majority of the votes cast. The proposal appointing KPMG LLP as our auditors to serve until the close of the 2027 Annual Meeting of Shareholders and authorizing the Board to fix the auditor's remuneration has been approved by a majority of the votes cast.

The final results of this shareholder meeting will be included in a press release and form 8-K that will be filed later today. As there are no further -- as there is no further business to be brought before this meeting, the meeting is concluded.

I will now turn it over to Josh Kobza to provide you with a business update.

Thank you very much, Jill. Thank you again for joining us here today, whether you're here in person at the Tim Hortons headquarters in Toronto or online. On behalf of the Board of Directors and everyone at RBI, thank you to our shareholders for your continued support and confidence in our company.

Now that the formal portion of the meeting has wrapped up, I'd like to take a few minutes to share a quick update on our business. When I think about what makes RBI special, it comes back to a few simple things. We have 4 iconic global brands in each of the largest QSR categories; each with great food and beverages, outstanding franchise partners and teams that care deeply about serving our guests.

Just as importantly, we have a culture built around ownership. We make decisions with a long-term perspective. We invest in our brands, and we do what's right for the business even when it's not the easiest path. That mindset has shaped RBI from the beginning, and it continues to guide how we operate today. In February, we hosted our Investor Day in Miami where we shared our vision for RBI to 2028.

We laid out our path to accelerate net restaurant growth, to deliver predictable earnings growth and to pursue an investment-grade balance sheet, and we continue to be the partner of choice for great franchisees and the employer of choice for great talent. Most importantly, we reinforced our commitment to build durable long-term value for our shareholders.

Tim Hortons remains one of the strongest and most loved brands in QSR. Canadians keep choosing to make Tim a part of their daily routine, and our restaurant owners continue to deliver for them every day. Axel and his team remain focused on strengthening our leadership in coffee, breakfast and baked goods, while building new growth drivers in areas like cold beverages and PM food. We're also proud to be bringing Tim to more Canadians, returning to positive net restaurant growth in Canada last year, and we plan to accelerate from there.

Our international business continues to be one of the strongest growth platforms across the restaurant industry.

Across Burger King, Popeyes, Tim Hortons and Firehouse Subs, franchise partners are building great local businesses all around the world. The breadth of our portfolio, the quality of our operators and the significant runway we still have for growth make me incredibly optimistic about the future of this business.

At Burger King, the progress Tom and his team have been making executing against Reclaim the Flame is becoming increasingly visible. The team has spent years improving operations, modernizing our restaurants, building greater alignment with our franchisees and elevating the guest experience. Those efforts are helping us to reconnect with guests, building brand momentum and positioning the business for long-term growth.

There is still work to do, but the trajectory is clear and the energy in the system is increasingly strong. Popeyes has the best chicken, and our focus is on ensuring the guest experience consistently matches the quality of our food. Peter and his team are focused on operational excellence, consistent value and lean into the core menu that guests love the most. I'm confident that under Peter's leadership, the brand will return to the growth potential in the U.S. and Canada that we know it's capable of.

And Firehouse Subs continues to gain momentum. The brand stands out for its high-quality hot subs, loyal guest base, community ties and strong development engine. We're seeing growing interest from franchisees to be part of this brand and we remain very excited about where our Firehouse is headed.

Across our overall business, we've grown AOI by more than 8% consistently over the last 3 years, and we grew earnings by 10% last year, all while simplifying our portfolio and moving towards a 99% franchise model. This has resulted in significant and growing cash flow. And in 2026, we're working towards returning over $1.6 billion to shareholders through dividends and buybacks. Everything we're doing is designed to drive long-term total shareholder return.

Across all of our businesses, what gives me most confidence is the quality of our people, our teams, our franchisees and our operators. They care deeply about getting the fundamentals right and creating great experiences for our guests. We're proud of the progress we've made over the past year, but we're even more excited about the opportunities that lie ahead.

Thank you again for your support and we look forward to continuing to earn your confidence and support in the years to come.

Before we close, I'd like to thank the shareholders who took the time to vote today. We really appreciate you being here and voting online. If you have any questions about the business, please feel free to reach out to our Investor Relations team. They're always happy to help. That will conclude our session and this year's annual meeting. Thank you again to everyone for spending the time with us today.

Thank you, and that concludes our event.

Good morning, everybody. My name is Danilo Gargiulo, I'm the senior restaurant analyst here at Bernstein. Thank you very much for joining us today. It's a pleasure to have back on stage, Patrick, the Chairman of Restaurant Brands International and Josh, the CEO of Restaurant Brands International. We have a system whereby you can ask any questions that you would like to if you use the Pigeonhole app with the app code 2026 SDC. I'm going to get the questions on my iPad, and I'm going to be asking them live as needed and once appropriate.

Just to get started, maybe Josh, for those who are unfamiliar with the story of Restaurant Brands International. Can you provide us with a quick overview of your business?

Of course. And good morning, everybody. Thank you very much for joining us, and especially thank you, Danilo, for having us. We always love being part of this conference. It's a wonderful one so we thank you for the time and inviting us again.

So our business, Restaurant Brands International. It's one of the largest global quick service restaurant businesses in the world. We have almost $50 billion in systemwide sales, operate 4 brands in the 4 largest segments of global QSR and we do that in over 120 countries and territories around the world. So one of the largest, most diversified businesses out there.

We operate in 5 different segments. I'll kind of talk through them really quickly in order. Our biggest one is our Tim Hortons business, which is originally based in Canada, and that's our biggest market. It is one of the best quick-service restaurant businesses anywhere in the world. It has tremendous market share, incredible unit economics, our restaurant owner base is incredible. They're small local owner operators who live in their communities or in the restaurants all the time. And we have the most loved restaurant brand in Canada. We're the best positioned for value in the market so just a really tremendous business that has an incredible track record.

Our second business is our international business. So that's the business outside of home markets for all 4 of our brands. And that one -- it's actually in 200 or so brand market combinations. So it's a pretty big business across the globe. It has an incredible growth track record. We grow around 10% a year and we've done that for a very long time. So a very good business with a very consistent track record. Our brands are modern and vibrant around the world. And it's something that we're really proud of.

Our third biggest business, probably the one that gets most of the attention here in the U.S. is our Burger King business. We're one of the largest burger chains out there in the U.S. and we're proudly the home of flame grilling and the Whopper. We can talk about it more in a little bit, but we've been on a tremendous trajectory there over the last few years. That business has improved a ton.

And then our fourth business segment is Popeyes. It's our chicken business that we bought about 8 or 9 years ago, and that's been doing really well. We've grown that multiple times over the last 8 or 9 years. And we're one of the largest fried chicken chains out there. Wonderful business in the U.S., also a terrific business around the world.

And our newest business is Firehouse Subs. We have the best hot subs out there anywhere. And we also proudly support our communities through our efforts with first responders. It's a great business. It's one of the highest AUVs in the sub sandwich sector, and that's been growing consistently. We ramped that up from when we bought it growing just a few units to now it's the fastest growing of our domestic business and we did, I think, around 8% unit growth there last year. So that's been going really well and we're happy to serve our hot and hearty subs to more and more guests and support our local communities and save lives.

So that's hopefully a little bit of an overview of the business at a macro level and then our biggest segments.

Excellent. And maybe, Patrick, you became the Chairman toward the end of 2022. And a lot has changed since then, right? So what prompted you, first of all, to look at RBI as your next venture after a very successful career. What has changed in the business? And what do you see as a continued opportunity from here on?

Yes. So I look at a business that had 4 amazing brands, 5 businesses that I could see either in some places, some under appreciation from the market. I mean, I came in as an investor, right? I invest a lot of my own capital in the business. And I was just excited by these businesses, what I thought could be done to either elevate the awareness of how good they were or to accelerate the pace of growth in some of these businesses.

And really, I mean, if I go through the businesses and how they perform, where the surprises and both up and down were, I mean, Tims was underappreciated. It's the best business anywhere. I mean it's an amazing business. I think people are understanding that. There was a sense when I invested, when I became involved that somehow there was something wrong at Tims. It is an incredibly well-run business. It's remarkable.

The international business is -- I would tell you, I think it's the best international business in the QSR space. It's the consistency of the growth of that business, 10% top line at the scale that we have, it's still a bit under $1 billion in total cash flow, but it's clearly going to get there over the course of the next couple of years. I mean, it is a big scaled effectively 100% flow through cash flow business growing 10% top line year in, year out, it is an amazing business.

Then Burger King, that was probably at the downside when I came in. It was in tougher shape than I thought. The franchisee's balance sheets were in worse shape. The asset base was in somewhat worse shape I thought coming in, but we have made huge progress on that business. It was slower to get there than I would have hoped for because I think the hole was a little deeper than I thought it was going to be when I got involved, but boy, it is going now. And Tom and his team have done an amazing job. The franchisees are bought in. You've clearly seen the inflection point on that now. We've been outperforming the category pretty consistently now for a couple of years, but you're seeing that outperformance accelerate, and we're really excited about that business.

Popeyes is best food in the business and like unbelievable outside of the U.S. And then Firehouse which is really going to be for us, if you look in the overall portfolio, it's going to be a big part of the NRG story. The business is doing very well. The cash-on-cash returns kind of in the 3- to 4-year range. So it's a great investment for franchisees. And we've been ramping up development and it's going really well.

And I think at the end of the day, the -- one of the big things that you've seen now is when I came in, I think there was a perception of RBI as the cost cutting and financial engineering and all of that, and the answer is this is a really well-run restaurant business. We've got people who understand the business, and I couldn't be more excited about where we are in kind of the trajectory ahead of us.

And we take on the big things, right? The things that weren't working, getting Burger King on track, buying Carrols, which was absolutely the right answer. It made the story from an investor standpoint, a little messier, taking on China, which is turning into a great story for us, finding a new partner for that business. I think will be a big part of NRG going forward. We're good at this, and we're applying it to each of these businesses, and we're getting the results.

So you invested in the business, you made some tough decisions in the past couple of years. And then recently, you had an Investor Day that was fairly successful. So Josh, maybe what is the most important takeaway of that Investor Day? What is the biggest news that you launched in that Investor Day?

Yes. So I think we took a little bit of a different approach to Investor Day as we discussed it. And we -- I think what we tried to do is to try and directly address what felt were the biggest questions on people's minds and really spend the time on that, and I hope people appreciated that approach. One of the questions, of course, was Burger King. So we spent a bit of time on Burger King and kind of why we felt so good. I think we kind of told the story of what we had worked on. And then that was the underpinning for why we were so confident about where we are going. And I think Patrick said at the time I think we're seeing stuff that I think you will see over time more clearly. And I think that's come out since as we've gone through the elevation campaign and seeing the performance of the business really inflect. So I think that was a helpful part. And then Sami also kind of talked through a little bit of a clearer vision of where we were going, both in terms of some of the complexity and then capital allocation. So we talked really clearly about simplifying the business. We know that taking on some of those big problems that you all referenced, that was something to digest for people. It complicated the story. It complicates financials a little bit. And so we tried to give everybody clarity that by the end of 2027, we'll be done with that. We'll have refranchised the businesses that we've taken on. We also talked about where we're going with the capital structure and gave clear guidance that we're going to move over time to an investment grade rating on our debt facilities. And even just since then, we've already achieved some upgrades. So kind of clear us -- you can clearly see us moving in the direction that we talked about. And I think that's helpful for everybody to know, to have a clear understanding of what we're going to do capital structure-wise. And together with that, because the free cash flow profile of the business is so good, we're able to announce that in addition to the dividend that we pay that a lot of our shareholders really appreciate. We're going to also start repurchasing shares. And we announced that we would start repurchasing with about $500 million this year. We've already started that program and started repurchasing the shares in the market since the Investor Day, and we still plan to do around that $500 million this year. And I think then importantly, from there, as our free cash flow grows, we'll be able to expand those share repurchases over time. And get to a place down the road, especially as we get to those investment-grade leverage levels where we should be able to really meaningfully expand the share repurchase.

So I think we brought a little bit more balance to the capital allocation approach. And I think those were the kind of the few of the big messages that we want to get out there. And I think it was helpful for us to just give a little bit more clarity on the vision and what the plan was going forward to all of our investors. So hopefully, we accomplished that.

And Patrick, I remember, at the end of the conference, you and I were sitting on the side and doing literally napkin math on why it makes sense for you to do more investment to pursue investment grade as opposed to retain your current leverage ratio and potentially use your cash for more share repurchases. So can you elaborate on that? So why are you pursuing more an investment-grade optionality for you as opposed to reinvesting more into share buybacks?

Yes. They wouldn't let me put all the math in the slide. That somehow made it wrong. But if I do air math, napkin math, it's okay. And so look, if you do -- if you're doing 8% kind of AOI growth, you're buying back in the shares at some point, if you're at investment grade, once we've hit investment grade, and we're IG facility now at Fitch and S&P. Once we've got that at the company level, then you can add debt which gives you -- you can instill, maintain your IG, and we're committed to maintaining IG once we accomplish that. That means that you can accelerate your share returns and you can see a path pretty clearly to get in low to mid-teens on shareholder return. And so we're excited about that.

The other thing that's interesting is -- I think about this the other day. I think we are one of -- once we get to IG at the company level, we will be one of only two predominantly franchised restaurant businesses that are IG. And the reason it matters apart from the company standpoint is it actually lowers the cost of debt for the franchisees. If you have a lower-risk franchisor, when the banks and people who are lending to our franchisees to fuel growth, to do remodels, all of that. They look at a more solid franchisor that has a lower risk balance sheet. And that actually will take some cost off of the debt facilities for the franchisees as well.

And so we absolutely think it's the right thing to do, and it was really a 2-step process. One is get to the point where we can start buybacks, which we did. The second part really once we are IG at the company level, then you can stay within IG but add actual quantum of debt, and that creates more capacity for you to return capital to shareholders.

Great. And Josh, you mentioned earlier, China, you mentioned Burger King, Tim Horton. So we're going to cover all of that. But before we go any deeper, what are the top 3 takeaways that an investor should remember at the end of this conference?

So I'll -- maybe I'll first start with kind of nearer-term stuff. I think if you think about the important parts of our growth algorithm, big one first is same store sales. And I think if you look at our performance in the first quarter, we performed over 3% same-store sales. That's one of the kind of the goalpost that we have out there. So we're really happy that we delivered that. And I mentioned on the Q1 earnings call that where we were at that point in May, we still felt good about continuing to do that. So things still felt pretty good, and that continues to be the case today. Like I said, we're always going to have puts and takes, some businesses that do better than others, but that's like the main goalpost that we have out there, and we feel pretty good about how we're performing against it.

And then I think, together with that, the other big metric that we always look at is our AOI growth for the year. We set out that we want to grow 8% plus on our operating income, and we've done that over the last few years, and we continue to feel confident that we'll do that again this year. So those are the kind of near-term takeaways.

I think over the kind of medium to long term, the big thing I would leave you with, and Patrick's referenced this, is just that we're always going to do the right thing by our brands, all of our brands. We're going to try to do amazing things. If we get off track, we fix things. We're always going to stand by our brands. And I think that matters for our investors. But to the point Patrick just made, it matters a lot to our franchisees, too. We're always going to make sure that all of our brands have a really exciting long-term future. We're committed to all of them. And I think that's a bit of a defining characteristic of us and our philosophy about how we run the company.

And I think lastly, together with that, I would just tell you, we have a huge focus on franchise profitability in our franchisees' success. I think we've done this in a differentiated manner than a lot of the other companies out there and that we both disclosed our franchisees' profitability in good years and bad years. When we -- doing that, I think it's appropriate. You all, as investors, I think, should want to know that. But it also it forces us to be transparent. And it also reinforces our commitment to our franchisees' profitability. And we actually reinforce that, too, by putting our franchisees profitability in our own bonus formulas. I think that's a bit of a unique one. And it really drives a lot of alignment within the system. And I think it's been -- both of those things have been powerful to driving better alignment with our franchisees, creating trust within the system and trust like in any business, what allows you to move quickly and decisively. And it's especially important in a franchise business to have that trust and that fluidity of movement and ability to do big things. So I think that's been really powerful. It's a bit of a philosophical thing. I think Patrick joining us really reinforced the importance of that. And I think it's been a big part of how we've been performing in the last few years.

Great. Now for context, you mentioned already a couple of long-term goals that you have. So your long-term guide is to reach at least 3% comparable sales growth, 5% in unit growth by 2028, 8% in AOI. And in the past 3 years, you have grown system-wide sales faster than peers. Excluding China, your net restaurant growth was about 4% versus 2% from peers. You exceeded your adjusted operating income every single year, again, ahead of peers. The stock only recently started to work and grow some of the valuation gap that you have with some of the bigger QSR peers. So why do you think the stock has accelerated? And what do you think investors are still missing or maybe misunderstanding about your business today?

Yes. I think like anything I think you have to prove a track record over time. And talk openly about it and show that you do what you say you're going to do. And some of the discussion earlier, we introduced a couple of new factors with -- we had to take over BK China and Carrols, there was some complexity. I think we've given people more clarity on the complex side. And we've started to build a track record. As I said, we grew AOI more than 8% for 3 years. We started to grow EPS double digits. I think we've just got to keep doing that. I think once you develop a track record of consistent delivery, that's when you get credit. And I think that's the practical thing for us is to just keep doing it over and over again. And I think as we do that, folks will develop more confidence and it will be easier to underwrite doing it in the future. So I think that's the practical to do for all of us.

And I think importantly, the big things that we needed to deal with, we've dealt with, right? I mean getting Burger King on track was a really big deal. It was -- it took time. It took resources. We've got it going right direction now. We're seeing the results, our confidence level on it is high. We had to get our Burger King China business fixed. We just -- for the scale of this business, we have to be successful with that business in China, it's going really well. I mean the outcome from that has really exceeded our expectations. Very excited about our new partner, about the results that we're seeing. But the big things then buying Carrols to break that up over time mean these were big things that we took on, and that certainly made the story from an investor standpoint, more complicated. They're now behind us. And so it's important. And people seeing the consistency in the performance and believing that the story is going to stay more simple is what's going to cause the stock to rerate and we've seen the start of that, but until we're at a premium to everybody else, I'm not going to be satisfied.

Okay. Let's touch maybe on Burger King since you mentioned this is the part that typically gets most questions in the United States despite only accounting for about 18% your EBITDA. So starting with Burger King, what was the rationale for the acceleration at Burger King that we've seen in the past couple of years, outpacing peers even more successfully, I have to say, in the past couple of months, we've seen like a big spike. So what was the rationale behind it? And more importantly, how sustainable is the growth of Burger King going forward and hopefully with the same level of results that you've achieved in the past few months?

I think there are -- a lot of the things that we did, we've been working on for like 3 to 4 years. The operational consistency across the base was a huge undertaking that took many years. It took a lot of work together with the franchisees. And Tom and Peter did a great job on that. We actually -- when you look at third-party rankings of Burger King consistency of service, the change that we've made is probably -- it's the biggest one that I can think of in any large chain that's been around for dozens and dozens of years. And as hundreds of franchisees, thousands of units, that very rarely happens because it's really hard to do. And so I just really have to commend the team for the amount of improvement that they made. And I think, on average, when you go into Burger King, you're seeing much more consistent service there.

We also made a bunch of investments in remodels together with our franchisees. We knew we had dated restaurants. And we made, I think, a pretty bold decision to make one of the biggest franchisor investments that's been made in recent history to partner with the franchisees to do the hard work that needed to be done to start to really put these restaurants into a competitive state and make them modern and welcoming for families and all of our guests.

And I think all of that hard work set us up for what we're starting to do. What the great work that Tom and the team have done and Joel, our CMO, has been fantastic on this. We refer to it a lot as our elevation campaign. And you've seen it come across in a few ways, whether those are TV ads or some of the social stuff where we're taking feedback and we're making improvements. We knew that when we did that, we were going to welcome a lot of guests back into our restaurants. And what was critical was that we were going to be proud of the service experience and the product that we gave them when they came back. And that required the 3 to 4 years before it. Like we couldn't have done this elevation campaign 3 to 4 years ago and had the same impact because we needed to do that foundational work first.

And that's what gives me confidence about the durability of it, is we did all the hard stuff we're bringing people back in and they're having great experiences. And I can see it in data where we see return rates of new guests that have gone up and they're some of the highest rates that we've ever seen. But I also see it and I hear it anecdotally, one of the benefits of listening is you hear a lot. And Tom and I get e-mails all the time from guests who write us and they say exactly what we wanted, which is, "Hey, I hadn't come back to you for a while. I had a bad experience 10 years ago, and I kind of -- I'd written you off. I saw your ad, I thought it looked interesting. I gave you another try, and you nailed it, and I came back and you nailed it again". And I think people are really having a different experience than what they remember from 5 years ago or 10 years ago. And that's what's going to allow us to come back. Not a onetime marketing stunt, but bringing people back and them seeing a different version of Burger King than what they recall. And that's what gives me confidence in the durability.

The other thing about it is you saw the elevation of the Whopper, and that was -- I would characterize that as a first chapter because it's our flagship, it's the most important thing. It's the first place you should always start with Burger King. But there's a lot of other things that we can elevate within burger King. And I think what you should expect to see over this year and into next year are new chapters of elevation and us constantly figuring out what are all the things that we can make better. We sort of -- we know more or less what a lot of those things are. But we know that this resonates with our guests. There are so many people out there who absolutely love Burger King. They have wonderful memories and they want Burger King to be better. That's probably the biggest theme we get out of these phone calls. And we know that there are a lot of things we can do over time that keep making Burger King better and keep writing new chapters. They'll bring more and more guests back. And if we keep serving them the right way when they do, that's how you drive consistent performance over a long period of time.

This is not a promotion that's driving these results. And it's something we talk about all the time, which is -- and kind of my -- just to rebase around the business is I literally sit down kind of once a quarter. I make myself sit down and say on each of these businesses is the customer having a better experience today than they were having a year ago. And fundamentally, it's really simple, is the food that they're getting better than it was a year ago, is the service level, they're getting the restaurant better than it was a year ago. Is the average image of one of the restaurants better than it was a year ago and are you doing it for a good value? Those are the fundamentals of the restaurant business. They have been for hundreds of years. There are always going to be. You got to run restaurants really damn well. I mean that's the bottom line on success, and there may be promotions that bring a little bit of extra energy and all the rest of it.

But marketing's job is to magnify the truth. And if the truth isn't good, you're not going to be successful. And you look at Burger King, our core product is the Whopper, and it is better than it was a year ago. right? Our service levels, every metric we've got has been showing that we're getting better and better at running our franchisees at running those restaurants. Our image, we're remodeling hundreds of restaurants every year. So our image is improving. And we've got a value platform that has been very consistent because it's very effective people know that they're going to get the $5 duo, $7 trios, when they come into Burger King, it's been that way for a while. We're not jumping around trying to find something that will work. And so consistent value, better product, better service, better image, you're going to grow your business.

Thinking about Burger King compared to peers, you still have a significant AUV opportunity if you look at yourself and make a better version of yourself over time, you talked about adding new chapters. In the Investor Day, you talked about potentially leaning in a little bit more into the family occasion which is potentially underpenetrating. There are many other chapters along this journey. Like what will it take for Burger King to double the AUV to get to maybe like $3 million plus in the box?

Yes. I think a few of the pieces in it. Honestly, it goes back to some of Patrick's basics, but I think a couple of the chapters will be continuing the elevation on service levels. As I mentioned earlier, we've made tremendous progress. We went from a place where we were very inconsistent to a place where we're more consistent, but we want to be one of the best. And so we're going to continue chapters of further elevating the quality of service and the consistency of the service that we give in the restaurants. We also -- while we've done some remodeling, we're nowhere near done. The good news is we've got an awesome new image that we know consistently provides big uplifts and good returns. But we've got to get through the rest of the system. So bringing a modern image, beautiful new signage, welcoming restaurants that help us bring those families back in, that's going to be another piece of the bridge from where we are today from -- to where we want to get to.

And then I think the new chapter that you've started to see, but I think you'll see more over the next couple of years is figuring out ways that we can even further elevate our food. And we did that with the Whopper. We took America's Favorite Burger and we made it a little bit better. We made it -- the bun a little bit fluffier. We made it a little bit more beautiful. We put it in a box to preserve the physical presentation, the height of the Whopper and really to celebrate how great that sandwich is. But that's the first chapter.

There are other places we still think we can do even better for our guests across our menu. And I think that's something that we can tell from what we've done. So far, people love that. People love our products. They love the idea that brands want to give them more and do better by them. And so I think you'll see a few other chapters of that coming over the next 12 to 24 months.

Excellent. Moving on to the international business, specifically the relevance of net restaurant growth. This has been a focus point for investors. And at the recent Investor Day, you were talking through the building blocks to get into 1,800 net new restaurants by 2028. So if you were to be decomposing the net restaurant growth expectations by brand and maybe by market, where do you have the greatest conviction level? And where are some of the -- watch out? Where are you monitoring the evolution a little bit more closely?

Great. I'll share my few thoughts. Patrick, feel free to jump in here on any different ones you have. So just as a quick recap. As Danilo said, we laid out a path to get to 5% restaurant growth or 1,800 net new units by 2028. That's composed of a few pieces. It's 300 to 400 restaurants in our U.S. and Canada domestic markets, 300 to 400 restaurants in China and then 1,100 restaurants across the rest of our international business, which is about 700 in our top 10 growth markets. We're doing something near that today and around 400 in the other 190 brand market combinations. So that one is a little bit more diversified.

And I'll tell you the -- perhaps the one where I would characterize, I think there's the most upside to is our China business. Just to give an illustration of that, we laid out guidance to get to doing about $200 million, a little bit more than that in our Burger King China business. I think the opportunity there is much more. If you look at how fast -- how many trade areas that are in China and how fast some of the other brands are growing there, you have competitors doing upwards of 1,000 units a year. And many of our team members were part of those brands doing 1,000 units a year. So they know that's the possibility. They know how to do that. They know what it looks like.

And I think our ability to unleash some of that possibility is all about our performance. We've got a great partner there now. We've got the capital. They funded $350 million of primary capital on the balance sheet. So we're ready to grow and our team is doing an awesome job. The combination of Johnson Huang, who is our Chairman; [ Danny Tam ], who's our Deputy CEO, they're doing great. The business is performing really well. We announced it's doing over -- it's doing over 10% comps already. So we're off to a great start. If we keep making that kind of progress, we keep making the unit economics better, so it's more compelling for our partners to accelerate growth. I think that's one of the places where we have the most upside. Any -- Patrick, any different ones you?

No. I mean, we've got -- I mean, they put $350 million in primary capital into a bank account the day that we closed this deal. They have prefunded 1,500-plus restaurants. And so really excited about that business, about what we're going to accomplish there. We've all been spending time over there.

The other thing I'd say, and I just -- I'm going to keep saying it over and over again until I see it showing up often enough in people's analysis. Our run rate on our Popeyes International business now is at $2 billion. It did $0.5 billion in Q1 outside of the U.S. And it's only been growing 30% or 40% annualized for a few years now. You do the math. You can do 30% or 40% on $2 billion long enough. It becomes a really big business. So Popeyes outside of the U.S. is just an extraordinary business. And the difference between the U.S. and the rest of the world in the chicken category is there's fundamentally only one player outside of the U.S. and they're gettable. And so we're pretty excited about that business and the growth prospects for that business. And overall, I mean, we just -- we've got a great business. mean it is growing faster than anybody out there, the consistency of the execution has been great. The average restaurant in our international business is very well run. We've got great partners. I mean it's just a really good business.

What is the secret sauce? Because to your point, this is not just about a net new unit growth story. International markets comps has also been accelerating ahead of peers. So what is determining the success factor for international business for you?

Yes. I mean, so I'll compare it to the -- because 90% of it still is -- or close to 90% is still Burger King. So if you compare our international business, the Burger King business to Burger King in the U.S. The restaurants, on average, are new and look great. They are very digital. Many markets are fundamentally 100% digital business today. The food quality and execution overall has been great. We've got great local partners that are doing a terrific job of translating what the Whopper and flame grilling means to consumers in local markets. I mean it's just the execution. I mean, if you look at kind of your product service and image and your value and add on a bit of digital, and it is a more digital business than our domestic business today. it's just extraordinarily well run on average outside of the U.S., and we're seeing the results from that plus Popeyes business growing 30% to 40% a year.

We'll touch on Popeyes momentarily but let's touch on Tim Hortons first. 42% of your adjusted operating profit. In 2022, they had an Investor Day, and they were putting out an algorithm of 2% comp that was clearly exceeded very successfully in the subsequent years. Now recently, we've seen some growing concerns among the investment community on the state of the Canadian consumer and the economy softening, migration flows potentially tightening a little bit compared to the past few years and coincidentally, the same-store sales of Tim Hortons has decelerated to 1.5%. So is this like an early sign of consumer distress? Or are you expecting Tim Hortons to continue to come in the, call it, 2% to 3% range going forward? And how do you see Tim Hortons' relative value positioning as you look into the menu today, where do you see opportunities going forward? And how does Tim Hortons compared to peers when it comes to a more compressed economic scenario?

Yes. Tim's, it is one of the best restaurant businesses that I think we've seen anywhere in the world. It has so many -- all the basics that you want to see, it does a great job with those. And I think that's what's allowed the business to perform so well throughout all the economic cycles of its existence. And one of those characteristics is that -- well, two maybe. We're the #1 brand in Canada. We're also #1 for value. And it's always been an everyday value positioning that we do so well on. And I think that's what allows us to do well even in tough times from a macro perspective. And you referenced back to 2022. I do think it's important to call out the businesses had a really consistent track record for a long time. And I think Axel and the rest of the team have done a nice job is they laid out a plan and they stuck to it and they executed it in the details for a long time. So I think that's exactly what you want to see.

More recently, there was some softening in the Canadian QSR space. You saw that in our comps. I think we're about 1.5% in Q1. I would say, importantly, we outperformed the industry by about 1.5%. And in terms of where the Canadian macro is, a few things that I look at, one, employment, it's a little bit higher than the U.S. I think it's around 6.9% right now. That's been stated -- it goes up now a little bit month-to-month. But if you look at it on like a 1-year basis, it's kind of been stable in that range. And consumer confidence, it's not in a great place. But I would say it took a little bit of a dip when you had the conflict in Iran start. It's come back a little bit. So you've seen some fluctuations month-to-month there. But I would say it kind of it came back a little bit from where it was maybe a month or two ago.

So what's your confidence level on Tim Hortons going back to like 2% to 3% on the foreseeable future?

I think that business -- because it's got all the fundamentals that are so great, I think it's going to continue to perform really well over time. I mean that's what we've been able to do. So that's what we're focused on. We've got to execute our basics really well, make sure we keep our great value positioning. And I think that will be the basis for performance over the next few years.

Great. Earlier, you mentioned also that you added franchisee profitability in your bonus pool. So in 2025, franchisees 4-wall EBITDA reached about CAD 295,000 which is 3% above 2024 EBITDA despite elevated coffee prices and tariffs. What do you see as the health of franchisees today? And how do you think it's going to be evolving in 2026 if, again, the -- we have to turn a little bit softer.

Yes. So I think when you look at the -- and specifically on Tim's Canada, the franchise profitability. It's in a great place. If you're at CAD 295,000, that is a fantastic business. That's why everybody wants to become a Tim's franchisee. When we have units available, everybody wants them. It's a wonderful business for folks. So that's great. And also the balance sheet of our Canadian franchisees are one of the healthiest. We maintain very low leverage levels. So I think it's a great business with very good balance sheets and plenty of capacity to invest. It's always going to be our goal. And that's in those bonus targets every year that we want to grow and improve our franchisees' profitability and further strengthen the system. So that's going to be our goal each period. The best way to do that is by growing sales. And so that's what we're most focused on.

But I mean for a franchisee in Canada, they buy the equipment package. when we build out the unit. We're in the real estate business there. So they're putting in, what, CAD 700, CAD 750, something like that, their cash flow at around CAD 300. It's a really good business.

Actually the impact on that point on the pipeline for net unit because Tim Hortons was not opening units for a long period of time and then recently started to reaccelerate your units. You talked about the importance becoming a lever that you want to unlock both in Canada and in the U.S. So can you talk about not just the cash on cash returns that you're touching on, Patrick, but also the pipeline that you're seeing? And why do you think that there is room for Tim Hortons to keep opening stores in Canada where you have probably the highest penetration on store per capita even compared to some other peers in the United States?

Much lower penetration today than there was 10 or 15 years ago is the answer. Canada's population did grow a lot. It has slowed down now. But you've had a flat unit count for Tims fundamentally 10 or 15 years. And the market has gone from being, what, 32 million, 33 million people to around 40 million. And so there are a lot of areas, particularly Western Canada and Quebec, where others still more in Ontario as well, but particularly Western Canada and Quebec, where there are real opportunities. And our average unit volumes in the West are higher than our national average, and our penetration is much lower. So it's very easy to see how you get more built.

And just in terms of the visibility on the pipeline, it's a little bit different from some of other markets, say, in the international market that we might have and that we're doing a lot of the development. We have internal teams who are putting capital behind the product. So we're actually leading all the development projects. So that gives us, I would say, a much higher degree of visibility into exactly what's going to happen in any given time frame.

Excellent. Finally on Popeyes. We hear many possible reasons for a contraction of Popeyes. We heard rising competition in the chicken space, growth of other national brands change in consumer preferences, increased discounts from traditional burger players onto the chicken, given the high cost prices for beef, execution challenges, GLP-1. So what do you think the same store -- what you think caused the same-store sales contraction at Popeyes? And what must Popeyes execute well over the next 12 months, hopefully, 6, to structurally win share again?

We're doing it right now. We're not waiting for 6 or 12 months, just to be entirely clear. I think Peter has made a bunch of progress already in just the first few months, which is great. But zooming out for a second. I think the Chicken segment and Popeyes have been a tremendous success for us. If you look at it over the last 8, 9 years, we got into chicken because we were really excited about what -- where it was going, both in the U.S. and around the world. And that's played out very much as we thought. It's been a wonderful period of ownership for us. And I continue to think chicken is a great place to be.

Logically, when you have a great segment, other people are going to go after it, too. So that's natural. That's okay. Still happy to be in the segment, happy to compete there. I think more recently, probably we got a little bit out of focus on the core of the menu. We expanded things a little bit, and we're a little bit too focused on things like wings and some of the LTOs. And what Peter is doing right now is bringing that focus back to the core, focusing on the few things that we think we do, the absolute best in the space, things like our amazing bone and chicken where we are absolutely the market leader in the chicken sandwich, where we sort of changed the whole chicken sandwich category in the U.S. as well as our tenders that we've already made improvements to. So we're bringing that focus back to the core, both in terms of our operational teams, but also what we're communicating to our guests, and that's an important part.

The second big thing is we've always known that we've got to make -- we've got to bring more consistency to the level of operations across the restaurants in the U.S. And that's one of the big reasons that we brought in Peter. He had done what I think is the most impressive turnaround in large-scale QSR of the last -- as many years as I can remember. So he knows exactly what it takes to bring a system along and upgrade the average experience, the consistency of the experience that our guests are getting. That's something we've known -- we need to work on for a while, and we're now going to make progress on it. I think that's going to a big lever because frankly, the level of expectations are going up in the space. There are -- a lot of the growing players are doing a good job. And I think we've got to move there with them, and that's very clear to Peter and his team.

And the last piece I would say is having consistent value. And that we've basically already done. We've put in place the $5 faves, which is basically -- it's a single leader value proposition as well as a $20 family offering. So we've already made a lot of progress there that we're seeing results from.

So I think those are the few things. I have a ton of confidence in what Peter is doing. And I think a lot of -- the good news is a lot of the things that we need to improve on, they can be done more quickly. and I think he's moving very expeditiously to make progress on all those fronts.

The structural issues that we had in Burger King are not present in Popeyes. The assets are fine. The balance sheets are fine. The franchisees -- I mean we don't have the -- this is a very, very different situation. We've got to execute better in the stores. We've got to have a consistent value and have people know that it's there. And frankly, our market share is low enough that no matter what else is going on in the chicken category that we can't use that as an excuse. We can grow this business. We're going to grow this business. But we just got to execute better, and we're doing it.

Is the unit growth in international market for Popeyes dependent on the performance of the U.S. or you think it's going to be different?

That's one of my favorite questions. I'll jump on that one because I don't believe that you can have a great international business unless your core business is good in your domestic market period. When I was at a pizza company before this, I ran the international business for 5 years. And I used to tell the CEO that the constant complaint from our master franchisees out of the U.S. is paying a full royalty for this supposedly great pizza business, and I come to the U.S., and it's a disappointing experience. Why am I paying you when you can't run it well in your own home market? And I made the comment one too many times and he said, "Hey, come back and run the U.S." I'm like, "Oh crap" and it ultimately worked out. And -- but we had to fix the U.S. business. You are -- when you're going into international, I mean the global QSR business is dominated by U.S.-based chains. They are paying for a brand and know-how that's coming from North America. And you've got to be great here. You can't have a weak business here and expect to have success in your international business, period, full stop.

Maybe Patrick this is for you. What is the strategic rationale for running a portfolio of companies instead of having 4 separate businesses?

Want me to take it?

Yes, go for it.

All right. So it's really interesting because I've done both. I've been involved with both, right? And here are the advantages. To me, they're really -- it comes down to 3 things that I have in this portfolio, why it makes difference. There is leverage from a purchasing standpoint that we are getting more and more and that scale matters. There is the ability to accelerate international growth in the other brands because you already have a network. Basically, the reason we are able to grow these other brands, and particularly Popeyes so quickly outside of the U.S. is we're already in 110, 120 markets with Burger King. We already know all of the players and all the markets. We know the suppliers. When we go in, we are not starting from scratch. So that's a big deal.

And then the last one, and I think it's ultimately the most important is people. And you're able to move people around, get them the experiences that they need. So when you've got an issue, an execution issue at Popeyes, Josh can look around the company and say, who is best at executing at the store level in our system that we can put in charge of Popeyes and there's Peter Perdue, who's been doing it on Burger King and moving that business forward and we're able to pull him across. He's already known. He's known to us. And so that part of it is really important, and it allows you to attract great talent because they know they're going to get those opportunities.

It's a little hard when you are a single brand company and you want to be the CMO, it's exactly one CMO job. And we have multiple CMO jobs, and we have multiple COO jobs, and we have multiple heads of finance for a brand jobs. And I mean, we have the ability to give a great career and development opportunity to great talent, and I'll put our talent up against anybody in the industry. And then the important thing is we focused everybody around what ultimately matters, which is, if we're going to be a great restaurant company, then you've got to generate great returns for franchisees. That's what's going to generate growth. And so everybody gets closer to that, understanding the core of the business, how you improve that, and that's how you build real momentum.

To complement, could I add one or two other ones that come to mind just -- I think there was also an advantage to our ability to invest behind the brands through cycles in difficult moments. I think you've seen a lot of other concepts go through tough times, and they struggled to get out of it. They get under various constraints and I think one of the benefits of our business and also bringing to the investment-grade credit rating that we're going to is we have the ability to always invest through good times and bad times of the economy, of brands, of everything. And I think that should give comfort to all the folks involved, whether investors or franchisees as well. I'm a franchisee, I'd want to invest in a business that I know is going to invest behind it when it needs it, good times and bad.

And I guess the last point I would make is also for franchisees, too, it's an exciting thing sometimes to know that if I'm a fantastic Tims franchisee in Western Canada, I might have the -- I'm doing a great job in my town, but maybe I'm built out with my Tim Hortons business. I have other options. I can do other things to grow. I can build Firehouse.

So I think there's some attraction both from the stability of the business, the long-term perspective, we're able to take the financial capacity we have and the growth options that you get as a franchise partner that are also a bit of an advantage to our setup.

Great. Running out of time. So thank you very much, everybody, for joining. Thank you, Josh. Thank you, Patrick for [indiscernible].

Thank you.

Good morning, and welcome to the Restaurant Brands International's First Quarter 2026 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Kendall Peck, RBI's Vice President of Treasury and Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Restaurant Brands International's earnings call for the quarter ended March 31, 2026. Joining me on the call today are Restaurant Brands International's Executive Chairman Patrick Doyle; CEO, Josh Kobza; and CFO, Sami Siddiqui. Following remarks from Josh, Sami and Patrick, we will open the call to questions.

Today's discussion may include forward-looking statements, which are subject to risks detailed in the press release issued this morning and in our SEC filings. We will also reference non-GAAP financial measures, reconciliations of which can be found in the press release and trending schedules available on our Investor Relations website. As a reminder, organic adjusted operating income growth is on a constant currency basis and excludes results from the Restaurant Holdings segment. For calendar planning purposes, our preliminary Q2 earnings call is scheduled for the morning of August 6, 2026.

And now I'll turn the call over to Josh.

Good morning, everyone, and thank you for joining us. When we met with you in Miami at our Investor Day in late February, we made clear commitments to the investment community and highlighted a vision for RBI through 2028. We laid out a path to 5%-plus net restaurant growth, predictable earnings growth and an investment-grade balance sheet while being the partner of choice for the best franchisees and the employer of choice for the best talent.

We also committed to returning capital to shareholders in a meaningful and sustained way through a growing dividend and the resumption of share repurchases with the goal of delivering consistent double-digit total shareholder returns. And we've acted quickly on that commitment. We began repurchasing shares in March for the first time in over 2 years, reflecting our conviction in the business. Investor Day laid out the vision for the company we are building and Q1 is an early proof point that we're moving in the right direction.

We converted strong top line results, including comparable sales growth of 3.2% and system-wide sales growth of 6.2% and a 10.7% organic AOI growth and mid-teens EPS expansion, while continuing to invest behind our brands and return capital to shareholders. This combination of top line growth, cost discipline and shareholder returns is exactly what we're aiming to deliver on a consistent basis.

At Burger King, Tom and his team's work under Reclaim the Flame is starting to show up in the numbers. We saw strong performance on both an absolute and relative basis this quarter, delivering nearly 6% comparable sales growth in the U.S. and significantly outperforming the industry. Importantly, that performance wasn't driven by 1 collaboration or campaign. Over the last 4 years, the team has strengthened the foundation of the business from restaurant standards to the quality and consistency of the guest experience, and that's now enabling our brand elevation efforts to land more effectively.

In Q1, we continue to take a balanced approach to value and family offerings and layered on exciting improvements to the Walker, both of which are driving higher engagement and repeat visits. In addition to the momentum of Burger King, both International and Tim Hortons delivered their 20th consecutive quarters of positive comparable sales, reflecting the quality of our franchisees, our brand strength and our teams. International continued to stand out, delivering 5.7% comparable sales and 11.1% system-wide sales growth, reinforcing its role as one of our most important long-term growth engines.

We also closed our Burger King China joint venture with CPE, a milestone we're excited about and one that sets the business up for the kind of growth that we know is capable of. Overall, the momentum we built in Q1 gives me confidence. It reflects focused execution, engaged franchisees and the strength of the plan that we laid out in February. We're executing against it, and we're doing it in a way that the founders of our brands would be proud of with discipline and ownership mindset and a genuine commitment to building something durable for our franchisees, our guests and our shareholders.

With that, let's turn to our segment highlights, starting with Tim Hortons, which represents roughly 41% of our operating profit. Tim delivered comparable sales growth of 1.5% in Canada, outperforming a relatively flat QSR industry amid a backdrop of lower consumer confidence and unfavorable weather in January and March. Growth was broad-based across all dayparts, with notable strength in morning and late night, largely driven by cold beverages and breakfast students. We remain focused on defending and extending our leadership in coffee, breakfast and baked goods.

In Q1, we achieved the #1 position in Brand Health's best breakfast ranking for the first time, leading our nearest competitor by approximately 2 points, and we're focused on building from that position of strength. During the quarter, we launched our $3 breakfast sandwich or wrapped with a coffee, supporting our value leadership and ensuring Canadians can access their favorite core Tim's products at a great everyday price.

We continue to build our presence in the PM daypart. Our $8.99 loaded wrap meals helped drive higher combo incidents throughout the quarter. And with continued execution improvements, we remain confident in the long-term opportunity to grow this part of the business. Across dayparts, beverages remain a key driver of our business. Beverage sales grew 2% year-over-year with another quarter of standout performance in cold beverages, up 10%; and continued strength in espresso-based drinks and tea, up 8%.

As we move into the warmer months, we're excited to provide guests with more cold beverage innovation, including recent launches like protein and zero sugar centers.

Underpinning these results is continued operational progress. We're making steady improvements with strong execution from our restaurant owners and team members reflected in an average Google rating of 4 stars for the quarter. Overall guest satisfaction also improved over 2 points year-over-year, with the PM daypart reaching an all-time high in Q1. At the same time, we're enhancing our digital experience and deepening guest engagement with a nearly 40% digital sales mix in Q1, supported by initiatives like roll up to win, which returned in February with a refreshed more engaging experience.

We're looking forward to launching our loyalty partnership with Canadian Tire in the second half of the year, bringing more guests to the Tim's platform alongside another iconic Canadian brand.

Finally, on development. While Q1 reflected normal seasonality, we remain confident in our path to accelerate growth in 2026, following our return to positive NRG in Canada last year. Tim is a brand that earns its industry outperformance quarter-by-quarter, through quality food and beverages, compelling everyday value, a consistently high-quality guest experience, and as a result, the loyalty of millions of Canadians who make it part of their daily routine. As we head into summer with an exciting innovation pipeline, continued focus on operational excellence and accelerating unit growth, we remain confident in the path ahead for this business.

Turning now to International, which represents 29% of our operating profit. International delivered another quarter of strong results with comparable sales of 5.7% and net restaurant growth of 4.5% driving system-wide sales growth of over 11%. Performance was driven by solid execution of both menu innovation and everyday value, leading to broad-based momentum across some of our largest markets, including Burger King in Spain, Germany, Australia, Brazil, China, Korea and Japan. Our local teams continue to launch innovative products that are locally relevant, create guest excitement and drive incremental visits.

We expanded baby burgers into Germany and Spain, building on the platform's strong performance in France last summer. In Korea, premium beef innovation like the Garlic Bulgogi Maximum Burger drove positive guest response, while in Australia, Hungry Jack's launched new unique beverages like Natell is coffee. At the same time, innovation must be balanced with strong value-for-money positioning. Markets like Brazil continue to execute a solid base of everyday value. While in China, we recently launched a value-oriented whole muscle chicken sandwich that has been met with incredible guest feedback. This combination of innovation and value has enabled us to deliver some of the strongest and most consistent international sales results in the industry over the past few years.

During the first quarter, we also closed our joint venture agreement with CPE at Burger King China. In March, Patrick, Sami, Tiago and I spent time in Beijing with the Burger King China team, including Chairman Johnson Wang and Deputy CEO, Danny Tan, and we all came away energized about the path ahead. The team there is exceptional, and the early results speak for themselves with double-digit comparable sales growth and notable margin improvement in the first quarter. The team is already demonstrating its restaurant expertise and deep knowledge of the Chinese market with a clear plan to optimize the supply chain, enhance the brand's marketing and improve restaurant build costs to drive stronger returns.

As we highlighted at Investor Day, BK China is an important component of our path back to 5%-plus NRG by 2028. And CPE has injected $350 million of primary capital into the business, fully funding development over the next 5 years, starting with a return to modestly positive net restaurant growth this year in 2026. While we were in China, we also spent time with the Popeyes China team, which is working to solidify brand positioning and increased awareness. We're looking forward to accelerating development this year and positioning the business for success under a new long-term operator within the next 2 years.

The first quarter demonstrated how the International business continues to be a reliable source of growth for us, consistently outperforming, building on a strong base of scaled markets and with no shortage of catalysts ahead, from CPEs ambitions in China to Popeyes continued acceleration all around the world.

Shifting now to Burger King, which represents roughly 18% of our operating profits. U.S. same-store sales grew 5.8%, outperforming the burger QSR industry by over 5 points this quarter. This is the result of 4 years of disciplined execution from Tom and his team that has positioned us and the system to successfully welcome guests back through impactful marketing. Our marketing continues to be anchored on 3 key tenets: elevating our core menu, connecting with families and kids and delivering consistent everyday value.

This quarter, we launched the Elevated Whopper, featuring a new glazed spun, cremer mayo and clamshell packaging, which is driving positive guest feedback and the highest whopper average unit volumes in over 3 years. In April, we drove further trial and engagement with lapsed guests through nationwide Whopper Wednesday, reminding guests why our flame grilled burger is the very best in the industry. We also rolled out $3.99 King Junior Meals as part of our strategy to reengage with families and kids and saw continued growth in King Junior average unit volumes as a result.

And on value, our $5 DUO and $7 Trios continue to perform well, complementing our premium offerings and providing guests with choice and a consistent value message. A key highlight this quarter was our direct engagement with guests and the launch of our brand elevation campaign. In February, Tom personally spoke with more than 1,500 guests as part of a listening campaign to better understand what they love about Burger King and where we have opportunities to improve.

The feedback was really encouraging. There is clear late in love for the brand. And we received valuable input that's shaping our menu elevation road map and providing the team with ideas to further strengthen brand love and deepen guest connections. Our marketing efforts are supported by ongoing improvements in operations and strong alignment with our franchisees, as evidenced by their 97% vote to maintain their elevated ad fund contribution, which we announced at Investor Day.

Overall, this was an exciting quarter for Burger King, and it serves as a strong proof point that our strategy is working. When we invite guests back to experience a better Burger King, they come and they stay. What's most encouraging is that these results are not isolated data points. They reflect a brand that's earning back guest trust and building real momentum and we believe we're still in the early innings of that journey.

Now turning to Popeyes, where net restaurant growth of 1.2% was more than offset by a comparable sales decline of 6.5%, resulting in system-wide sales declining by 3.9%. While results were softer than we'd like to see, we have a clear understanding of the underlying drivers and are moving quickly to address them. At Investor Day, Peter laid out 3 key pillars required to get Popeyes back on track. One, improving in-restaurant execution and guest service; two, narrowing our focus on our core offerings; and third, rebuilding a consistent everyday value proposition. During our franchisee road shows in April, we brought these priorities together into a clear actionable framework, which was met with strong alignment and excitement from our franchise operators.

To improve execution, we have increased field support to enable higher frequency, shoulder-to-shoulder training on our brand standards. We held our inaugural restaurant general manager guest experience rallies across roughly 20 cities over the past 2 months, featuring interactive training focused on delivering great guest service. I attended our rally in Miami and saw firsthand the incredible energy and engagement from our managers. We're beginning to see early improvements in product satisfaction and operational metrics, though it will take time for these to translate into top line results.

We're also focused on the core of what we do best: bone-in chicken, tenders and the sandwich. A tighter focus makes it easier to execute well in the restaurant and ensures our marketing is working harder behind fewer stronger bets. To rebuild a consistent base of everyday value, we launched our $5 Faves platform, offering guests choice of their favorite Popeyes items at an affordable price point, and we're already seeing signs of underlying improvement in value scores. We'll continue to evolve this platform while exploring additional offerings for group occasions. So while there's more work to do on Popeyes, the plan is clear: franchisee alignment is strong, and the energy in the system tells me we're ready to execute and deliver some great results. I'm confident our efforts will support a return to positive comps in the second half of 2026.

Finally, Firehouse Subs delivered net restaurant growth of 8.1% and relatively flat comparable sales, resulting in 7.2% system-wide sales growth. We continue to see solid development momentum, supported by a strong pipeline of franchise partners, average paybacks of less than 4 years and increasing brand awareness. As highlighted at our Investor Day, I'm excited to see Firehouse to become a more meaningful contributor to RBI's growth over time and remain confident that the brand will deliver another year of accelerated unit growth in 2026.

With that, I'll pass it over to Sami to talk through our financial results for the quarter. Sami?

Thanks, Josh, and good morning, everyone.

Today, I'll discuss our Q1 financial results, capital structure and 2026 financial guidance. But before that, I want to recap a few takeaways from our Investor Day. First, we remain confident in the durability of our long-term algorithm anchored by approximately 3% same-store sales and 8% organic AOI growth, supported by disciplined cost management and accelerating net restaurant growth. We are on track to deliver roughly 1,800 net new restaurants per year by 2028 coming from 3 building blocks: 300 to 400 from our businesses in the U.S. and Canada, 300 to 400 from our 3 brands in China and around 1,100 from international including about 700 from our top 10 growth markets and 400 from the balance of the portfolio.

Second, we are continuing to simplify the business and have a path to sunset restaurant holdings by the end of 2027.

Third, we announced our intention to become an investment-grade company and remain on track to achieve corporate investment-grade leverage by 2028. And finally, we continue to generate strong free cash flow, which allows us to do it all: invest in high-return organic growth opportunities, support our path to investment-grade leverage and return capital to shareholders through a growing dividend and share repurchases. As Josh mentioned, we resumed share buybacks in March and have repurchased $60 million through April 30, an indication of confidence in our business momentum and our view that our shares remain undervalued.

Now on to our results, beginning with our financials. In Q1, we delivered comparable sales growth of 3.2%, net restaurant growth of 2.6% and system-wide sales growth of 6.2%. We translated that to organic AOI growth of 10.7% and nominal adjusted EPS growth of 14.6%. Strong comparable sales were led by nearly 6% growth in both international and Burger King U.S. And while Q1 NRG marks a low point for the year due to typical seasonality, we remain on track to accelerate in 2026. Organic AOI growth outpaced system-wide sales growth this quarter, driven by a few factors.

First, we saw $12 million of net bad debt recoveries, primarily stemming from international compared to approximately $8 million of net bad debt expense in the prior year period. Second, we benefited from a $12 million decline in segment G&A, excluding restaurant holdings. And third, we closed the Burger King China joint venture transaction with CPE on January 30 and began recording royalty revenues from BK China in the International segment once again. These tailwinds were partially offset by a $13 million AOI drag from Tim Hortons advertising and other services compared to $2 million in the prior year period, primarily due to the timing of certain marketing-related expenses. We expect to see a similar AOI drag in Q2, which will partially reverse in the back half of the year. As a result, we anticipate a full year AOI drag of approximately $20 million in 2026 compared to $14 million in 2025. As a reminder, the Tim Hortons advertising expenses and other services line item includes CPG marketing expenses, which are funded by Tim Hortons Corporate.

Now turning to EPS. Adjusted EPS increased to $0.86 per share this quarter from $0.75 last year, representing nominal growth of 14.6%. This was driven by our AOI growth as well as a modest year-over-year decrease in adjusted net interest expense from $128 million to $124 million and an FX tailwind of approximately $0.04. Our adjusted effective tax rate this quarter was 18.5%, in line with our expectations for the full year of between 18% and 19%.

Moving to cash flow and capital allocation. We generated nearly $200 million of free cash flow in Q1, including the impact of $53 million of CapEx and cash inducements and a $26 million benefit from our swaps and hedges. In March, we resumed share repurchases, repurchasing a total of $34 million of stock in the quarter and $26 million in April. We remain on track to repurchase approximately $500 million for the full year 2026 largely through a programmatic approach to buybacks subject to trading dynamics. In total, we returned approximately $315 million of capital to shareholders in Q1 through dividends and share repurchases. We ended the quarter with total liquidity of approximately $2.3 billion, including $1 billion of cash and a net leverage ratio of 4.2x.

Finally, I'd like to discuss our 2026 financial guidance. First, we continue to expect segment G&A, excluding restaurant holdings, of about $600 million to $620 million. Second, we continue to expect net adjusted interest expense to stay approximately flat year-over-year in the $500 million to $520 million range based on a mid-3% average SOFR rate, which flows through to approximately 15% of our debt. Third, we continue to expect 2026 CapEx and cash inducements including capital expenditures, tenant inducements and incentives to be around $400 million.

Fourth, we continue to expect Tim Hortons supply chain margins to be roughly in line with 2025 levels. And last, there are a couple of things to keep in mind for restaurant holdings, which, as a reminder, is not included in our organic AOI growth. In Q1, Restaurant Holdings AOI was negative $1 million, comprised of positive $8 million from our Carrols Burger King business, offset by a $9 million loss in our international start-up businesses, Popeyes China and Firehouse Brazil.

For the 2026 full year, we continue to expect total RH AOI of roughly $10 million to $20 million. The expected year-over-year decline in RH AOI reflects the impact of Carrols restaurant refranchising, continued beef inflation and incremental investments in our international start-up businesses that we expect to continue until we transition ownership to new local partners. We are closely monitoring beef costs and expect normalization over time with relief now anticipated closer to 2027.

So stepping back, Q1 provides a solid foundation for the year. We are well positioned to accelerate net restaurant growth in 2026, deliver another year of approximately 8% organic AOI growth and increasingly translate that growth into strong earnings. Our resumption of share repurchases this quarter is a clear reflection of this confidence.

And with that, I'll turn it over to Patrick.

Thanks, Sami. I'm going to start with some thoughts on the overall restaurant category. Share a couple of observations on our recent trip to China and our international business generally, and then I'll shift to Burger King.

I've been working in the restaurant industry almost 30 years. I've never seen better proof of how executing well on the fundamentals for guests can drive such differentiated outcomes. I have an exercise I go through on a regular basis: I sit with a piece of paper and write down whether I think the average customer is having a better experience today than they were a year ago. If the food, service and image are generally better and the perceptions of value are improving, sales are going to follow. And marketing's job is simply to amplify that truth. If you aren't convinced the truth is better than a year ago, you can't market your way around it.

There are notable successes in the industry right now, and that includes Burger King, and they're putting up great numbers. And there are others in the industry where things are clearly getting worse and they are losing market share. Our teams are obsessed with being on the right side of that equation and hitting our 3%-plus comp gold this quarter is a reflection of that.

Now turning to China. It's been a while since I was last there, and I came away encouraged by what I saw on the ground. We're finally starting to see some signs of improving consumer momentum. It's still early, but it feels like things are improving on the macro front after a number of rough years coming out of COVID. At Burger King China, our partnership with CPE is off to a strong start. They bring exactly what we were looking for in a partner: deep local operating experience and a clear focused plan to improve the business. The pace of execution on the ground is impressive, and early results are giving us real confidence that we made the right decision at the right time to position this business for growth as the consumer recovers.

Burger King China is delivering on every element of my simple test. Food quality is improving, service is better, the restaurants look good and they're hitting the mark on value. And as a result, sales are very, very strong. At Popeyes China, it's clear we have a tremendous opportunity. And the team is focused on getting the brand positioning right so we can scale it with the right long-term partner. And at Tim's, I walk away confident about the potential of the business. There's still work to do to fully unlock that opportunity including incremental capital to support development, but it's a great brand with strong awareness in a huge and growing category.

Our overall International business is outstanding. Our comps are some of the best in the industry. Our system-wide sales growth, which has averaged nearly 13% over the past 3 years is best-in-class and the free cash flow generated by the business is fantastic. We see lots of opportunity for continued outperformance. Congrats to Tiago and the team for yet another remarkable quarter.

Now on to Burger King U.S. We've consistently said that if we put in the hard work, sales will follow. What you saw in our Q1 results is a reflection of that. And the great marketing we're seeing today, whether it's around the whopper or collaborations like SpongeBob or Mandalorian, only works because the in-restaurant experience is consistently better than it was a year ago. I particularly want to thank our franchisees. They've shown tremendous trust and alignment with our team and are starting to see the return on their investments, and we remain committed to improving those returns for our franchisees.

We've made progress, but we are close to being satisfied. The most exciting part is that while we're proud of the progress we've made and the sales growth we're seeing by truly listening to our guests, we're also confident in our ability to continue improving our food, our service and the image in our restaurants moving forward. On top of that, guests know that they can come to us for consistent value and choice. That's how we'll continue to generate profitable growth in our restaurants. This is a business in company with real momentum, improving fundamentals and a system that is increasingly aligned and executing at a higher level. We've been seeing the signs of this internally for quite some time, but now our top line results are starting to make that progress visible to you all, and I'm confident this will continue. This quarter is not an outlier, and that's what gives me confidence in where Burger King and RBI more broadly is headed from here.

With that, I'll turn it over to the operator for questions.

[Operator Instructions]. Our first question will come from Dennis Geiger from UBS.

I wanted to ask a bit more about Tim Hortons. Encouraging to see the solid results despite the weather including the upside that you drove to the overall category. But just curious if you could help us think through where the Canadian macro environment is, where the Canadian consumer is, maybe how that's been impacting results of late and really how you think about the outlook for the brand looking ahead, if we do have a more difficult backdrop in that market?

Dennis, it's Josh. Thanks for the question. I'll share a few thoughts on Tim's in Canada macro, Sami or Patrick feel free to add on, if you like.

I think when you step back and you've got to remember, Tim is an amazing business. It's one of the best restaurant businesses in the world, has fantastic brand scores, the #1 brand in Canada, really great unit economics, wonderful restaurant owners, and I think we've put up a pretty great track record here with 20 consecutive quarters of same-store sales, and I think that reflects the underlying strength of this business.

There was a bit of macro softness in Q1, which you saw in those sector results. And I think importantly, we outperformed the sector by about 150 basis points, which is, I think, really remarkable and something we've done consistently. I think some of that macro softness is probably driven by a couple of the factors that I mentioned earlier and you cited. The weather was a bit tough. That happened sometimes in Q1, but I think particularly this year, January in Toronto, I think it might have been the most know that they've had in Toronto ever on record.

So it was a bit rougher, and that's why we called it out, but that happens in Canada in Q1 sometimes. And there was a bit of a different consumer confidence. I think a bit of that was probably caused by some of the higher gas prices that you saw recently, but this happens from time to time. You have a bit of macro ups and downs. If you go back a year, actually, we saw something similar in Q1 and we printed a really great year overall. So our job, I think, is to deliver throughout any ups and downs that you see in the short run. And I think those things tend to even out over the medium term.

And with regards to this year and the things we're doing, I think our plan highlights some of the great strength of the Tim's business and some things that only we can do. A few of them are that we're going to continue investing as we're able to do through the cycles. We're actually going to increase our investments in Canada this year. We're going to increase the pace of remodels doing, I think, 300-plus remodels in the country, that's hundreds of millions of dollars of investments back into our local markets. And we're also going to increase the pace of new restaurant openings. So we're going to be opening up restaurants, bringing Tim's to new markets and new communities.

So we're making huge investments that I think almost nobody else is making or can make in Canada. I think there's also something very exciting that I mentioned that's coming up later this year, which is our partnership with Canadian Tire. Being the #1 most loved Canadian brand makes us absolutely the partner of choice for other iconic Canadian brands. And I think bringing those 2 brands together to deliver even more and differentiated value to our guests is going to be something very exciting for Tim's as we get into the back half.

Another version of those partnerships that we'll bring to life is that we also are the partner of choice for some of the biggest IPs out there. So some of those global kind of family partnerships that you've seen us do elsewhere, we'll bring some of those to Canada, and we've got a couple in the lineup that we're particularly excited about that we think are going to generate a lot of excitement and a lot of engagement within our Tim's space.

And lastly, I would tell you, the cold beverage and PM food calendar, that really ramps up as we get into the summer. So some of the food items that are going to drive our PM food start to come out here over the next couple of months and into the back half of this year. And I think our power as a brand is that we're really able to drive categories forward to transform categories and bring whole new ideas and things to Canada. We've done that in the past. That's a lot of our history as a concept, and we're going to do that again here going forward. And I think that's a unique asset of Tim's. I think you're bringing those things together and more, and that's what gives us confidence about the trajectory of the business regardless of any blips that we might see on the macro side.

The next question comes from David Palmer, Evercore ISI.

Great. And thank you for that color on Canada and Tim's very helpful thought. With regard to other international markets, I know there's concern that maybe some developed markets, Europe, for example, might be dealing with similar types of macro headwinds and obviously, the energy cost issue, could you speak to just what you're seeing around the world in terms of the consumer and market share? And any sort of adjustments you might be making as you see the macro conditions outside the U.S.?

So on our International business, if you look broadly across the business, as I mentioned earlier, really good results, over 5% same-store sales. So I think Thiago and all the teams and our partners around the world are doing a very nice job. If we break that down a little bit more into some of the regions, within our EMEA business, we actually had a very good quarter. So the EMEA business results were relatively in line with the rest of International. So some puts and takes across markets. But yes, I think when you look at the aggregate of that business, we continue to see good momentum. Obviously, we're keeping an eye on energy costs that can flow through things like utilities and all. So that's something we'll definitely watch over the rest of the year. But I'd say, so far, in the first quarter, the business there performed pretty well.

The other big highlight I would call out is our Asia Pacific business, which has been performing wonderfully. I called out a few of the markets, but it's pretty broad. Our China business, as we talked about, is doing great. Johnson and Danny are doing a wonderful job posting double-digit comps. So off to a great start there. Japan continues to be a real standout with well into the double-digit comps again. So they're doing really well. Australia had a good quarter. Korea had a good quarter. So really across the Asian markets broad-based strength.

And within Latin America, I would say, Brazil was a positive point, both across our Burger King business and especially Popeyes, which has been doing terrific in Brazil. So hopefully, that gives you a little bit more color on some of the biggest markets around the world, but overall, pretty happy with the quarter across the International business.

The next question comes from Danilo Gargiulo from Bernstein.

While it's very encouraging to see the consumer response to Burger King U.S. relaunch of the whopper. And it seems you were able to reach mid-single digit even without being dragged into value work. So I was wondering if you can maybe expand on the sustainability of the results and perhaps if you can focus on your comments on these not being isolated data point? So can you share maybe your expectations for the brand now in the U.S., whether you think this will be fair to be assuming low to mid-single-digit growth in the coming quarters and/or increasing 2-year stacks, however, you may want to play this, in it in light of the momentum that the brand is experiencing or do you think that Burger King will remain a low single-digit same-store sales contributor to your trajectory going forward?

Thanks. I'll touch on a few thoughts on Bering here. And I think Patrick referenced it well. The really -- the thing that gives us so much confidence about what we're doing with Burger King is that what's happening now is building on underlying work that we've been doing on the foundation for the past 3 or 4 years. we focused on all the basics. We improved operations really dramatically in the consistency of operations in the system across the whole country. We made important improvements to our franchisee base that we're going to continue to do over the next few years.

We've done a ton of remodels, made sure that the physical asset base looks a lot better and is ready to welcome back all kinds of guests and especially families that you see coming back. And now you started to see us really talk about that and build upon it with some of the culinary improvements that we've made. And I think Patrick referenced, one of the things I think, Tom and I'd love to say it too, like marketing amplifies the truth. And the important thing here is that we've built a much better version of Burger King that you're now seeing us talk about. And I think that's what gives us a lot of confidence.

And we've now started to talk, I think, about the things that we're doing. And we're seeing the momentum build. We saw it with SpongeBob in the back half of last year. We were able to really effectively bring families back into the restaurant. But we saw things progressively build then again as we got into the first quarter here, where we started out with listening and then brought out the elevated Whopper, now building upon it further with Mandalorian. So I think that, that's kind of building the dynamic of what we're doing is what gives us confidence.

And I also think we sort of -- we found our way into an amazing insight with all the listening. I think it actually taught us all a lot. It showed us that there is incredible latent love for this brand. We do these calls with our guests and hear what they have to say, it's amazing how many people -- they start out with, I love Burger King. That's the theme they love Burger King and they want us to do better. So what Tom and the team were working on resonates so well. And I think that's why you saw our guests embrace so strongly what we did with the whopper.

And what you'll see us do over the next few years is we'll bring out kind of further and further chapters of all of the amazing things that we're doing to make Burger King even better, whether that's things like you probably just saw recently on Instagram, fixing all of the signs around the country, continue to remodel our restaurants. And we have a really incredible, I would say, roadmap of menu elevation ideas that have come from our guests and our team that will allow us to continue the momentum over many quarters and years to come.

In terms of the, what you mentioned, Danilo, on kind of what the expectation should be? What I would say is I would stick with the definition that we've had over the last couple of years. We want to outperform the burger QSR segment consistently year upon year. And I think we've started to do that. This quarter was a great example of it, and we'll look to do that in future quarters and years going forward.

Patrick, anything you want to add there?

Yes. I just -- Daniel, I think that we really got to an inflection point in the first quarter. And there were a lot of things that we wanted to talk about at Investor Day, but the timing of it was not an accident. And we scheduled it last year for the first quarter. And partly, it was because our confidence was growing in our execution at Burger King that we had enough improvements in our service levels, in better-looking restaurants, in all of those things that first quarter was when we were going to invite our guests back to take a new look at Burger King and to experience a new better Burger King and the results that we saw we're proud of them. But frankly, at some level, we're expected, given that we are inviting people back.

And so we feel very good about where we are. And I guess the thing that I would say is that while we have made great progress, growth comes from continued improvements. We are continuing to remodel our restaurants. So the image that people experience is going to continue to get better. As Josh just laid out, we're going to continue to improve our food across our menu, which means food perceptions are going to continue to improve. We've got great consistent value and our franchisees are executing at a better and better level. So if you do all of that, it ought to drive consistent growth. We're proud of the fact that we have outperformed the category for a couple of years now, and what you saw in Q1 was an acceleration of that.

The next question comes from Brian Bittner from Oppenheimer.

Sticking on Burger King, again, congrats on those results. It does seem like you've got a great thing going there with the brand's resurgence, nearly 6% comps and now you are ready to accelerate refranchising. And sometimes refranchising this many units, it can cause some choppiness within the system. So as you do embark on now accelerating the refranchising of the RH segment, how do you make sure that the business momentum you have goes without a hiccup? And how do you think getting these stores in the right hands could actually be accretive to the trends of these stores?

Brian, thanks for the question. I think we are very focused on how this refranchising process goes and the success of our new franchisees, in particular. And I think we've seen some encouraging signs so far. And I would tell you as we have these discussions, our #1 criteria for the new partners that we want in these -- in the refranchising is the quality of the local operator, that's the #1 consideration that we have. And a couple of things we've seen so far. I was actually -- I spent -- last Friday, I was out visiting restaurants with one of our newest operators that just bought 30 restaurants just a bit north of here, and they're doing fantastic. They're improving the operations of their restaurants. They're getting great managers in all of the restaurants, they're working on planning their first remodels.

They're outperforming the system by hundreds of basis points. And so I was really pleased with what I saw. And I can tell you, not just me, but everybody on the team is spending a ton of time with each of the new operators that comes in and takes over some of our restaurants to make sure that they're doing well, and we're hearing all of their feedback to make sure that not just they are successful, but each of our future franchisees who takes on some of the restaurants are successful. So I'd tell you a ton of focus, but pretty pleased with both the quality of the operators we're finding and their results so far.

The other thing I would mention is I would tell you that the kind of the top of the funnel, the new transactions that we're seeing, we're seeing a lot of them. We're seeing a ton of interest both from outside parties, but a lot of inside folks as well, both team members from Carrols and people from our corporate teams who are really excited about what we're doing here with the brand. I think there really can't be any greater endorsement of the momentum of the brand and the fact that it's driven by sustainable fundamentals then the very folks who are working on it and driving that success want to become franchisees and be involved and participate in what the brand is doing for decades to come and dedicate their lives and their families' lives to it. So that gives us a ton of excitement. And I think we're going to have a lot of wonderful new franchisees in the Burger King system over the next couple of years.

Sami and I, we talked through with every single week kind of the new potential partners, and we're seeing a number of applications every week and ones that we're really excited about. So I feel good about it. I think we have -- I think there's a ton of focus on it, and I think we're going to -- we're kind of setting the course for a great new version of the Burger King system with some wonderful existing and wonderful new franchisees.

The next question comes from John Ivankoe from JPMorgan.

Firstly, an observation. The execution of the whopper at Burger King really is objectively better. So congratulations on that because I know how much work goes into it, especially across an overall system. So that's first.

And then secondly, as we think about brand momentum, from what I understand, you consider approximately 60%, correct me if I'm wrong, of the Burger King U.S. system to be modern. It would seem that if customers were to be reintroduced to the Burger King brand, you would want them to see a modern image restaurant. So the repeat would generally be higher. So I wonder if we have an opportunity to really look at some of the sales momentum in the business, operating momentum in the business and just overall sentiment around franchisees to perhaps accelerate some of the remodels for Burger King in the U.S.

And if I could get a sense of where those remodels as a percentage of the overall system are modern as a percentage of the system could potentially end in '26, '27, '28, especially as you do want to accelerate and take advantage of just overall consumer and franchisee momentum as we think about Burger King U.S.?

First of all, thank you for the whopper feedback. It puts a smile on all of our faces every time we see that and we're getting guest calls and e-mails that are saying the same thing. I got a wonderful one from a guest by the name of Jim the other day. It said something to the effect of, "I hadn't tried you guys in a very long time. I saw your commercials and you look genuine, so I gave it a try, and you nailed it. And I went back again and you nailed it again."

And so we're hearing that very consistently. And -- we all have Patrick's test in mind every day. Are we making our core products better for our guests every day? And we feel like we are. And I think that's really exciting as to the sustainability of the progress.

In terms of I think you're right, we're in that 60% range. And we've said consistently that we want that to get to 80%-plus such that almost every Burger King you see in America has that modern clean image. It's going to take a little bit of time to get there. And we've had to strike the right balance of waiting until we were all the way there versus making some progress in talking about it, and we felt like it was the right time with where we are in numbers.

Where we run and in operations, we felt we were ready to welcome guests back in today. And to your point on repeat business, that is one of the stats that we look at quite closely. And 1 of the things we saw recently that gave us a lot of confidence that I think we've mentioned is after we did the Spongebob promotion back in Q4, we tracked for each of those promotions, what's our repeat rate? So how often do the guests who come in for some of those promotions? How do they come back in the next 30, 60, 90 days? And we saw the highest repeat rate that we've seen in any of those promotions in a long time, which is another -- it was another data point that gave us confidence that as we brought new folks back in or lapsed guests in the case like the one I mentioned of Jim, that they were going to be happy with what they saw.

So I think you're seeing that repeat rates start to increase, which is a great sign of operations quality, but also that we're going to get a really solid ROI out of any marketing that we do. In terms of remodel pace, I think we mentioned in the last quarter or 2 that we still want to get to 85%. It might take a little bit longer than the 2028 time line we had previously outlined. We would love to accelerate that pace. And I would tell you, we are investing pretty aggressively. So in our company stores and the former Carrols stores, we're investing pretty aggressively to increase the pace of remodels from what we did last year.

And we're talking to our franchisees about the potential to do more. I think what we need to do is see a bit more sustained momentum of the same-store sales and have that flow through to the franchise profitability. And once we get franchise profitability moving meaningfully back in the right direction, which doing these kind of same-store sales helps an awful lot on that, then I think we have a good opportunity to think about trying to move a little bit faster on the remodels, but we got to do it in that order, I think.

Sami, anything that you want to add there?

No, John, I would just add on to what Josh was saying in terms of the pace and we talked about this, I think, a couple of quarters ago when we talked about maybe some of the remodels sort of getting pushed out a little bit. This top line momentum is a great accelerant when you think about it, but we have to look at the whole P&L. And we've talked a little bit in the past about sort of the unprecedented beef pressure that we've seen over the last year. And that those beef prices do remain elevated right now. We'd initially sort of planned for those to wind down for the second half of this year. We're seeing that elevated level of beef costs kind of persist a little bit.

This is natural. It's part of a herd rebuilding cycle that occurs in our industry every so often. I think as you see relief on the food cost side, you'll see even more momentum and even more excitement around those remodels, particularly with sustained top line momentum.

I'll add 1 thing, John, which is simply, we've been watching every operational metric improve, and thank you for adding to that, which is we passed the test on the whopper, so thank you for that. And we had to make a decision. When do you really do the big relaunch. When do you invite everybody back when do you think that the experience is enough better that you want to put yourself out there and say now is the time to retry Burger King, and I think Tom and the team nailed it. I mean you can't wait for perfects. But what we are very confident of is that our guest experience at Burger King is going to continue to improve. We're going to continue to give them consistent value. The restaurants are going to continue to look better. And we had seen that in increasing repeat rates, which meant it was time to move and really invite them to give us a new look again. And the experience is just going to continue to improve. And that's what should give us confidence and give you confidence that we're going to continue to see good results in the business.

The next question comes from Chris O'Cull from Stifel.

Congrats guys on the solid start to the year. My question is on Tim's. I know the company is rolling out fountain drink equipment to the system and I was hoping you could just provide an update on where you are in that process and when you expect it to be completed? And then how significant do you believe this could be for lunch and dinner food sales? I mean, is this something that's going to be a slow build where people discover it or is it an opportunity to make combo meals heroes in your messaging for that lunch kind of day part?

Chris, you're right, we are starting to roll out fountain machines to the system. We had already had sparkling beverages. If you look at it across the system, we had sparkling quenches but we were doing it out of bottles. So as we get through the rollout here, what that enables us to do is a couple of things. One, it enables operational efficiencies. Obviously, using bottles is pretty complicated operationally. And moving to fountain machines makes things an awful lot easier and faster for our restaurant teams, but it also improves the cost profile of those beverages.

And then the fountain machines will also open up a lot of new innovation paths that we have on the cold beverage side. So they'll enable some of the platforms and the drinks that we have in mind over the next couple of years. So it's an enabler, if you will, to, I would say, a next leg of growth in our cold bev business, and so that's pretty exciting.

And then I would say lastly, I think you referenced this. As we move into PM food, one of the things that we want to be able to do is to drive more combo incidents. And I think I talked about moving that up in the quarter. And having a comprehensive set of beverage offers through a fountain machine is something that will allow us to drive that combo incidence and build the PM food business over time. So I think all of those things are pretty exciting and hopefully give you some sense of the things to come on our PM and cold Bev journey over the next couple of years.

In terms of where we are today, we're about 1/4 of the system rolled out, and we'll finish that, I would say, over the next few quarters.

Next question is from Andrew Charles from TD Cowen.

One bookkeeping question in my real question. So international AOI saw nice improvements from the release calling out bad debt recoveries. How should we think about that dynamic going forward? And then my real question is about just the algorithm for 3% portfolio same-store sales on average. And curious just based on your confidence, you talked about BK momentum, you talked about the second half Popeyes rebound. Canadian macro is obviously challenged. I mean if you put it all together, do you believe the 3% growth applies to 2026, you face more challenging comparisons over the balance of the year?

Andrew, I can take the beginning of that question. So yes, we called it out in our prepared remarks around a particular sort of international situation where we had an outside bad debt recovery, that's a one-off sort of occurrence. I think if you look at the performance even absent that one-off, we were still above algorithm, that 8% AOI algorithm. We were really, really pleased not only with the top line performance, but really with the bottom line growth. So we wanted to call out that one. I think as you kind of move throughout the year, we'll always call out one-off items, though we don't anticipate any sort of large one-off sort of items like that again.

And on your question on the 3% same-store sales, we laid that out as the benchmark. We've actually been pretty consistent about that over the years, and we reiterated that at our Investor Day in February. We're really pleased that in our first quarter reporting to you since then, we cleared that 3% bar, and what I can say is that sitting here where we are in early May, we continue to feel good about how we're performing against that threshold in Q2.

Next question is from Lauren Silberman from Deutsche Bank. We're going to move on to the next question is from Sara Senatore from Bank of America.

I guess maybe a housekeeping question and then a question about Popeyes. So you mentioned, I think, the idea that beef remains quite high, but -- and so the topic of franchisee profitability emerges, is it fair to assume that franchisee margins were under similar pressure to the RH margins in the first quarter? And I guess is the implication that perhaps you're taking less price and inflation or even the competitors just sort of thinking through the value proposition versus weighing that against franchisee economics?

Yes. I can jump in there, sara, on the profitability side for our BK system. I think first off, it always starts with the top line, right? And we were really pleased with the top line performance. I think, yes, it has been a tough backdrop on the beef side. I think if you look at the margins year-on-year, keep in mind, last Q1, so Q1 of 2025, you had just started to see the beef costs run up and so as you think about the compare in Q1 of '26 where we've been -- we've continued to see all-time high beef costs, you'll see kind of as you think of the food basket, you see basically high single-digit food cost increases. And keep in mind, beef is about 25% of our food basket. So that's what's driving, I'd say, a more outsized year-on-year increase in Q1.

Though, as you go through the rest of the year, and you think about that food cost basket, it will kind of revert to more mid-single digits inflation for the full year. And so that's how we're thinking about it. I think with respect to the Carrols margin, you actually see expansion on a year-on-year basis as you look at Q1 over Q1, largely driven by top line sales overcoming some of that beef cost inflation and continued great work on the operational side. So I think that's how we're thinking about the margin profile. And beef costs, I said it a couple of questions ago, I think as we get closer to 2027, it's probably when we expect to see more relief on the beef cost side.

And Sara, did you have a question on Popeyes as well?

Yes. So just on Popeyes, obviously some, I think, some impressive initiatives that we're talking about at Investor Day, particularly for the second half. But there's also, I think, in a sense that there's been a lot of competition, and in particular, a lot of growth, unit growth in the chicken category. Is that something that you've observed? Is that sort of competitive incursion or intensity? Is that something that is a headwind for Popeyes just as you execute the brand-specific initiatives? I'm just trying to think through, it seems like a lot of the chicken operators perhaps are seeing some slower same-store sales than they have historically.

So in terms of the category and how I think about it, I zoom out a bit and say we are super happy to be in the chicken category. We got -- the reason we got involved with Popeyes 9 years ago now is that we knew that there was going to be huge secular growth in the chicken category in the U.S. and the world, and that's exactly what's happened. I think it's natural that when you have a great category like that that's doing well consistently over time, you're going to have competition, and that happens in any part of restaurants.

I think there's a lot of concepts. A lot of them are upgrading what people expect in the category. I think that's good for the category. So I think that's positive, and it pushes us to improve our game to and that's a healthy tension. And the way I feel about it is I think Peter is off to a fantastic start. He's built a great team that's very focused on improving the quality of operations. We're already seeing it across the business, engaging with restaurant managers, getting all the franchisees on board with the plan.

And we're already starting to see signs that operations are improving in product satisfaction improving. They're moving really fast to make progress on some of our core items. Things like tenders, which is a big part of our business, we've tightened our tender spec a bit, and that's rolled out across -- it's rolled out very quickly to -- now we're just over 1/3 of the system, will be done with the rest of the system by June and we're already starting to see really material improvements in product satisfaction for the tenders.

Peter's focused on bone and chicken quality as well, making sure that we're serving our famous bone-in chicken exactly as it's meant to, that's the focus of seed trainings going to all of our restaurants across the entire country, starting right now in May. So I would tell you, the team is moving very quickly to make progress on operations and delivery of product quality. And I think that's what's going to lead to a turnaround in the business and help us to be more successful.

And I would tell you, on the sales side, a lot of what gives us confidence about the back half is just that we've already seen sales -- underlying sales trends improving in the business from low points around the time of January. We've stepped up to a much better level. So I think we're seeing good progress. I would tell you, we're excited about the category. Any category in QSR is going to be competitive, and we're happy to be in a category that's continuing to grow servings, and I think it's going to be a growing category for a long time.

Sara, I'll add one thing, which is we know how to win in this category. We've got the best food in the category. And our execution is already improving. It needed to be better than it was, and we needed consistent value and Peter and his team and the franchisees are all over it. They believe in that as the path. And we know what it can do. The team will laugh at me if I don't quote my favorite statistic as I do every quarter, but where we are executing at a really high level with Popeyes is International.

We've now crossed the $2 billion run rate in system sales outside of the U.S. I think we did $502 million in the first quarter. And our system sales growth was only up 43.9%. So we know with this amazing food, how well we can win. And by the way, there is a big competitor in chicken outside of the U.S., and we're growing a lot faster than they are. And so we know how to win in this category. We know that having the best food is ultimately our point of differentiation, and we just need more consistent execution and consistent value and we're doing those things.

Our final question today will come from Gregory Francfort from Guggenheim.

Patrick, I guess maybe we've asked a lot about it, but just virgin U.S., what metrics do you feel like you're seeing in the underlying customer response or that maybe we're missing from the outside and that kind of give you confidence in the momentum going forward?

Yes. Ratings on the food, overall customer satisfaction, speed of service, repeat rate of customers coming back after having a great experience. All of those things are moving in the right direction. And that's why it was time to invite everybody back in. And we know that as we continue the remodeling the restaurants, they're going to be going into or driving through at a better looking restaurant. And so all those operational metrics have been moving in the right direction. It was time to invite people back, and that's why we have the confidence to do it.

I'll now pass the call back to Josh for closing comments.

Thanks, Adam. Well, thank you all for joining us today. We really appreciate the time and the questions, as always.

Going back to February at our Investor Day, we made a number of commitments and outlined a clear vision of what we want to deliver in the future. And I think in this quarter, we made a great start and made progress against essentially all of those commitments. First, we told you that we delivered same-store sales above 3%, and we did it this quarter. We said we're going to lay out a path to get back to 5%-plus net restaurant growth, and we did -- we made 1 of the most important steps towards that vision of the future by closing the China transaction and getting off our first quarter with our new partner to a terrific start.

We said we're going to keep delivering 8%-plus AOI, and we did that for the quarter. And we told you that we're going to move towards a simpler business, where we made a lot of progress on starting to refranchise our Burger King U.S. restaurants and built a big pipeline to move towards our goals on that front. Finally, we announced a new capital allocation approach, where we're going to restart consistent share repurchases. And we did exactly that by repurchasing over $30 million so far in the quarter, and we look forward to repurchasing $500 million as we said for the full year.

So thank you all very much for the time today. We wish you a great rest of the day. We look forward to updating you on our continued progress with our Q2 call in August. Have a great day.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Awesome. Good morning, everyone, and welcome. I'm Kendall Peck, the Vice President of Investor Relations and Treasury at RBI. We really appreciate you taking the time to join us, whether in person here in Miami or live via our webcast.

I have the very exciting job of reminding you that today's remarks will include forward-looking statements, and these statements are subject to various risks and uncertainties set forth in our SEC filings and the press release posted this morning, which can be found on our Investor Relations web page.

Today, you will be able to hear from Patrick Doyle, our Executive Chairman; Josh Kobza, our CEO; Sami Siddiqui, our CFO; and Tom Curtis, our President of Burger King U.S. and Canada. The 4 of them will be doing prepared remarks, after which we will be having a panel with all of our business unit presidents, including Tom, and he'll be joined by Axel Schwan, our President of Tim Hortons Canada and the U.S.; Thiago Santelmo, President of International; Peter Perdue, President of Popeyes U.S. and Canada; and Mike Hancock, President of Firehouse U.S. and Canada.

We know some of you were unable to join us today due to the difficult weather in the Northeast. And so for those participating live on our webcast, you may submit a question during our Q&A session by e-mailing [email protected]. Please include your name and your firm, and we will ask that question during the live Q&A session should time permit.

For those of you joining us live in Miami, thank you for making the journey down here. We are also very fortunate to have 30 of our most senior leaders from the company with us today. We hope you take the opportunity to get to know them during breaks and lunch. They're amazing, and we'll provide you with a lot of insights into some of the work that we're doing here at the company. Thank you again for joining us.

And with that, I'd like to welcome our CEO, Josh Kobza.

All right. Thank you, Kendall, and good morning, everyone, and welcome. Thank you for being here with us today in Miami. It's great to have you at our headquarters. Miami is a special place for our company and one we're proud to call home. Many people don't realize that Burger King was founded right here over 70 years ago by Jim McLamore and David Edgerton. In fact, the very first Burger King was opened just 5 miles from our headquarters here. Jim and David built Burger King around flame-grilled burgers and established it as the Home of the Whopper.

While Burger King story began here in Miami, each of our brands has its own origin story, rooted in unique communities, cultures and guest needs, but built on the same principles, bringing guests quality food and beverages, great service and convenience. In 1964, Canadian hockey legend, Tim Horton, opened his first doughnut and coffee restaurant in Hamilton, Ontario and soon teamed up with former police constable, Ron Joyce. From the beginning, Tim Hortons was built around great coffee, baked goods and the community. Al Copeland opened the first Popeyes just outside of New Orleans in 1972, rooted in craveable fried chicken with bold flavors and an authentic Louisiana heritage. And in 1994, Brothers and former firefighters, Chris and Robin Sorensen, opened their first Firehouse subs in Jacksonville, Florida, built around hearty hot subs and a deep commitment to service.

Across all 4 of our brands, there's a common thread. They were built by dedicated operators, focused on creating something durable, relevant and meaningful for guests and for their communities. Their legacy shapes how we run RBI today with an ownership mindset, deep respect for our franchise partners, their teams and their communities and a willingness to invest through cycles and make hard decisions. Most importantly, we all have a commitment to building our brands in a way that their founders would be proud of. We decided to host an Investor Day because we know there are important questions about our business, and we want to address them directly.

Today, we'll be hearing about what's working, where we need to improve and how we're positioning RBI for the future. As you listen, I'd ask you to keep this simple vision in mind. Our vision is that by 2028, RBI will be a 99% franchise company, delivering 5% plus net restaurant growth with predictable earnings growth, a strong investment-grade balance sheet and attractive double-digit total shareholder return. At the same time, we aim to be the franchisor of choice for the best operators and the employer of choice for the best talent in the industry. In doing so, we are committed to being the most respected, loved and trusted restaurant business in the world across all of our stakeholders, from guests to franchisees to shareholders. Everything you'll hear today from the work we're doing here at Burger King to our global growth plans, to our path to simplification and our capital allocation strategy is designed to move us closer to that outcome.

With that context, let me walk you through the agenda. I'll start with an overview of RBI and how our structure supports our 2028 vision. Then Tom Curtis will join us to share progress on Reclaim the Flame. I'll come back to outline the building blocks to 5% plus net restaurant growth by 2028. After a break, Sami will walk through our simplification and capital allocation priorities. Patrick will share his thoughts, and we'll hear from our business unit presidents in a panel and Q&A.

With that, let's get started with a quick reminder of who we are as a company. I joined Burger King in June of 2012, just after we went public again. At the time, we had one brand, $16 billion in system-wide sales and about 13,000 restaurants in 85 countries around the world. Since that time, we acquired 3 iconic restaurant brands, Tim Hortons, Popeyes and Firehouse Subs and solidified ourselves as a world-class global restaurant business, operating in 4 of the strongest QSR categories worldwide. Today, our brands collectively generate nearly $47 billion in system-wide sales across more than 33,000 restaurants in over 125 markets, with each brand playing a distinct role in our portfolio. Tim Hortons is the clear leader in coffee and breakfast in Canada, a brand deeply woven into the daily routines of millions of Canadians with unmatched convenience and one of the most engaged restaurant owner groups in the world.

Burger King is one of the most globally recognized restaurant brands with nearly 20,000 restaurants around the world, serving our guests our iconic flame-grilled Whoppers their way. And Popeyes has grown tremendously since our acquisition in 2017, bringing its bold Louisiana flavors and truly differentiated best-in-class fried chicken to one of the fastest-growing QSR categories in the world. Finally, Firehouse Subs, our newest brand, is an important emerging growth driver in an attractive category, differentiating itself through its high-quality subs and strong community roots.

Across our portfolio, our brands consistently deliver what matters most to guests, quality, service and convenience. Those fundamentals matter more than anything else, and they're where great restaurant companies differentiate themselves over time. Stepping back, it's also worth reminding ourselves that we operate in an excellent industry. The quick service restaurant industry is one of the most stable, long-standing and attractive consumer categories globally. Restaurants meet a daily need. People need to eat 3 times a day, every day. And QSR wins on affordability and convenience.

Within QSR, franchising, when done well, scales that model effectively by aligning capital, local ownership and long-term brand stewardship. The combination of these dynamics with our ownership mindset, aligned franchise partners and operational know-how positions our brands to endure through the cycles, adapt and serve millions of guests every day. With that context, it's worth spending a moment discussing the top 3 advantages of our multi-branded structure. First, our ability to scale brands globally; second, our ability to allocate capital with a long-term lens. And third, our ability to develop talent and share best practices and capabilities across our system.

Let's start with our ability to scale brands internationally. Based on the conversations I have with our investors, I believe the quality of our international business is often underappreciated. We've built one of the strongest global growth platforms in the industry, supported by a deep network of well-capitalized franchisees, suppliers, quality assurance and local support teams. That infrastructure was developed over decades through Burger King's global expansion, and it's not easily replicated. It's a true competitive advantage that only a select few global players enjoy and one we are leveraging as we bring Tim Hortons, Popeyes and Firehouse Subs to many new markets all around the world.

An important extension of that advantage is the opportunity we create for franchise partners to scale multiple brands within their markets. Take Gregorio Jimenez ,or Goyo as we call them, who began operating Burger Kings in Spain in 1981. And Borja Hernandez de Alba, CEO of Restaurant Brands Europe, we call him Borja. Goyo transformed Burger King into the largest QSR business in Spain with $1.7 billion in system-wide sales and nearly 1,000 restaurants as of 2025. Together, Borja and Goyo built on that foundation to expand Burger King to Portugal, and bring Popeyes to Spain and Italy, leveraging their real estate expertise, operating infrastructure and local market knowledge.

While I love to tell their story, I thought it might be better for you to hear from them directly.

[Presentation]

Awesome. What a great story from Borja and Goyo. You can see the power of our ability to scale brands globally very clearly what we're doing at Popeyes International. When we acquired Popeyes, it had around 475 restaurants and less than $300 million in system-wide sales across about 25 countries and territories outside the U.S. and Canada. Today, Popeyes is a top 10 Western QSR business globally with more than 1,800 international restaurants, over $1.7 billion in system-wide sales and nearly 40% system-wide sales growth in 2025.

Growth like that at this scale doesn't happen overnight, and it doesn't happen without the foundation that we built at Burger King. A fantastic example of the brand's international potential and our ability to scale quickly by partnering with well-capitalized local owner operators is Popeyes in the U.K. We entered the U.K. in November of 2021. And under CEO, Tom Crowley's leadership, we quickly scaled to roughly 110 restaurants and nearly $250 million in system-wide sales as of 2025. Tom has a ton of experience running restaurants. So I thought it would be best for you to hear directly from him what makes Popeyes U.K. so special. Let's roll the clip.

[Presentation]

Awesome. Thanks, Tom. Looking ahead, it's stories like Tom's that make us so excited about the opportunity for Popeyes in the international markets. With significant white space, superior product quality and a proven new market entry playbook, we believe Popeyes has the potential to become one of the most meaningful growth engines in our portfolio. The second advantage for RBI is the strength of our free cash flow generation across brands and geographies that grants us the flexibility to allocate capital with a long-term perspective. Each of our 5 business unit presidents is accountable for executing their strategy across marketing, development, franchising and operations.

At the enterprise level, our role is to ensure ample investment across all of our businesses while leaning in to accelerate growth where appropriate. This allows us to invest through cycles, take a disciplined approach to returns and avoid short-term trade-offs that undermine long-term value creation. That flexibility is especially important in the restaurant business, where sustainable improvements can take time, and it's an advantage that stand-alone brands often don't have. Third, our structure lets us share back-of-the-house capabilities and talent. Centralizing legal, finance, procurement, communications and global business services reduces friction for our brand teams and allows leaders to stay focused on brand building and running great restaurants. Our global RBI procurement team is a great example of the value this unlocks for our brands, franchisees and suppliers.

The team led by Paul Lacy Smith is anchored in 3 core tenets: deep category expertise, a seamless and disciplined process and the ability to leverage RBI's global market presence to deliver better outcomes for all of our stakeholders. Over the past 3 years, Paul and his team, and Paul is right over there, have delivered around $700 million in cumulative savings for franchisees across multiple food, beverage, paper, packaging and media categories while also improving service levels, unlocking access to innovation and building more collaborative relationships with suppliers, all of which serve to support a better guest experience.

Underpinning everything that we do is our people. We attract and retain strong talent. Our people are given meaningful responsibility and the opportunity to build rewarding long-term careers across our brands, functions and geographies. The result is a shared talent base that allows us to place experienced leaders where they can have the greatest impact, while giving our brands the benefit of deep institutional knowledge and fresh perspective. When I look across our teams, I see an amazing combination of homegrown talent and industry veterans. Take Peter Perdue, our President of Popeyes U.S. and Canada; or Katerina Glyptis, who runs Tim Hortons in the U.S., for example. They both started their careers at RBI and have worked across our brands, or Hope Bagozzi, Tim Canada's Chief Marketing Officer; and Joel Yashinsky, Burger King's CMO, who both have decades of marketing experience with the largest burger QSR player in the industry before they brought their expertise to RBI.

We also developed leaders from within our own restaurants. Joe Hoffman is a great example. Joe started in Burger King in the back of house as a teenager and now oversees our Carrols and Burger King company portfolios. And we have a strong track record of matching the right leader to the right brand at the right moment, like Axel, who grew up in his family's restaurant business and spent 7 years in various roles at RBI before stepping in to lead Tim Hortons in late 2019. Axel has since helped drive one of the strongest and most consistent performance stretches ever in the brand's history.

A key reason our talent development works is our deeply embedded ownership culture. Ownership for us is very intentional. It means accountability for outcomes, comfort making decisions that may not pay off immediately and an understanding that this is a business built on long-term partnerships. This is especially important in a franchise system like ours, where our franchisees are making multi-decade investments in their restaurants and in their communities and trust and alignment truly matter. That philosophy is reinforced through how we structure our incentives. Nearly 50% of our corporate RBI employees are equity holders and senior leaders have meaningful personal stakes in the business.

In total, our director level employees and above own roughly $350 million of RBI stock or $750 million when you account for unvested equity, which vests over 3 to 4 years. This creates an aligned long-term approach across the organization. And my 9 direct reports and I each have the vast majority of our net worth invested in the company. This ensures decisions are made through the same lens our franchisees and shareholders use with a focus on durable value creation over time. Our leaders here are all in. And the result is a talent flywheel. We attract leaders who act like owners. They develop the next generation, and that continuity strengthens our brands.

While my direct reports bring an average of more than 15 years of restaurant experience, what gives me the most confidence is the depth of talent behind them, many of whom are with us here in the room today. Alongside our commitment to talent is our commitment to our franchisees. We work with a high-quality group of franchise partners around the world who share our ambition and our ownership mindset. And we've been very intentional about building trust across the system, publishing our franchisees' profitability publicly and tying our compensation to their bottom line. While there will always be natural moments of friction, I believe alignment across our systems is stronger than it's ever been. And that alignment is critical and gives us confidence that we're moving forward together.

All of that sets the backdrop for the conversation we want to have today about our performance, progress and what still needs to change. When we spoke at the New York Stock Exchange in 2024, I spent a lot of time emphasizing the fundamentals of this business: quality, service and convenience. Delivering those basics consistently at scale is what drives traffic and unit economics across our brands. That belief hasn't changed, and it's been an important lens for how we've navigated a challenging operating environment over the last 2 years. At that event, we laid out our long-term growth algorithm, 3% plus same-store sales and 5% plus net restaurant growth, translating to 8% plus organic adjusted operating income growth on average from 2024 to 2028. We're roughly halfway through the algorithm period.

And while the macro environment has been less favorable than we and others in the industry had hoped, we've still delivered consistent performance near the high end of our closest peers. We've grown same-store sales nearly 2.5% on average with continued strength at Tim Hortons and our international business and burger QSR industry outperformance at Burger King. On top of that, we've maintained strong cost discipline and delivered over 8% organic adjusted operating income growth in each of the first 2 years of our algorithm period.

That said, we need to deliver this level of profit growth alongside stronger absolute top line growth for us and our franchisees. And there are parts of the algorithm, specifically net restaurant growth that have required more work but are now greatly derisked after the deliberate actions that we took over the last year. We're going to walk through those pieces today. We also know that beyond delivering 5% net restaurant growth, we need to simplify our business, provide a clear capital allocation framework and demonstrate steady, predictable growth across all of our brands.

As I mentioned before, our vision is that by 2028, RBI becomes a 99% franchise restaurant company, delivering consistent 5% plus net restaurant growth with strong and predictable earnings growth and attractive double-digit shareholder returns. Today, we're going to show you how we get there, starting with Burger King. While Burger King U.S. and Canada is only 18% of our operating profits, it's the largest focus of our investors. And beyond that, we also think that our approach to running Burger King is the best window into how we've evolved as a company and how much more operationally focused we've become.

Tom Curtis has been doing an amazing job leading Burger King for nearly 5 years and has been the driving force behind Reclaim the Flame. Tom is a great example of the deep restaurant talent that we have at RBI, starting his career as a franchisee for roughly 20 years and bringing decades of operating experience to his current role. That background shows up everyday in how he runs the business.

And with that, it's my pleasure to welcome Tom Curtis, President of Burger King in the U.S. and Canada.

[Presentation]

Good morning, everybody. It's great to see you here today, and I appreciate you taking the time to spend your day with us. I joined Burger King almost 5 years ago after a 35-year career at Domino's. And during my time here, I had the privilege -- during my time there, I had the privilege of participating in one of the most exciting turnarounds in the restaurant industry led by Patrick. Seeing what was possible when you do the right things, not the easy things, gave me confidence that the same kind of transformation was possible at Burger King.

Now Burger King was a brand that I grew up loving. The Whopper was and it still is the absolute best burger in the business. and being given a crown was always special. But somewhere along the way, this brand lost its focus. It's focused on what made it great in the first place, flame-grilling, the Whopper, have it your way. And those things were not being delivered with the consistency, care and hospitality that our guests deserved. But I also knew something else. The love for this brand had never disappeared. It was still there, just waiting to be reignited. And that belief, combined with the team, the mindset and a great group of franchisees and the willingness to invest is what brought me here and what continues to motivate the work that we do every day.

This morning, I'm excited to share what's changed over the last several years and why we believe this brand is on track to continue improving from here. I'll start by taking you back to the intent behind Reclaim the Flame. When I joined this brand, it was a business in need of a reset. The cracks in the foundation had become evident coming out of the pandemic. Franchisee profitability had fallen to a trough of around $125,000 a year, which simply wasn't enough to support reinvestment in growth. Restaurant execution was inconsistent. And on top of that, the physical state of the restaurants lagged the category and in many cases, was actively turning our guests away.

To break this cycle, the team worked together with franchisees to develop a comprehensive turnaround plan and Burger King committed to an investment of $700 million to support marketing, technology and restaurant modernization. The plan, which we called Reclaim the Flame, was designed to deliver on our brand promise and included well-sequenced initiatives to address our most urgent needs, operations, franchisee quality, restaurant image, marketing and unit economics. Now first, operations or the guest experience is the foundation of any good restaurant system. And to anybody that knows me, it's no surprise that operations is that first pillar. I've been working in restaurants for far longer than I've been working on restaurants. And I know that success and growth come from repeat business, not onetime business. And that is what operations is all about.

Since 2021, we've worked deliberately to rebuild operations in partnership with our franchisees. We've been relentlessly focused on what we call repeatable precision. We've doubled the size of our field teams to support our restaurants. And our field teams have also implemented targeted standard operating visits with some of our bottom-performing restaurants. In 2025, these visits delivered notable uplifts in same-store sales and traffic with both metrics outperforming the control group by 1.8 points and 1.3 points, respectively. We also launched Royal Roundtables, an annual touch point with every restaurant general manager and franchisee to educate and energize teams to drive fundamental changes in their restaurants. The team just finished our fourth year of Royal roundtables and the energy was incredible, which I think comes through in this quick video.

[Presentation]

Our first year of roundtables started with Whopper execution. It might sound simple, but if a Burger King restaurant could execute the Whopper correctly, it can do just about everything else right. And as a result, Whopper product satisfaction is now over 87%, a nearly 10-point improvement from 2022 levels. We've also been standardizing our tech stack, improving consistency and uptime from 92% in 2022 to over 99% today. And we'll continue to enhance it by rolling out a singular point-of-sale system. More than half of our restaurants are already on this new system, and the rest are expected to be converted by the end of this year.

And our network, our kiosk and our menu board display systems are already the same across the country. And all of this helps with standardization, which makes it easier for team members to execute. And in addition, we're implementing AI-driven technology in our restaurants that make life easier for our team members and improve franchise profitability, and I'll expand on that tool later on. Our commitment to operations is backed up by investment. As part of Reclaim the Flame, we invested $100 million matched one-for-one with our franchisees into what we called our Royal Reset refresh program. Franchisees updated broilers, fryers, toasters and other kitchen equipment, and we provided assistance to install kiosks, computer hardware and new signage. This refresh benefited over 5,300 restaurants. And while none of that work garnered headlines, it improved the guest and team member experience in a meaningful way.

Overall, I think you'd be very hard-pressed to find another major player in this industry who is as focused as we are on improving the guest experience. And this operational work is paying off. Across the system, overall satisfaction has improved across all key metrics, including taste, order accuracy, friendliness and speed of service. And we're seeing this progress relative to our peers as well. According to Circana, in 2020, Burger King ranked 10th out of 12 in overall satisfaction among top U.S. QSR brands. And by 2025, we had moved up to 6. We also saw revisit intent move from fifth to third out of 12. Now that's meaningful improvement, and it didn't happen by accident. Our goal is to be consistently in the top quartile. And from my time at Domino's, I know that getting these metrics moving in the right direction is a sign of good things to come in the years ahead. Part of resetting expectations also meant taking a hard look at our franchisee base.

In 2021, we implemented our franchisee success system to gain a better understanding of franchisee and restaurant level performance. And we prioritize placing restaurants in the hands of great operators while moving underperforming restaurants and franchisees out of the system. Since 2022, over 1,000 restaurants have changed hands and each of the new engaged local operators has driven improvements relative to the path those restaurants were on under prior ownership. We also redesigned our incentive programs to reward better operators by providing them with larger remodel incentives. And this had the combined benefit of motivating all operators to improve on the guest experience and positioning our A operators to grow their portfolios.

Now guests don't know which franchisees own which restaurants. To them a Burger King is just a Burger King. And that means that every operator that we have has a responsibility to protect the brand, a sentiment you'll hear shared by our franchisees in this video.

[Presentation]

Now not only do we want to make sure the restaurants are in the hands of the best franchisees, but when guests show up to these restaurants, the building should reflect the brand that we're advertising and make it easier for our team members to deliver on a great guest experience. And that's why modern image is equally as important in delivering on our brand promise. We knew that the system needed to move past outdated restaurants, but some unit volumes didn't support remodels without co-investment from Burger King.

So as part of Reclaim the Flame, we committed $450 million toward franchisees' cost of remodeling restaurants. And our franchisees responded with contractual commitments to accelerate the pace of those remodels. We started this journey with less than 40% of our restaurants in modern image, and we're now closing in on 60%. And increasingly, those remodels are done in our Sizzle image. Sizzle, which we introduced to the system in October of 2023, offers fun and exciting seating options for the whole family and lights up at night to attract late-night traffic. And importantly, it improves operations with a simplified, more digital flow that's seamless for team members. Last year, over 35% of our remodels were done in this image. And looking forward, the vast majority will be Sizzle. That excitement for Sizzle has been driven by average unit volumes of roughly $2.2 million in year 1, as well as, the feedback that we're hearing from our teams and guests, which you will hear in this short video.

[Presentation]

So as we continue to see more of the system modernize, something important starts to happen and it's tough to model. At first, remodels drive performance at the individual restaurant level, improving guest perception, smoothing operations and lifting sales and profitability. But as penetration increases across the system, guests stop associating Burger King with this and start associating it with this. And over time, that shift compounds, and it creates a system-wide halo effect. And we're not there yet, and we didn't expect to be, but we know we're getting much closer.

And our Miami market is a great example of that. We've been accelerating our pace of remodels the past 3 years. And we saw the market outperform the rest of the system in 2025 by over 8 points on same-store sales. And that is our long-term vision. A Burger King system where guests look around and see modern inviting restaurants is the norm and where the physical restaurant itself becomes a competitive advantage. Now everything that I've described so far, operations, franchising, modern image, it's about fortifying the foundation and enabling customer retention, and that's where marketing comes in.

Our share of voice must allow us to effectively reach consumers and the voice of the brand must effectively communicate a reason for them to visit. To help increase our share of voice, Reclaim the Flame featured $120 million ad fund investment by Burger King corporate from late 2022 through 2024. And this was coupled with a commitment from our franchisees to increase their ad fund contribution rate from 4% to 4.5% through at least 2026, if we reached $175,000 in average 4-wall profitability by 2024. We did achieve that. And now there's a second target of $230,000 by the end of 2026 that would enable a continuation of the 4.5% rate for 2027 and 2028.

Now we may fall short of that mark due to all-time beef costs. But our franchisees know that these headwinds are temporary and that this co-investment has contributed to 4 years of burger QSR industry outperformance. I'm happy to report to you today that our franchisees have overwhelmingly voted yes to continue the 4.5% ad fund contribution through at least 2027. And if we reach $230,000 by the end of 2027, that rate continues on again through 2028.

Now after that important good news, I wanted to move on to our brand positioning. Our marketing is now anchored in a few core truths about Burger King. The Whopper is our hero. It's the best burger. It's differentiated because it's flame grilled, and we see an opportunity to continue strengthening that position. And Have It Your Way isn't just a slogan. It means guests have a choice and control in the restaurant experience. And that's the foundation of our You Rule positioning, and it's the framework that we'll continue to build on going forward. We've been highlighting our best burgers through platforms like Million Dollar Whopper and Whopper by You, both of which were literally designed by guests and for guests.

Over the last year, as guests reconnected with the brand through Whopper innovation like Barbecue Brisket Whopper and my favorite, the Crispy Onion Whopper, we saw an improvement in regular price combo meal incidents, even as much of the industry remain very narrowly focused on value. And those are higher check, higher gross margin tickets for our franchisees and also remind guests why they love Burger King. Now value is an important part of our messaging and how you deliver value matters just as much as having it in the first place.

Today, we feature consistent value that communicates quality and choice at an easily accessible price. I'm very happy with how our primary value platform, $5 Duos and $7 Trios performed in 2025. Through all of the competitor noise, we've been consistent with our messaging. We found price points that work for our guests and importantly, our franchisees as well, and we stuck with them. I'm confident that we have our value platforms right.

And finally, every element of the Reclaim the Flame plan ladders back to healthier franchisee profitability. When franchisees earn strong returns, they reinvest back into their restaurants. Operations improve and the business grows in a sustainable way. And from that $125,000 trough that I mentioned, franchisee profitability improved to approximately $205,000 in both 2023 and 2024. Now commodity costs in a tougher consumer environment, those are real headwinds in 2025 and resulted in a step back to around $185,000 a unit. But when you look through the impact of unprecedented beef prices and the ad fund transfer, franchisee profitability actually grew last year. And while those are real expenses for our franchisees, I just say this to highlight that the actions within our control, operations, marketing, remodels, franchising, they're working to expand franchisee profitability even in a challenging environment.

Also within this brand, there's significant upside as more restaurants climb the quality curve. In 2025, A restaurants generated average sales of $1.9 million and roughly $245,000 in profitability, over 30% higher than the system average. And while this number is not where we want it to be long term, that gap is proof of what's possible with strong execution, and it gives me confidence that the system has room to grow.

Now the last area I want to circle back to is technology. There's a lot of discussion around AI in restaurants, and it's often focused on reducing labor. Here at Burger King, we see it differently. When I was a restaurant manager, much of my time was spent on very repetitive tasks, looking up standards, monitoring inventory, verifying temperatures. That work pulled me away from what was really important, leading the team, engaging with guests, being present in my community and technology and AI can solve all that. When managers and team members can focus more on leadership and customer interaction, growth follows.

I've seen firsthand that as technology improves the guest experience, team member efficiency improves as well. And so as traffic does increase, a more effective team can handle higher transaction counts without adding more labor. And those team members are just better. They have more capacity. And that is the inspiration behind BK Assistant. It's the manager and the team members assistant. It's their partner, it's their analyst. Our Chief Digital Officer, Thibault Roux, has been instrumental in bringing BK Assistant and Patty, who you meet in just a moment, to life by leveraging real-time data in our restaurants to improve the lives of our team members. And to show you what that looks like in practice, I'll share this video.

[Presentation]

We are really excited about BK Assistant. I've got to tell you, Joe and I have spent about a total of 80 years in restaurants and not much surprises us, but we're like a couple of giddy teenagers when we get to play with this thing. It's amazing. And while it's only in about 500 restaurants today, it's going to be available to all 7,000 by the end of the year. So as we look toward the future, there are 4 important opportunities that I'd like to highlight.

First, and it won't surprise you, I continue to see growth opportunities from operational improvements. Between bringing highly motivated new franchisees into the system, continuing our focus on repeatable precision and now that's BK Assistant, opening the door for everyone to give better customer service, I'm confident that you'll get even better, more consistent guest experience.

Second, we're continuing to execute on these quality remodels. And while our pace was modestly slower due to that franchisee P&L compression in 2025, we're starting to reach the point where it's benefiting our overall results. And as we execute more and more sizzles and modernize more restaurants, that halo effect is going to start to materialize, and that's exciting.

And then third is culinary. Now this is not an area where you've heard us talk a lot about over the years, and we haven't placed significant emphasis on it, largely because we already have a strong high-quality food foundation in place. But now that we're showing the necessary progress in those other foundational areas, we can turn to elevating our menu. And this year will be full of product news, and that news will start with the Whopper. We're elevating our flagship burger with the rollout of new glazed buns, a creamier Mayo and clamshell packaging designed to enhance both the eating experience and the premium feel of the Whopper. And you can expect additional product quality improvements over the coming quarters, led by our new head chef, Amy Alarcon, who brings nearly 2 decades of experience leading culinary innovation at Popeyes.

Finally, we see a real opportunity to win with kids and families, which represent nearly 20% of QSR traffic, but only 10% of Burger Kings. Now this hasn't always been the case. 20 years ago, we had a large vibrant kids business. And over the past few years, we've been intentional about regaining that. In addition to improving the guest experience in our restaurant image, we've leaned into family-friendly partnerships like Spider-Verse, Adams Family, How to Train Your Dragon and most recently, SpongeBob, paired with real menu innovation designed for families to make every visit feel special. You can expect to see more family-friendly IP partnerships done the Burger King way in the years ahead.

And what's important here is that these partnerships, when executed well, drive durable behavior change. King Junior Val incidence is now at its highest level in over a decade, and we're earning repeat visits from families who are rediscovering the brand during these windows. In fact, over 35% of guests who visited during our last 3 IP partnerships returned to Burger King within 30 days. A great proof point for that, despite the severe weather in January, Burger King's underlying trends have improved following our SpongeBob collaboration in December.

This opportunity for family and kids is significant. As this chart shows, even modest progress in reclaiming our share can put meaningful wind in our sales. And given the size of the family occasion, that emotional connection that it creates and the lifetime value of those guests, this is something we believe can be very big for Burger King over time. The most important point that I want to leave you with is that while I'm very proud of the foundational progress that we've made over the past 4 years, we are certainly not done. Much like our franchisees, we think like owners and owners are never done. The work we put in thus far was about building a foundation that allows us to play offense going forward. Across every part of our business, we've built real momentum with meaningful growth levers still ahead of us.

And I hope that we've given you a clear perspective today on what's changed at Burger King and why we're very confident in where we're headed. Altogether, we are investing over $700 million to strengthen the Burger King U.S. system. And our franchisees have stepped up beside us and are committing over $1.5 billion of incremental capital toward remodels, kitchen equipment, technology and marketing. And this goes back to a point that Josh made a little bit earlier. RBI is deeply committed to its brands. And it's clear to me that while RBI still possesses the incredible financial discipline and firepower that defined its early years, that's now balanced with deep restaurant experience, long tenure and strong operating instincts. And that combination has driven meaningful fundamental change over time.

It's hard to look at the data and not recognize that this is a fundamentally different business than it was 4 years ago and that this plan is working. And there's still plenty of work to do, but that's what makes the team and I excited every single day. We've already seen some great results. And relative to others in the space, we still have a lot of levers to pull to continue driving outperformance.

And with that, I'll pass it back to Josh. Thank you.

All right. Thanks, Tom. Can we get one more round of applause for the amazing work Tom and team are doing? I'm most hopeful that by next time we get together, Thibault can help me out and maybe Patty can just do this presentation for me. We'll see. We've got some time.

All right. So I now want to change gears a little bit and focus on net restaurant growth, which expands the reach of our brands to new guests around the world and is a clear indicator of franchisee confidence and returns. Two years ago, we said that RBI should be able to deliver 5% plus net restaurant growth on average. Since then, the trend has clearly not been favorable, but it's easily explainable. Our results were negatively impacted by softness in a few select markets, most notably in Burger King China. In fact, when you look at the numbers outside of Burger King China, our net restaurant growth has averaged 4% over the last 5 years, underscoring the strength and consistency of our core development engine.

That said, we know that the consolidated number matters and getting back to 5% plus NRG is important. So today, I'll walk you through the building blocks that will get us there. At a high level, it's fairly simple. By the end of our algorithm period or 2028, 5% plus net restaurant growth equates to roughly 1,800 net restaurants per year, coming from 3 main building blocks. First, 300 to 400 from our businesses in the U.S. and Canada; second, 300 to 400 from our 3 brands in China; and third, 1,100 from international, including about 700 from our top 10 growth markets and 400 from the balance of the portfolio. Together, that gets us to roughly 1,800 net new restaurants per year or 5% plus net restaurant growth by 2028. That's the framework.

So now let me walk you through why we believe each of these building blocks is repeatable and increasingly derisked. We'll start with the U.S. and Canada. We expect 300 to 400 net new restaurants per year compared to roughly 90 on average from 2023 to 2025 or just north of 200, assuming Burger King was neutral during that time. Within that, Firehouse Subs will serve as the primary driver, delivering about half of our net new units. Burger King should gradually return to a neutral position, and Tim Hortons and Popeyes will drive the remainder of growth in the U.S. and Canada. We have high visibility into this pipeline.

Starting with Firehouse Subs, Mike and the team achieved an important milestone in 2025, surpassing 100 net new restaurants in the U.S. and Canada. And we've increased the pace by more than 5x versus pre-acquisition levels. With less than 4-year paybacks, a strong franchising team and growing brand awareness, we see a clear path for Firehouse to open between 150 and 200 net new units per year by 2028.

Shifting now to Tim Hortons. After a return to positive net unit growth in 2025, Tim Hortons is expected to continue accelerating in underpenetrated regions like Western Canada and Quebec as well as dense markets like the Atlantic region, where franchisees are opening restaurants to keep up with demand. This growth is further supported by very attractive paybacks, which are less than 3 years on average in Canada. In the U.S. market, Katarina and her team are introducing Tims to new markets like Virginia, Florida, Delaware and Tennessee, while building further density in our existing markets like New York, Michigan, New Jersey and Texas.

Tim Hortons in the U.S. recently achieved its highest level of gross openings since 2014, and we anticipate further acceleration from here. Meanwhile, the Burger King U.S. portfolio cleanup is largely behind us, giving us confidence that we'll be able to return to net neutral growth. And while Popeyes has slowed development, Peter and his team are laying the operational groundwork needed to position the brand to accelerate sustainably once ready. This deliberate sequencing is the primary reason we introduced a lower bound to our combined U.S. and Canada net restaurant growth outlook. Taken together, while 300 to 400 net new restaurants represents a step up from today, given our level of influence in home markets, including our own capital investments, we're confident that it's achievable.

The second bucket of growth is in China, which has historically been the largest swing factor in our global net restaurant growth. We entered our first master franchise agreement in China with Burger King in 2012. And from there, we scaled the business from around 50 units to over 1,000 restaurants, adding nearly 300 net new units in 2019 alone. However, the business struggled during and after the pandemic. Given its importance, we temporarily took control in February of 2025. And over the following 9 months, we built an exceptional local leadership team, reignited marketing, optimized the restaurant portfolio and drove 10% same-store sales in the back half of 2025.

From the start, we believe the right solution would be to partner with a well-capitalized, ambitious local operator. And in November, we announced a joint venture agreement with CPE, a leading Chinese investment firm with a strong track record of scaling consumer brands in China. Post closing, CPE invested $350 million of primary capital on day 1, becoming the majority shareholder with an 83% stake in the business.

Importantly, CPE committed to doubling Burger King China's footprint to 2,500 restaurants in the next 5 years. No one is better positioned to explain the path forward than Johnson Huang, our Chairman of Burger King China, who spent years leading KFC in China; and Mark Mao, Managing Director of CPE. So I'll turn it over to them.

[Presentation]

Great. Thanks to Johnson and Mark for that. As you heard, we now expect Burger King China to open over 200 net new restaurants per year by 2028 with continued acceleration thereafter. When you layer in Popeyes and Tim Hortons in China, we expect an additional 100 to 200 net new restaurants per year combined by 2028. Both businesses are earlier in their development curves and require capital for sustainable growth. So we expect a bit more variability year-to-year versus a more mature system, which is why we've been conservative in the ranges that we're giving.

Taken together, China should contribute 300 to 400 net new restaurants per year, with the high end of this range slightly ahead of our prior guidance of 300. We believe CPE's ownership and involvement in Burger King meaningfully derisk the market and view Popeyes and Tim Hortons as providing incremental upside over time as we prove out the unit economics.

That brings us to the rest of International, which should deliver roughly 1,100 net new restaurants per year. International is a real source of strength for us. And as I mentioned earlier, one that we view as underappreciated by the market. Since 2013, we've built 5 international businesses with more than $1 billion in system-wide sales each and won Burger King France with over $2 billion. We've grown these businesses by partnering with local operators who share our long-term vision for the brands and bring a true ownership mindset to execution.

Burger King France is a perfect example. We entered the market in 2013 through a master franchise joint venture with Groupe Bertrand, led by local entrepreneur, Olivier Bertrand. Through strong execution and beautiful well-located restaurants and a deep understanding of the local market, Olivier and his team grew Burger King France into a $2.3 billion system-wide sales business with over 600 restaurants in 2025. I could spend a lot of time highlighting the strength of this business and its team but it's more compelling to hear directly from Olivier himself, along with Alex Simon, CEO of Burger King France, who joined the company in 2028. Take it away, guys.

[Presentation]

Awesome. Hope you enjoy that. Alex and Olivier are truly special partners, and we're tremendously lucky to have them. So France is an incredible market but what's just as exciting to me is that our international success isn't concentrated in just 1 or 2 markets. Our 10 largest international businesses account for less than 60% of total international system-wide sales, which speaks to the breadth and diversification of our portfolio. That matters because we're not just growing units to drive a headline net restaurant growth figure. We're expanding in attractive markets with great average unit volumes that contribute meaningfully to system-wide sales and deliver strong flow-through to adjusted operating income.

Our international restaurants generate average unit volumes of $1.3 million. compared to a global average of $1.4 million. As a result, as we add units, we'd expect only modest dilution between NRG and system-wide sales growth. In fact, when you look on a consolidated basis in the last 3 years, we've seen 0 drag from same-store sales plus net restaurant growth to system-wide sales growth. This is a key differentiator of our growth model versus others in the industry. Importantly, our growth is being fueled by healthy franchisees who are seeing attractive returns and reinvesting in their businesses. Since 2020, nearly $2 billion of primary capital has been injected into 13 of our largest and fastest-growing international businesses.

Burger King India is a great example. Since joining in late 2013, CEO, Raj Varman, who was actually previously one of our top-performing general managers across North America and the U.K. before he became a franchisee, has grown the business from 0 restaurants at the start of 2014 to nearly 600 today, establishing Burger King as a leading brand in India's fast-growing QSR market. The business has delivered 5 consecutive years of positive same-store sales and increased net restaurant growth to nearly 70 net new units in both 2024 and 2025. And earlier this year, Restaurant Brands Asia, the parent of BK India, announced plans for up to $165 million of new primary capital from the Agarwal family, the new controlling shareholder. With this capital, the team is well positioned to increase team development in the years ahead.

Let's hear from Raj.

[Presentation]

Amazing. I'm sure you can all tell how amazing an operator that Raj is if you were on the shelf behind them, you probably noticed his trophy collection. That's because he won last year, he actually won Developer of the Year and Franchisee of the Year for his incredible work in India.

Burger King France and Burger King in India are great represents of how our international growth business works. Strong operators, local expertise, well capitalized with a clear line of sight to continued development. With that context, let me discuss our path to 1,100 net new international restaurants in 2028. We expect our top 10 growth markets to provide a solid base of 700 net new restaurants annually compared to about 600 on average from 2023 to 2025. These markets, including India, the U.K., Mexico, France and Japan are diversified across Europe, Asia and Latin America.

Growth in these markets is being driven by strong unit economics with an average payback of 4.5 years. And importantly, we are not even close to full penetration in these markets, which gives me confidence that we have ample runway to continue growing for a long time. These top 10 international growth markets only represent a small portion of our overall footprint. The rest of our international portfolio, which is around 175 brand market combinations, should deliver the remaining 400 net new international restaurants per year.

For perspective, this group contributed around 350 NRG on average from 2022 to 2024. While 2025 represented a step back to just over 200, this was largely due to geopolitical disruptions that impacted some markets in the Middle East and Southeast Asia, the impact of which we believe is now behind us. As pressures ease and we entered new markets with Popeyes and Firehouse, we're confident in our ability to reaccelerate growth to 400. Putting it all together, we have between 300 and 400 net new restaurants from the U.S. and Canada and 700 from our top 10 international growth markets. This is lower risk, repeatable growth, supported by strong operators, attractive economics and established development pipelines.

When you add 300 to 400 net new restaurants from China, the midpoint represents about 1,400 net new restaurants annually or more than 4% unit growth from just 13 markets where we have more visibility. From there, an additional 400 net new restaurants come from the rest of international and bring us to 1,800 net new restaurants per year or 5% plus net restaurant growth by 2028.

I can easily point to upside in each area, particularly in countries like India, Japan and China. And if something arises in one of the markets, I'm confident we'll be able to overachieve in another. Importantly, our growth is coming from a wide variety of businesses all around the world, and by addressing the situation in Burger King China, we've now removed the largest historical source of net restaurant growth volatility. All of this is supported by healthy development pipelines and strong franchisee alignment, which gives us confidence that this level of growth is not only achievable but sustainable. So that's the framework. And that's why we believe that the path back to consistent 5% plus net restaurant growth by 2028 is now clear.

With that, we're going to take a break. We've got our beautiful Tim Hortons bakery showcase and some new beverages next door for everybody to try, and we'll start back here at 10:30 with an update from Sami. Thank you all very much.

[Break]

All right. Good morning, everyone. Good morning. I can see we're all hopped up on coffee. I hope everyone enjoyed the delicious Tims products, but please, please save room because we have tons of food to come at lunch later on today.

So just quickly on agenda. For the rest of the day, I'm going to provide a financial update. Patrick will join us to give us his thoughts on the plan. And lastly, our brand presidents will take the stage for a panel and live Q&A. It would be great to hear directly from our brand leaders on the exciting paths ahead for their respective businesses.

I personally had the pleasure of sitting in some of their seats over my 13 years at RBI, working on 4 of our 5 business units all around the world, from Miami to Toronto to Singapore. And collectively, as a leadership team, a few years ago, we stepped back and made some difficult but needed choices, short-term trade-offs to drive long-term results. We chose to acquire and operate restaurants to invest in early-stage international businesses, and they put a record amount of capital behind Burger King's Reclaim the Flame plan. We made those decisions for the benefits of our brands and our franchisees. They required capital and added G&A and complexity but we firmly believe they were the right things to do. And now that those investments are starting to take shape, our focus now shifts towards simplifying. And that's what I'd like to discuss today.

There are 3 things that you need to believe in: One, that we can deliver consistent earnings growth; two, that those earnings clearly translate into steady and growing free cash flow; and third, that we allocate capital in a way that creates the most long-term value for our shareholders.

And with that framework, let me be more specific. We expect to continue growing organic AOI at roughly 8% on average through 2028, return to a roughly 99% franchise business and sunset the Restaurant Holdings segment by 2027 and achieve corporate investment-grade leverage by 2028. This will drive greater earnings predictability and sustainable free cash flow generation, which allows us to return increasing amounts of capital to shareholders through both the growing dividend and share repurchases.

Let me start with the most important point. Our algorithm has not changed. We continue to believe that the system can deliver 3% plus same-store sales on average from 2024 to 2028 and return to 5% plus net restaurant growth by the end of the outlook period. And that combination supports 8% plus organic AOI growth on average over the algorithm period. We've delivered that level of organic AOI growth over our first 2 years of the period, even though net restaurant growth hasn't been exactly where we want it yet.

I think it's worth spending a moment on what drove AOI growth in 2024 and 2025 because there has been some noise in the numbers. Over that period, AOI benefited from solid underlying fundamentals, including healthy same-store sales outperformance across our largest businesses as well as continued cost discipline. Layered on top of that were a handful of onetime items, including ad fund dynamics, bad debt movements and the impact of Burger King China as we work through the ownership transition there. Some of those benefited us and some created short-term headwinds. But overall, we were able to drive over 8% organic AOI growth over the first 2 years of our algorithm period.

And as we look ahead, that noise, it largely clears. There are 3 core structural drivers that will support our ability to continue delivering the AOI algorithm. The first is ramping the 5% plus NRG. The second is a structural tailwind in our royalty rate. And the third is disciplined cost management.

So on the first, before the break, Josh walked you through our building blocks to 5% net restaurant growth by 2028, which translates to roughly 1,800 net new restaurants annually. While we internally manage the business on absolute net new units, another way to look at that is how do you bridge from the roughly 3% net restaurant growth today to 5% plus in the target. That gap is roughly 200 basis points. And when you break down those 200 basis points, they come from a few very clear buckets. The biggest is Burger King China. We've made a lot of progress here, and it will pivot from roughly a 70 basis point headwind in 2025 to a 60 basis point tailwind by 2028. That 130 basis point swing, it's already prefunded by CPE, which gives us confidence in the development ramp, consistent with the growth plan that Johnson and Mark outlined earlier in their video.

The remaining 70 basis points will be split across 2 main drivers: Popeyes International and Firehouse North America. Both of these platforms have tangible momentum and a clear line of sight to incremental unit growth. Popeyes International continues to expand and take share in underpenetrated markets, supported by our existing international partner networks and strong demand from our guests. I can't think of any other international businesses of such scale that are consistently compounding system-wide sales at nearly 40%, and this is just the beginning. Meanwhile, Firehouse is hitting its stride in North America with sub 4-year paybacks and a robust development engine in place. You've already seen the pace of development of Firehouse almost 5x in the past few years, and we expect more acceleration in the years to come.

Beyond those drivers, there will, of course, be puts and takes, which is a reality for a business of our scale. In any given year, we're opening restaurants in over 70 different countries all around the world, which to me, just highlights the strength and diversity of our global pipelines. As those numbers accelerate over time, we'll see this flow through nicely to system-wide sales and to ultimately AOI growth.

The second dynamic that's worth highlighting is our effective royalty rate expands modestly over time due to mix shift towards higher-growth business units like International and Firehouse as well as higher contractual royalty rate step-ups in many of our international markets. Burger King China is a prime example of this. We told you on our last earnings call that we will resume collection of royalties in 2026, which is a modest tailwind to our '26 AOI growth. Royalties will start a couple of points below our standard 5% international rate for Burger King with a contractual ramp to the full rate over time. That creates a built-in tailwind to AOI as the business scales in China. And on a global basis, we expect our blended royalty rate to expand by 1 to 2 basis points per year through at least 2028, largely driven by this dynamic in International. And our nearly $50 billion of system-wide sales with nearly 100% flow-through, that's a really nice tailwind to AOI.

So the third driver I want to talk about regarding AOI growth is disciplined cost management and G&A leverage. We often hear that we have a reputation for being cost cutters. But as you can see here, the numbers tell a far different story. Since before 2020, we've grown segment G&A by around 50%, adjusting for Firehouse, peaking at around $650 million in 2023, up from $400 million just a few years before that. We made deliberate investments across RBI, particularly in field support and other franchisee-facing functions to strengthen the foundation of our business and our operations.

And more recently, since I've been CFO, we've rightsized our segment G&A a bit with all of the step-down coming from corporate and back-office functions. Meanwhile, our brands have actually held steady to ensure that we continue to provide comprehensive support for our franchisees and for our restaurants. As we sit here today, I'm confident that our brands are at the right level of G&A to support our strategy and to deliver against our growth ambitions. And looking forward, you should expect segment G&A to grow roughly in line with inflation or at about 2% annually, while system-wide sales will grow meaningfully faster. This will create operating leverage.

As a rule of thumb, approximately 2% annual segment G&A growth will drive approximately 1 point of AOI growth leverage. So taken together, these 3 factors, increasing system-wide sales from a ramp-up in unit growth, a modest increase in our overall effective royalty rate and G&A leverage support our outlook for roughly 8% organic AOI growth on average through 2028, and it sets the stage for the simplification actions I'm going to walk through next.

So on to simplification. Let me turn to Restaurant Holdings. While organic AOI growth, our framework actually excludes Restaurant Holdings, and the segment is less than 2% of our reported AOI and adjusted EPS. We recognize it's added some complexity to your models, so it's important to be clear about how we think about it. Restaurant Holdings was created intentionally. It allowed us to step in where needed, acquiring Carrols to accelerate franchising efforts and modernization at Burger King and to scale early-stage international businesses like Popeyes China and Firehouse Brazil.

As we look ahead, Restaurant Holdings is not a permanent part of the model, and it was never intended to be. Our long-term objective is to operate a 99% franchise business with a small intentional base of home market company restaurants. To sunset RH, we're actively working on 2 things. First, we're working to place Popeyes China and Firehouse Brazil in the hands of long-term local partners. And second, we plan to refranchise the Burger King company restaurant portfolio down to its steady-state level of roughly 300 restaurants from around 1,100 today. We expect to accomplish both of these objectives by the end of 2027, at which point the Restaurant Holdings segment can wind down.

Of course, refranchising transactions are not linear. So we may ultimately sunset RH with up to 500 remaining Burger King U.S. company restaurants, still with the long-term goal of reaching a steady state of 300. As a reminder, when we acquired Carrols back in May of 2024, we said refranchising would play out in years 3 through 7 following the acquisition or in other words, from 2026 to 2030. Last year, we accelerated the plan, refranchising the first group of restaurants ahead of schedule. The team has already built a strong pipeline for 2026, giving us confidence that we're on the path to reach our steady-state company restaurant target ahead of schedule. We'd expect 2026 refranchisings to be back half weighted and to accelerate into 2027.

And from a modeling perspective, there are a couple of important points to note. First, we expect a few pennies of EPS dilution per year from refranchising Burger King restaurants over the next 2 years as earnings shift from company-operated AOI to a more traditional royalty-based stream.

Once restaurant holdings winds down, the remaining Burger King company-operated restaurants will roll into the BK segment like our existing company-operated restaurants do today. At that point, if there are additional restaurants remaining to refranchise, those will happen in the normal course of business.

Second, once we find new partners for Popeyes China and Firehouse Brazil, we will start to see a nice tailwind to AOI and to EPS as start-up costs transition from the RH P&L over to the new operator. I also want to take a moment to emphasize the why behind this whole process. Refranchising, whether at Carrols or in China, is first and foremost about putting restaurants into the hands of the right operators, owners who live in their markets, who run great restaurants and who reinvest in their people and their businesses.

That's the #1 priority. To bring that to life, we thought it would be helpful to hear directly from a few franchisees who are stepping in and taking on more restaurants. Let's roll the video.

[Presentation]

It's amazing. It's amazing to see a duo up there who some of you may have met over the years and used to be part of our corporate team here as a leader. So hopefully, that video paints a bit of a picture of the excitement that there is right now in the Burger King system.

Stepping back, we recognize that we've added more layers to the business in recent years. That was intentional and necessary to strengthen the foundation and best position RBI for long-term growth. I believe 2025 was the most complex year. And from here, the model steadily simplifies. We've addressed Burger King China. We're actively refranchising Burger King U.S. restaurants. And by year-end 2027, you should be able to delete the Restaurant Holdings tab from your models. As that happens, the translation from sales growth to AOI to free cash flow becomes more predictable and more durable. I guess spreadsheet jokes kind of get the audience going on.

So now we've talked through our vision for a more steady-state P&L. The natural question is, what do we do with the significant free cash flow that our business generates. We generated approximately $1.6 billion of free cash flow in 2025. And as we look ahead, we expect free cash flow to grow meaningfully, driven by 3 core dynamics: First, continued delivery of 8% plus AOI growth; second, the scale down of Reclaim the Flame remodel investments; and third, declining capital demands over time as refranchisings accelerate and RH eventually winds down.

This visibility has naturally caused us to refine our approach to capital allocation. Our first capital allocation priority will always be investing in our brands. Over the last several years, capital spending has been elevated as we made deliberate investments behind our brands. Today, we're modestly revising our long-term CapEx outlook down to reflect a more efficient, highly franchised model. We now expect total CapEx, tenant inducements and incentives, what we refer to as CapEx and cash inducements to be around $400 million for 2026 and 2027. We expect this to step down and settle around $300 million from 2028 on as RH goes away. This should generate a nice tailwind to our free cash flow growth.

And when we break down that run rate $300 million of CapEx, roughly half or $150 million will be allocated to Tim Hortons development and renovations as we continue to accelerate the business there. The remaining $150 million is split fairly evenly across 3 buckets. First, company restaurant remodels and repairs and maintenance across our U.S. businesses; second, general corporate spend in technology, facilities and in our supply chain business.

And third, we are earmarking $50 million for other investments as they may arise. In 2028 and 2029, given the slightly longer-than-expected time line for reaching our Burger King modern image goals, we anticipate the majority of this $50 million to be deployed against our existing Reclaim the Flame commitments. And to be clear, the total quantum of $700 million committed to Reclaim the Flame, that's not changing. We ultimately believe $300 million of annual run rate CapEx and cash inducements, it's a healthy level of investment to support our brands over the long term.

Our second capital allocation priority is maintaining a healthy and growing dividend. Returning capital to shareholders through the dividend has been a core part of RBI's value proposition for a long time, and that is not changing. We've now delivered 52 consecutive quarters of year-over-year dividend growth, and we are committed to maintaining that trajectory. Our previous long-term guidance was for a 50% to 60% dividend payout ratio, and we finished 2025 slightly above that range at 67%. Looking ahead, we're committed to a durable dividend with a payout ratio moving to around 60%.

Our third capital allocation priority is to continue supporting our strong balance sheet, which we view as a strategic asset. Over the past several years, our capital allocation strategy has been guided by a focus on maintaining balance sheet flexibility as we navigated a period of elevated complexity. During this period, we prioritized deleveraging, closing 2025 at 4.2x net leverage. And we've taken deliberate steps to further strengthen our balance sheet, extending maturities, accessing capital at very attractive rates and maintaining strong liquidity.

As we've previously discussed, once leverage reached the low 4x range, we plan to reassess the needs of the business and refine our longer-term leverage expectations. Having now reached that point, what we're outlining today tightens our long-term targets and provides clear visibility into how we expect to deploy excess free cash flow.

Moving forward, we intend to continue deleveraging and are targeting net leverage of approximately 4x in 2026 with a long-term leverage target of low to mid-3x net leverage, which we expect to achieve by 2028. That long-term target is at the low end of our previous 3 to 5x range because our intention is to become an investment-grade company. And based on our conversations with rating agencies, we believe this net leverage range is consistent with that goal.

We're already well on the path to becoming IG. Fitch recently rated our first lien debt as IG facility, and we expect to reach additional upgrade thresholds with the other rating agencies over the next 1 to 2 years on our path to corporate investment grade. While the business has historically supported much higher levels of net leverage, we view investment grade as the right long-term capital structure for RBI. Being investment grade provides tangible benefits, including a lower relative cost of debt, access to deeper, more durable pools of capital and the ability to issue longer duration debt, sometimes with 20- or 30-year maturities.

As I look around the room at the RBI leaders here in our audience, we're all personally large owners in this business, as Josh mentioned earlier. So we think in decades, not in years. And we believe being an investment-grade company is the right capital structure for us over the long term. However, we don't need to be overly aggressive to achieve our goals. Based on where we sit today, we believe we can achieve corporate investment-grade leverage by 2028 through earnings growth without the need for voluntary debt paydown.

This positions us well to optimize our cost of capital as well as renew our debt facilities in the coming years while creating capacity to return excess free cash flow to shareholders by resuming share repurchases. Importantly, on that basis, we're only a couple of years away from achieving our leverage goals. And given our significant free cash flow generation, we can do it all, invest in the business, reduce our net leverage and return capital to shareholders through both dividends and buybacks.

On the topic of buybacks, we believe our shares are currently undervalued and that this is an attractive time to invest in our own stock. In 2026, we expect to repurchase approximately $500 million of shares and together with our dividend, return over $1.6 billion of capital to shareholders. Share repurchases should grow from this level over time as we expect to use the majority of excess free cash flow to buy back shares annually.

From a modeling perspective, it's important to note that we target a year-end cash balance of around $1 billion that we reserve for normal course liquidity, ad funds and gift card balances and working capital needs, including our quarterly dividend. Until we become IG, we do not intend to fund share repurchases with incremental leverage. And once we do become IG, we fully intend to operate the business within IG leverage parameters. At that point, we can plan to meaningfully step up the quantum of share repurchases with incremental leverage capacity each year as EBITDA and earnings grow.

Lastly, I want to quickly touch on M&A. Historically, M&A has been an important part of our strategy, and it's been a meaningful driver of value creation over time. However, more recently, our focus has been on reinvestment and driving stronger fundamentals across our current portfolio. As such, M&A is not a priority today. We are focused on running the brands we have at the highest levels.

So taken all together, all of these priorities establish a balanced capital allocation framework. We'll invest in our brands where returns are compelling. We'll maintain a healthy and growing dividend. We'll reduce leverage over time as earnings grow and become an investment-grade company, and we'll return the majority of excess cash to shareholders through share repurchases.

Let me put some numbers around that. When I look at our dividend yield of around 3.8% today, and I add in $500 million in share repurchases, that delivers a roughly 5% yield to shareholders in a business that's growing AOI by 8% per year. This means that in 2026, we'd expect to deliver double-digit total shareholder returns, which should grow over time as our share repurchase capacity increases. That's pretty exciting.

I now want to turn it over to a guy who knows a little bit about driving shareholder returns, our Executive Chairman, Patrick Doyle. I've now had the opportunity to work with Patrick for just over 3 years. We sit 3 seats from each other upstairs in the office, and we speak almost every day. I continue to be impressed by the ambition of his vision and the intensity of his commitment to winning. He's been an invaluable resource for me, Josh and the rest of the leadership team as we position the business to accelerate growth and drive long-term value for shareholders.

Patrick, over to you.

Thanks, Sami. We're now at the exciting part of the morning where the team wonders whether or not I am going to stick to a script. And I'm not. I had a couple of conversations at the break with folks about BK Assistant and Patty. And I want to make sure everybody understands what you just saw there. We understand how technology can drive extraordinary results in a restaurant company. I have experienced that myself. The old days of having 500 people in a room coding, which we had in Ann Arbor, building things is not the way you operate anymore.

With AI, you can do things much faster, much deeper, get extraordinary things from it. So what did you just see with BK Assistant and Patty. What you saw with every team member wearing a headset is a personal coach for those team members. So not only can they find out anything about what's going on in the restaurant at any given time. And not only will they be told when the freestyle machine is out of a flavor and they should go replace it, which used to take over a day on average before the cartridge will be replaced and is now taking under an hour for that to be replaced because they're being prompted on it.

But they're getting coached because it can listen to the conversations that they're having. It can coach them on, are they being friendly? Are they saying welcome? Are they saying thank you for coming to Burger King, right? It is extraordinary. It is a game changer in terms of how you run restaurants. And I think our team is doing an amazing job. I don't know if anybody else out there is on this yet, but it is a very, very big deal about how you run restaurants, the hospitality you bring, ultimately, efficiency. It's going to predict things and say, you know what, sales are coming in higher or lower than we expected, and so you should adjust labor and all of those things are going to be coming through the headset. It is really, really, really a big deal for our business going forward. I'm very excited about it.

So before I get into all of my thoughts about the business, I want to spend a minute or 2 on the things that Sami was just talking about. As many of you know, I joined RBI 3 years ago, first and foremost, as an active investor, putting a significant amount of my own capital into the business. Shortly after I joined and made that investment, I spoke with all of you at the NYSE about why I believe my investment was going to generate great returns and what I believe needed to be done within the company to make it even better.

A very large percentage of my net worth is in this company. And listening to Josh and Tom and Sami, there are 3 takeaways that really excite me as an owner of RBI. First, RBI will always make the right decisions and investments for the long-term health of this business, even if it has created some short-term complexity. Sorry about that little bit of complexity you had the last couple of years, it's starting to go away, right? RBI operates with an ownership mindset, right? That's how we think about the business. That is perfectly aligned with how I approach business, and it's the right answer for generating the best returns for our shareholders over the medium and long term.

Second, the earnings algorithm is intact, and it's becoming more predictable. That allows me to even more confidently underwrite consistent future growth in this business. And third, this business generates significant free cash flow, $1.6 billion in 2025 with that number growing through our adjusted operating income growth and returning to a 99% franchise business. Relative to our market cap today, it's a pretty impressive figure and one that provides a ton of optionality, including what we have now announced, which is an acceleration in shareholder returns.

I'm not usually one for slides. because that controls what I'm going to say. But I do have one slide here today. And I think it's important to make the point because Sami walked you through what our total shareholder return is expected to look like in 2026. And then I started debating it and saying, well, look, here, I'm doing a little bit of air math, grabbing a napkin. So I did some napkin math, which they have illustrated with a napkin. And so here's the point. With our 8% AOI growth per year, I can easily envision a scenario where we are returning over $2.5 billion of capital through share repurchases and dividends, the first full year after we become investment grade and unlock leverage capacity.

So to be clear, our intent is once we're IG, then we can increase the quantum of debt while remaining investment grade, which will allow us to return more. So assuming no change in our share price, which would make me extraordinarily disappointed in everybody sitting in this room, my rough napkin math would add another couple of percent to shareholder returns on top of Sami's low teens that he laid out. They wouldn't let me do the math on the chart, but I said a couple of more points, so you can do that math in that mysterious red box yourself. That's mid-teens total shareholder return.

When I look at the multiple for companies with that kind of return relative to where we are trading today, I see a significant gap. And at some point, the market, again, that means you will recognize that our valuation today does not line up with the growth and free cash flow potential of this business. And I would expect multiple expansion on top of that yield and earnings growth. To me, that's pretty compelling as an investor. So to be clear, I already put all of my money in. And now the company is going to start more consistently buying back shares with its own cash, and I invite all of you to join us. So those are my takeaways on the financial side of things that I just wanted to call out.

But beyond that, I want to talk about one of the fundamental reasons I invested in and joined RBI in the first place. And that's because I love the restaurant business. You can tell it. I mean I love this business. I get so jazzed about some of the stuff that we are talking about, and I saw a great restaurant company in RBI. Now what makes a great restaurant company. It's really not complicated, and it has not changed over time. Great restaurants everywhere in the world are built on the same fundamentals, great brands, great people, great franchisees, great food and great service to your guests, all done at a consistently great value.

You can dress it up however you want, talk about it, however you want, but that's the formula. And none of that works without compelling franchisee returns. If unit economics aren't healthy, nothing else matters. You're going to have a brand, a great brand and food that people love and you have great marketing, beautiful restaurants. But if the franchisees aren't earning strong cash-on-cash returns, growth eventually slows, reinvestment stops and the system breaks down.

It's why when you saw Josh showing you the buildup on the 5% NRG, in every case, he was talking about these are the returns that people are getting in this section, right, in this part of it, why they would want to do this because the returns are good. In a franchise model, the single best predictor of long-term success is whether franchisees are making enough money to reinvest in their restaurants and build new ones. It's as simple as that. I have seen this play out over and over and over in my career.

The companies that win over decades aren't the ones chasing every trend or reacting to every headline. They're the ones that do the basics exceptionally well year after year and make sure the economics work for the people who own and run the restaurants. At RBI, we understand that deeply. That's why franchisee profitability sits at the core of everything that we do. It's why we have invested behind our brands. It's why we don't shy away from the hard decisions when something isn't working the way that it should. Now you may hear some conflicting narratives out there about who we are and how we operate. And if they're conflicting with what I'm telling you, I'm telling you they're wrong.

So let me give you my perspective on how we embody the core tenets of a great restaurant company across brands, people, franchisees, food service and value. First, I don't think it's a debate that we've got great brands with great food. In fact, it was one of my main takeaways when I joined the RBI business a few years ago prior to investing. The brands and the food are tremendous. Each of our brands is compelling on its own with clear points of differentiation, loyal guests and long runways to grow even though the 4 brands are in different stages of that growth. But they have one thing in common, and that's incredible food.

From the Whopper at Burger King to our incredible hand-battered chicken at Popeyes to our coffee and baked goods at Tims and Hot Subs at Firehouse, it is undeniable that we have exceptional products, which, of course, is the foundation of any great restaurant business. Now the question becomes whether you have the people who know how to build on that foundation over the long term. This company is led by people who know restaurants. Look at our leadership. Josh has now been in this industry for 14 years.

And you've seen the ownership mindset he brings to how we run RBI. Sami has spent 13 years here and is deeply familiar with every single segment of our business. Both Josh and Sami have been in this business as long as I had when I became CEO at Domino's. They are restaurant people. Every single one of Josh and Josh's direct reports have at least a decade in the restaurant business. Across the brands, you have leaders like Axel and Tom, Hope, Joel, Naira, Peter, Mike and Thiago, operators and brand builders who have spent their careers in restaurants, in the field with franchisees.

This is a restaurant company run by restaurant people. Axel started working in his family's restaurant business as a kid, basically from age 12. which is apparently legal in Germany. Before he ran that business, joined RBI and then eventually took over as President of Tim Hortons. He is a restaurant guy. Tom was a Domino's franchisee for 20 years before he ever stepped foot in the corporate world. Peter has built his entire career in restaurants and learned directly from Tom the importance of consistent operations in driving guest retention and the results. That's why he is the right person to lead Popeyes today.

At a moment, we need to lean in and focus on restaurant-level execution and delivering a great restaurant experience day in and day out. And it's not just Josh's direct reports. As Josh told you, we've built real depth behind them, many of whom are here with us today. One of our biggest competitive advantages is that we can develop and attract amazing talent and then train them and develop them. It's the best that I've seen. And all of that talent at the senior level in this company now has deep restaurant experience.

We can then move them around across the brands and geographies to deepen their experience where they need to get more learning and experience in the restaurant business. And that cross-pollination makes the entire company smarter, faster and better at solving problems. And our people think like owners because they are owners. It's not just Josh, Sami and me who have significant personal equity in this business. The rest of the leadership team, as we've said today, has the majority of their personal net worth in RBI stock.

Since the beginning, RBI has had a long-standing philosophy of broad-based equity ownership. And as we said, about half of our RBI employees today collectively own about $0.75 billion of vested and unvested equity in RBI. Having managed a lot of people and a lot of a handful of organizations over my career, I can tell you that, that kind of alignment is a game changer. When people have real skin in the game, it impacts how decisions are made and changes how trade-offs are evaluated. You worry less about next month and more about whether what you're doing is actually strengthening our business. the business in 1 year, in 5 years or 10 years from now.

And we've been doing that, and we've made the hard choices that show that. And that ownership mindset doesn't just align us with our shareholders, it aligns us with our franchisees, which brings me to my next point. I talk a lot about franchisee profitability. But the one thing that sits at the heart of that conversation and doesn't always get enough attention is the quality of the relationship between the franchisor and the franchisee because that relationship and that trust is what ultimately allows you to get things done in the system at pace.

At RBI, we've done a ton of hard work to strengthen those relationships across the system. In Canada, Axel and the team had to fundamentally reset the relationship at Tim Hortons several years ago. It required making real changes, including structural decisions that weren't easy or always popular at the time, but they were necessary. And today, Tim Hortons has one of the healthiest restaurant owner systems in the industry. In fact, the relationship is strong enough that their franchisee association recently decided to dissolve. After enough years of seeing our actions drive their results, they trust that we have their best interest at the center of our decisions. It's unbelievably powerful when that happens.

At Burger King alignment took a different form. We asked franchisees to reinvest meaningfully in their restaurants, and we committed to doing the same thing. That partnership resulted in one of the largest and most visible reinvestment programs in the industry ever. You don't get that level of commitment unless franchisees believe in the leadership team, believe in the plan and believe that the franchisor is fully in it with them for the long term. It doesn't mean that we don't have strong, healthy debate. That's critical to making the best decisions.

But I do believe that the majority of them trust that we are making the right decisions with their success in mind for their business. That's why the vote just passed with 97% support for the ad fund rate extension. That's amazing. That is unbelievably powerful. We came back to them and said, beef costs are high. We're sorry. We're really focused on this. This is the right thing for the medium and long term and short term for your business. And 97% of the restaurants said, "Yes, we get it. We'll keep investing."

At Popeyes, we benefit from some of the strongest franchisee relationships I've seen in the industry. The system is anchored by highly capable operators who genuinely love the brand. They know what Popeyes can be, and they know that right now, under Peter's leadership, we're taking the steps required to get the business back to that level quickly.

At Firehouse, our operators are engaged and mission-driven with strong ties to their local communities. They know what Firehouse stands for. They love it, and they are in it. In our international business, we have an incredible group of master franchisees, many of whom have decades of experience running restaurants in their local markets. You heard from some of them today, and they're a big part of how we've been able to drive consistent growth while navigating very different market dynamics around the world. Their partnership is essential to our success.

The important point here is that we do not approach franchisees transactionally. We work with them as long-term partners with aligned incentives and shared accountability. They are owners in our business just like us, in many cases, for much longer than us. And they must and will be treated with respect. And that ownership mindset shows up in other ways culturally. We don't avoid tough issues. When something isn't performing the way it should, we address it with the full weight of the organization.

And that ends up showing up in our operations and execution at the restaurant level. You don't hear us saying focus on this. ignore that, terrible message for the market, horrible message for franchisees and the brands that you're saying they're not our focus. We did that at Tim Hortons with Back to Basics, focusing on elevating food and beverage quality, improving operations and rebuilding franchisee trust. Nothing flashy, but it worked and those results have compounded over time.

We stepped in decisively at Burger King China when it became clear the situation needed to change. And now we're sitting here a year later with a fantastic new partner. There is no kicking the can here. Burger King is the clearest example of this mindset. I'll be frank. I think the investor perception of Burger King right now is meaningfully disconnected from what I'm seeing inside the business and from what our guests are now experiencing in their restaurants, the vast majority of the time.

When I hear some of the concerns on Burger King out there, a number of them simply do not line up with the facts. So-called value wars and competitive pricing are not derailing our progress. Remodel uplifts, they are very real. Underlying franchisee economics, while they are not where we ultimately want them to be, they are materially stronger than they were a few years ago, and that's amid all-time high beef costs. And the major franchising issues that we had previously that held the system back are now behind us.

Anyone who's lived through a turnaround knows that the early work, the in-restaurant operational work is often the least visible, the hardest for you all as investors to measure, maybe the least appreciated, but it's the most important, which is why Tom keeps telling his team to keep their heads down and stay focused. The first phase is about resetting standards, rebuilding trust and fixing the fundamentals. That takes time and progress is rarely perfectly linear. What matters is whether the right work is being done day after day.

As Tom always says, progress, not success. We still have lots of work to do, but we're reaching the point where if you pay attention, you can see real progress in the Burger King brand. We're entering the phase where we can start building some really exciting things on the foundation that Tom and the team have put back in place. What we're seeing now is a system that's healthier, more aligned and more disciplined than it has been in a long time. Operations are improving. The asset base is getting better every year, and franchisees are leaning back in, reinvesting, upgrading restaurants and focusing on execution.

We're bringing in dozens of new franchisees with incredible energy into the system as we refranchise restaurants. These are the behaviors that matter most in a franchise model. And when you look at our sales trajectory versus the industry, it is evident that it's starting to have that intended impact. This is how strong restaurant brands rebuild momentum.

You fix the core 4 first. You improve operations, you improve marketing, you invest in food quality, you modernize your restaurants, you rebuild trust with the people who are actually running those restaurants and then you let that momentum build and then you fuel that momentum. I'm confident in where Burger King is headed, not because I expected instant results, but because I recognize the pattern. I have seen what works and what doesn't work. And what I see today is a team executing with discipline and staying focused amid the noise.

You saw this with Tim Hortons as well. The Back to Basics plan was executed in the middle of the pandemic when Canadians stopped commuting to work. Given that almost 50% of the Tims business occurs in the morning daypart when people are commuting, it was difficult to see the immediate results. But Axel and his team kept their heads down and stayed focused on executing the plan. Today, Tims in Canada and the U.S. is a $7.6 billion system-wide sales business that drives over 40% of our adjusted operating income.

Now despite its importance to RBI, you'll notice Tim Hortons didn't have a dedicated section today. That's intentional. Tims didn't require a deep dive because it is performing exactly as you expect a strong, well-run business to perform, delivering strong franchisee economics and consistent results across a range of consumer environments.

While Tims remains a clear market share leader across its core categories, including coffee, baked goods and breakfast sandwiches, Axel and the team also continued to invest in growth categories like PM food and cold beverages. Those efforts have translated into nearly 5 straight years of positive quarterly same-store sales growth. Tims is firmly cemented as Canada's most loved brand, and we're confident the foundation is in place to ensure the brand thrives for a very long time.

Now let me touch briefly on the unit growth that we were talking about before. From my perspective, this is pretty straightforward. For the last few years, China was the biggest drag on our consolidated unit growth, and we fixed that. And by the way, as I was talking about before, we didn't try to manage around it or paper over it. We just jumped in like owners and fixed it. And we know that was a little bit messy for all of you as we did that.

But we're sitting here 1 year later after just closing a deal with an incredible operator. Johnson was on the video. He ran KFC China. He said, I used to work with another big brand. He ran KFC China, which is a pretty good business, right? He's an incredible operator. The team at CPE is fantastic. They honestly, they blew me away when we met with them and talked to them about their vision for the business and what they believe they could achieve in China and their excitement for the business.

And by the way, for those of you doing the math, if you think about what the cost is of building a Burger King in China, the $350 million in capital that they injected into the business.

That's what gives me an awful lot of confidence that we're going to be building a lot of stores. This is not just about the contract because the contract at the end of the day, right, that's an agreement between us and how we think about the business and what it can achieve. There is $350 million sitting in a bank account right now waiting to fuel growth for Burger King in China. That fully funds the next 1,250 Burger Kings to be built in China. That's why I'm confident, not because of a contract, but because the cash is in the bank.

So like I said, we fixed the Burger King China situation. I'm going to be over there in about a month. I am really excited about what's going to happen and about the value that's going to be created for CPE and that team and for all of us as shareholders. That alone gets you above the 4% mark by 2028. From there, you just have to believe that Popeyes International and Firehouse U.S. and Canada and some other collection of markets is going to accelerate, and we're going to be back at that 5% plus by 2028.

Of course, there are going to be puts and takes. It's never going to play out exactly the way we just laid it out, but there are so many different ways of getting there that that's what ultimately gives us the confidence. That's the advantage of running a business of our scale. Not everything needs to work all at once.

I talked to Thiago about this often that when you're running over 200 brand country combinations, you don't have to and you can't be a perfectionist, right? Not everything is going to work all the time. You need the vast majority of it working, and Thiago and his team in international are doing that. So let me close with a few takeaways. We are a restaurant company, a really, really well-run one across each category that we compete in.

We offer the best quality food and beverages that our guests genuinely love: coffee, breakfast and baked goods at Tims, flame grilled burgers at Burger King, incredible hand-battered fried chicken at Popeyes and craveable hot subs at Firehouse. All of that is delivered by committed hands-on franchisees who deeply care about running great restaurants, and it's supported by the ownership mindset we take to running RBI. We're willing to make tough decisions, and we don't ignore any component of our business.

And we know how to do the basics right. We proved that with Tims. We're doing it again with Burger King. We have a business in Canada, our largest business that's been delivering positive quarterly comps for nearly 5 straight years and it is one of the most penetrated concepts in the world and yet is still growing units and generating a great return on those units for the people who own them. We have an awesome international growth business, generating double-digit system-wide sales growth that's well diversified across markets with Burger King China back on track and representing a ton of upside. This is a simpler business than it was a year ago, and it will be meaningfully simpler again a year from now.

And through it all, we allocate capital well, and we keep franchisee profitability at the center of our decision-making. When you're looking to invest, you're looking for scarcity. And I say with confidence, RBI is one of the very few businesses that meets my threshold of being a great restaurant company, and I couldn't be more proud to be a part of RBI.

With that, I would like to invite our business unit presidents to the stage to kick off our panel with Kendall and our Q&A.

Awesome. Well, thank you, and thank you, everyone, for joining us again today. Hopefully, it has been a good session so far for you all. So I'm very excited to have all the business unit presidents here with me today. You already heard a lot from Tom earlier, but you haven't had the opportunity to hear from Axel, Thiago, Peter and Mike yet. So hopefully, we'll cover a few questions there. And then we're going to open it up for audience Q&A. I'll invite Josh, Patrick and Sami back to the stage to join them at that point.

So I'm going to kick it off, starting with Axel. Axel, Tim Hortons is a very remarkable business in Canada. For those of you who are not from Canada, it's the most loved restaurant business in the country. And I think it's probably one of the most loved brands in the country. The Maple Leaf is literally the flag for Tim Hortons, so pretty synonymous with the pride that everyone has here. And it represents over 40% of RBI's adjusted operating income. So extremely important part of our business.

You've been leading the team Axel since 2019, and you developed and executed a very successful Back to Basics plan. So for those less familiar with the brand and the plan, I just thought you could walk through a quick history and why you believe it's set the business up for success over the past few years.

Very happy to do. Thank you very much, Kendall, and hello, everyone. So when we go back 6, 7 years in our Canadian business, it was not a pretty time. So our sales were declining, our traffic was declining. Our franchise relationships were not very good. And so what did we do? As part of our analysis, we did a ton of research with Canadians and 2 things really stood out. Number one, exactly as you just mentioned, Kendall, Canadians had a lot of love for this brand. Even during this very difficult time in our history, Canadians were cheering for us, the most loved brand in the country, the most trusted brand in the country, the brand that is associated most with communities.

This is how the brand grew community by community. So all of that was still very, very strong. So that gave us confidence. And then the second piece that we learned is that we had to do better. So we got feedback from Canadians, your coffee is good, not great. So your breakfast sandwich is good, not great and your baked goods, they are mostly great actually, but we had still opportunities to do better.

So what does it mean? We had still brewing technology from the '60s, so the glass pot that was not what we should be doing. So we invented the fresh brewer and now we have modern brewing technology in our restaurants, which helped us to deliver consistently a great cup of coffee. So the second thing was we brought freshly cracked eggs to our restaurants. We had a, I call it an egg patty, a frozen egg patty before that was okay, but an egg should be an egg, I guess, right? So that's why we launched freshly cracked eggs.

And then hope likes to say our CMO, we put the apple back in the Apple fitter. So it's one of our most iconic doughnuts. There were not too many apples in it. Now there's a lot of apples in there. And the same is true for our Boston Cream, my favorite doughnut, but we didn't do it because of that. So we put in 25% more Venetian cream. So those were all things that we did. We improved operations as well at the same time. And that set the foundation like my teammates were sharing earlier in their presentations for the turnaround. And yes, we set the foundation to deliver on the 5 years of -- almost 5 years, sorry for that, of same-store sales growth.

It is full 5 years and 19 consecutive positive quarters. So we'll get to that -- hopefully, we'll get to that actual 20 quarters consecutive very soon. So awesome. Well, as we've mentioned and as you just mentioned, you've had a very strong track record. And one of the questions I consistently get and [ Tara ] and I get a lot from investors is, is this sustainable? So can you walk through a little bit more on the confidence that you have in the sustainability of your positive same-store sales growth? What are the key drivers that you see going forward that should make us all kind of excited and confident in Tim's trajectory?

Super happy to do. So it's 5 things that come to mind. Number one, the team. So really the team that I have the pleasure to work with now for many years is hands down the best group of people I ever had the chance to work with. Many of them are here in the room, and you will have a chance to speak with them also during lunch. So that's number one.

Number two is the brand strength in Canada. It's like we said a couple of times now, it continues to be the most loved restaurant brand in the country. And it's probably synonymous. Actually, I don't have that research point, but I would say Canadians love Tims as much as they love hockey. Still something to explore, but there's a lot, a lot of heart for this brand. Then the second piece is product innovation.

So we still have a lot of opportunity to grow in our most important daypart, the AM. And we have a lot of opportunity to grow in the PM. So and PM means in food and beverages. So we see a lot of opportunity with espresso-based beverages, with cold beverages. So we're rolling out a new espresso machine. You have a chance next door to experience our new Suprema espresso machine. And on top of that, we are rolling out fountain equipment to all our restaurants to really make a big push in combos. So we are super excited about that. Just to name a couple of things.

And then operations is very, very critical. Naira and her team have already been leading significant operational improvements. So that means guest satisfaction reached all-time highs, and we made significant steps forward in speed of service, and we see lots of opportunity with our owners to do even better.

And then the next point is unit economics. So $2.95 is the number that we have per restaurant in terms of profits. There was a little bit of a step back for all the reasons that were mentioned, but we are very optimistic because so many things are in our control to do better. And so we are very optimistic that our owners have the financial capacity to invest into equipment and remodelings. And so that all gives me a ton of confidence that we are literally -- I think one of our franchisees in the video [ said it's Raj ], I believe it was for India. It feels the same way in Canada. We are just getting started. So lots of opportunity, lots of confidence for our business in Canada.

Awesome. Thank you. Thiago, turning to you now. So we heard a lot about international unit growth today, which I will get there. But you also have delivered 5 years of positive same-store sales growth. And I'm often asked, what is going on in the international market that continues to help deliver such strong performance, especially for those of us based in North America, which I think almost all of us in this room are. We don't see that same level of detail and insight into what's happening in these international markets.

So can you walk through a little bit what's the difference that you see in international versus U.S. markets? The U.S. consumer environment has been much tougher recently. Why do you think international has been so well positioned? And Just walk us through your thoughts.

Thank you, Kendall. Hi, everyone. I think there are many drivers, but I will focus on the 3 that I consider to be the main relevant ones. First, I think the market dynamics in international are very favorable. Second, our franchise model is a real strength for us. And third, what has been driving our growth are what I see as a sustainable long-term growing platforms that should continue to drive incremental sales in the future.

So talking about the first one, the market dynamics, we see urbanization, improvements in infrastructure, growing middle class, all those things leading to an increase of penetration of Western QSR brands in the majority of the market. So it's really about the category growing and not just competing for market share. And on top of this, in the majority of the markets, there is really one large international player that owns 50% of the market. So all that together represents a big opportunity for us.

So the second point about our franchise model, you heard today, we have a great network of very strong local partners that are highly aligned, well capitalized and fully committed to building our brands in their markets. So they are world-class operators that deeply understand their markets and really care about building our brands. You heard from some of them today, and hopefully, that gives you a flavor of the caliber of our partners. So this combination of local expertise and our global scale is what gives us a real competitive advantage.

And the third point I mentioned was what has been driving our growth, right? So it's not about onetime big launch that -- or like a short-term fed. It's about a series of initiatives that we believe should continue to bring incremental sales in the future. We have a steady pipeline of innovation. We have developed together with our partners, very strong value platform tailored to their markets.

Our partners have been investing a lot in their assets. So today, in international, we have 80% of the system with our modern image. And they are highly focused on investing in digital capabilities, which is a big driver of sales growth for us as well. So altogether it gives me confidence that we can continue that pace.

And Josh talked about one of our advantages at RBI is our ability to bring brands globally. And I think the brand that we all know is going to drive the biggest growth for us outside of Burger King, of course, internationally is Popeyes. We have already taken that brand to pretty remarkable levels, 475 restaurants when we acquired it, over 1,800 today. What gives you the confidence that we're going to be able to continue pushing that brand forward?

Well, I'm very confident because if you look at the past 10 to 15 years, you see that our track record is pretty solid. And you saw that today in Josh and Sami's presentation, cases like Brazil, BK Brazil, for example, back in 2010, we had 100 restaurants. Now we have close to 1,000 and have passed $1 billion in system-wide sales. We also had Spain that back in 2012, we had about $700 million in sales, now over $1.7 billion in sales.

And we talk a lot about France that you saw today back in 2013, it didn't exist. And now it's our largest market with over $2.3 billion in sales. And most recently, we have cases like Japan that in 2 years, doubled system-wide sales to nearly $400 million. And that's on the back of net restaurant growth and 2 consecutive years of 20% same-store sales growth. So just in the BK world, we have, what, 6 businesses that are selling over $1 billion in system-wide sales with one of them over $2 billion. So that's very impressive in my point of view.

But turning to Popeyes, we already see very strong signs of success. So Popeyes International went from $300 million in system-wide sales back in 2016 to almost $1.8 billion in last year. So we grew system-wide sales last year about 40% on top of 50% the year before. And this is driven by cases like the ones you saw before with Tom Crowley from Popeyes U.K. U.K. is a market that we opened 4 years ago and now is generating $250 million of system-wide sales.

We also have cases like Turkey, Turkey is impressive. We have nearly 500 restaurants with $400 million in system-wide sales. And Spain and many others, Spain is a great one as well. Right after COVID, we had 40 restaurants in 2021 and now getting close to 200. So all of that is the result of having fantastic partners, like you said, highly aligned, well capitalized and supported by our global infrastructure.

I'm going to throw one more at you, sorry. But when you look at the 1,400 units out of the 1,800 they're coming from the international business, where do you see the biggest risks to that? And where do you see the biggest opportunities?

I will refer back to what Patrick, Josh, Sami said before. I think the biggest swift we had was in China really because of the situation we had there. But that has been heavily mitigated with the partnership we just signed with CPE. So I'm a lot more comfortable with the plans we have. The second thing is something that Josh pointed out as well. There is always execution risk, but our plans have been risk-adjusted for that.

And our system is very diversified. Our base of developers is pretty diverse. And if something happens in one side of the business, there's always other places that can compensate places like China or Japan that you just said or India, you heard from Raj, we really believe that we can over-deliver in places like that.

Awesome. Tom, we've heard a lot from you today, so I'm only asking you one question. Yes. So we are often asking, you've made really great progress at reclaim the lane. But I am often asked why is it not going even faster. So can you provide your thoughts on that question? Why aren't we even faster in those -- the results there?

Sure. I think the investments that we've made in Burger King were after years of erosion. And this is a huge system, and it takes time to turn around an aircraft carrier. We had to improve operations in the franchisee base. And I think the results are showing. We've improved franchisee profitability, and that's going to be the underpinning of many future years of success. And really, if you look at this relative to the industry, when we started we were 700 basis points behind the system in same-store sales.

And at this point, we're now operating at about 300 basis points ahead of the industry. And I think that's an amazing amount of progress. And then as I think about the future, we've done all these fundamental things right. We've got a strong system that needs to get stronger. Let me be very clear. But all we need now is a nice little catalyst. And when I think about a catalyst, I think about something like the elevation campaign that we're embarking on this year and the elevation of the menu, and I think you can light a fire on this brand.

Peter, you came up under Tom, helped develop Reclaim the Flame and you're now leading Popeyes. And the Popeyes business, you made a lot of very important operational improvements in the BK business that Tom talked about today. The Popeyes business was very, very strong for a number of years, especially coming off of the launch of the chicken sandwich in 2019. But I think all of us in this room can say we've been a little disappointed in what we've seen over the past year or so.

So what is your initial diagnosis? You're only 120 days in, so I just want to put that out there for everyone, like please just keep that in mind. But what's your initial diagnosis on what needs to be done and what are the key areas that you're going to be focused on in the next year or so?

Great. Thanks, Kendall, and good morning, everyone. It's a pleasure to be with you here. Well, look, obviously, as Kendall said, I've been getting up to speed on the business over the last few months, getting into the restaurants with our franchisees, with our restaurant teams and getting to know a lot of our guests as well.

And what I'd say is, I am increasingly encouraged about the foundations of Popeyes. Obviously, it's a brand rooted in deep Louisiana culinary heritage. As Patrick mentioned, we have some exceptional franchisees, great operators with the people-oriented mindset. And I think we have everything we need to be successful. Now I think what happened over the last year, 1.5 years, I think it's safe to say, ultimately, we focused on attracting new guests, and that came at the expense of the core.

We tried to bring new guests in, which we did, but they didn't come back, and we had a lot of LTOs that frankly just didn't resonate with our core guests. And the complexity that, that added, right, our service began to fall further and further short. Thankfully, I think all of these problems are addressable. And I think I really have 3 main takeaways at this stage. So the first of which is our service. When our food, our bone-in chicken, our tenders, our incredible chicken sandwich are executed as they are intended to be, they are the best products in the industry.

On our core, this is point number two, right? We just strayed away from what makes Popeyes so great. Again, we have incredible deep Louisiana culinary heritage. Our food is absolutely amazing. I think we can celebrate and highlight that a little bit more. And I think doing that as well is going to help our restaurant teams focus on fewer, better things done daily. And I think we can deliver incredible service and food experience.

And the last piece is on value. Because of the LTOs that we had introduced, it was at the expense of focusing on a little bit of everyday value, which, of course, is important in this consumer environment. We can do a little bit of that. We've already started to make some changes there and are starting to see some sequential success even since the fourth quarter. But addressing these 3 fundamental issues, service, our core and value. In service, we've already started to do the work to expand our field team.

We'll increase that team by about 75%. We are just about done with hiring. We are training all those folks in our company restaurants in New Orleans. So excited to get them out to the field into the markets that our franchises need the extra hands on deck to start to improve service. We're obviously working on the restaurant trainings, the hand-to-hand, shoulder to shoulder work with our franchisees. We started that in the fourth quarter as soon as I got in place. We're doing more of that this year.

And I think importantly, you heard Tom talk a little bit earlier about the Royal Roundtables that we're working, which have been this incredible firepower for us to really engage with our restaurant managers who are the brand in the communities that we serve. So Popeyes, we are introducing for the first time in many, many years, maybe since the '80s, experience rallies which is going to bring our restaurant managers into our planning, help them understand, hey, what do we need from them? What are we going to focus on? What are we going to get right today, tomorrow and this year, which again, going back to the core, it's the execution of our incredible core products, our bone-in chicken, our chicken tenders and our sandwich.

And I believe working closely with them is going to be the unlock that's going to get us back to the level of success that this brand can certainly deliver on. I think lastly, on value. Again, a lot of the LTOs just attracting new guests, they didn't come back and it was at the expense of our core guests. We haven't given them the service or the everyday value that they deserve. Again, we already started to put some value platforms in place, both for single [ leaders ] as well as family occasions.

So we're excited about some of the sequential progress that we're already making. Ultimately, what I think all of this work lines up to is positive same-store sales in the back half of this year. Right now, we're paying a lot of attention to our de-seasonalized sales, which we just index our daily or weekly or monthly results versus some historic averages. So we're focused on that sequential improvement right now, what are these value platforms delivering. And certainly, as we create more tailwind with better service in our restaurants, we have a lot of comps to get back to positive same-store sales in the back half of this year.

Awesome. That is great. Great to hear. And when you kind of compare the starting point for Popeyes right now versus the starting point for Burger King with Reclaim the Flame, can you walk through some of the puts and takes there on how you see the starting positions for each of the systems?

Yes. I think it's -- look, it's a good question. I think first and foremost, Popeyes is ultimately starting from a really healthy base, right? Our average restaurants do about $235,000 in 4-wall EBITDA. Our A restaurants, which we certainly aspire to ensure more franchisees and more restaurants become A restaurants, deliver $270,000 in average 4-wall EBITDA. As well, if we think about the growth that Popeyes has experienced over the last 10 years, the last 20 years, the majority of our restaurants have actually been built within the last 10 to 20 years.

So most of our asset base is quite new. It's healthy. Any work that we really need to do is fairly light in touch and scope. And I think I would add just for context as well, like our franchisees are fairly healthy from a leverage perspective. So I think we're in a very good position to do what needs to be done. It's not that expensive in nature. Really, the focus has to be on service around our core, which I know we have a history of actually delivering that really well.

We took our eye off the ball on the core and our service around it. We're going to get back to it, and I'm confident that we can ultimately get back to success there. But as we think about like the capital that went into Burger King and why Popeyes is not Burger King, there are really 2 big buckets of capital that Tom walked through earlier today. The first of which was the acquisition of Carrols, right? It's a big franchisee that we know we needed to accelerate the pace of modernization.

There's no Carrols at Popeyes. So that's simply not an issue for us. And again, on the remodel front, which is another big portion, right, the long-term Royal Reset program, which a lot of capital has been dedicated to. Again, I'll just go back to most of the Popeyes system has been built in the last 10 years. For Burger King, most of the restaurants were built by the mid-'90s. So just erosion that had happened over the course of decades that had to get addressed.

We don't have the same dynamics of Popeyes. So it's just not as much of an issue. I think the last piece is there's a bit of a smaller investment into the Burger King ad fund to try to course correct and make sure that we had healthy messaging to compete with the big players in the market. For Popeyes, our ad fund is very healthy. We are now at a stage where we can afford a very healthy message 52 weeks out of the year. We consider ourselves we're now a mass brand, and we have an ad fund to compete that way. So nothing that I'm concerned about on that front. I'm very confident we have everything that we need to be successful.

To put -- sorry, one more question, please. To put a finer point on that, do you envision a need for incremental investment, though, corporate support from RBI to get your plans in place going forward?

Yes. Look I think ultimately, we can accomplish our goals without significant corporate investment from RBI. And to the extent that there's any capital investment, it's already contemplated in some of the CapEx and the cash flow guidance that Sami outlined earlier today.

Awesome. Okay. Moving on to you, Mike. So we acquired Firehouse Subs 4 years ago. And the intent really was to tap it into our global network, right, and try to accelerate the business in terms of growth, both in the U.S. and overseas. And you've done a pretty fantastic job now over the past 4 years. I think Josh showed the net restaurant growth chart there. We've increased NRG by 5x versus what it was in 2021.

So I'd love to learn a little bit more like first, before we dig into the development side of things, when you come to market with the Firehouse Subs brand to a new market or to any potential new franchisee, how do you differentiate yourself? What really differentiates the Firehouse Subs brand from some of the other larger growth subcategories out there?

Thanks, Kendall. And I really love the question because it allows me the opportunity to talk about what makes Firehouse so special. I think we have incredible fundamentals. So first of all, we're #1 in our category in hot sandwiches, and we've led in that category for quite some time. And it all goes back to our founders, their culinary heritage. We're #1 actually in the sandwich segment as well in guest satisfaction.

So we typically have OSAT in the mid- to high 70s, Google Stars, 4.4, 4.5. We actually were ranked last year by Nation's Restaurant News as the #1 fast casual concept in the country. And we're #1 in the entire restaurant space in supporting our community. So we've raised over $100 million for first responders through our Public Safety Foundation. And we're really proud of that. We're actually top 3 private donors in all the United States for life-saving equipment.

And we've seen really rapid acceleration in our digital business. So since the acquisition, we've seen our first-party business grow almost 2x. We've seen our digital business grow close to 50%. And we actually were just ranked the #1 brand by Ipsos in terms of app functionality in all of restaurants. So very excited about the fundamentals, and now it's all about how do we unlock and grow this brand even faster.

So speaking how -- can you kind of walk through what has been the driver of success over the past few years, some of the foundational elements that you put in place to drive development and what gives you confidence in the unit growth targets that Josh laid out today because Firehouse is a very important contributor to our NRG going forward, and you've demonstrated a clear track record, but would love for everyone else in the room to hear directly from you on why you're confident going forward.

Yes, it's a great question. I think first off in the U.S., we started off being heavily focused on unit economics. So since the acquisition, we've seen 4-wall EBITDA to restaurant grow close to 30%. We passed over $100,000 this year. And then we've been very focused on maintaining best-in-class CapEx, which is going to result in better paybacks.

So through improved supplier negotiations and also shrinking our footprint a bit, we were typically around 2,000 square feet. We came down to about 1,400, 1,500 square feet. Our business has evolved to be much more digital, much more takeout. So we don't need that same size we did before. Both those growing EBITDA and improving our build costs have gotten us in that 4-year payback right now, which we're really excited about, and we're looking forward to push even further.

On the Canada side, we're super excited about the growth that we've seen there. So it's very different than the U.S. We have a ton of white space in Canada. We don't have the same level of competition. And this year, we were one of the fastest-growing brands in the entire country. And a lot of that comes from how we were able to leverage and cherry pick the best operators we have at Tims, and they're doing an exceptional job operationally and unlocking a ton of growth for us.

We're really excited about the pace of growth we're seeing in all of North America. And one thing folks don't realize just about the Firehouse business is even though we're growing quickly, even though our ARS is around $1 million, we have a take rate in the high single digits. So it's very accretive in terms of growth for RBI as we continue to build 150 to 200 restaurants over the next few years.

Awesome. So before we open it for live Q&A for everyone, I'm going to do a quick rapid fire here. We talk a lot about franchisee profitability. It's between 10% to 15% of all of our executives and the team's compensation here at RBI. So we are really, really focused on that. And I think one of the best ways to grow franchisee profitability, we're all aware, is to grow unit growth -- AUVs. So I'd love for you all to kind of talk through very quickly in lightning round style, what do you think are the next top 3 things that are going to drive your AUVs another 25-plus percent in the years ahead? I'll start with you, Axel.

4 things. So, the first one is continuing to grow in the morning. So we are by far the market leader. And at the moment, we are rolling out a new English Muffin, fluffier and even tastier in Canada, and we are testing new toasters to toast it even better. So super excited about that. Then it's the PM daypart, of course, with beverages and food innovation. I talked about some of the equipment that we are rolling out there, but expect more growth to come here over the next years.

Operational improvements, we are obsessed about operations. So Naira, James, who leads our field together with our owners continuing to improve operational performance. And then, of course, the digital world. So we strongly believe that we can improve our business through even stronger digital engagement, which means partnerships. So we announced our partnership that we'll have with Canadian Tire, another very strong Canadian iconic company. And we believe that we can further improve the experience in our digital channels. So those are some of the things that we are super excited about.

Thiago?

I think number one would be continue to consolidate our position as the best beef burger in all markets and leveraging -- doing that, leveraging our flame grilled taste. The second one would be continue to grow in fast-growing categories like chicken, where we just launched crisper platform and it's doing really well and other categories like beverages and snacking.

The third one, I'd say, is continue digitizing our business, rolling out kiosks, table service, table ordering. Those things are really important to improve guest experience, but they also drive a lot of sales. If I could squeeze the fourth one would be for Popeyes, Firehouse and Tims International, it's really about opening more restaurants and growing brand awareness.

Okay, Tom?

Yes. I think for us, there's got to be a continuation of the building on this foundation that allows what we do in marketing to really stick and to work. And I've seen the best example of this most recently with the amazing work that Joel and the team did on SpongeBob. Yes, we were high-fiving in all through December, but what I was thinking about the entire time is what happens when this is over.

And just the foundational strength that we've seen in the business since the end of SpongeBob has told me that's what's important because in the past we would do promotions and then we just get right back to the baseline. I think seeing us be able to build our business over time through great marketing initiatives and know that it's going -- that we're going to keep some of those guests over time is what's going to really build this business long term.

So as we think about that and what we do in 2026, I think in 2026, I'm very excited that we can now get to that important work of elevating the menu, and we announced the Whopper improvements today and what better place to start than with the Whopper. And that's just the first chapter of this elevation story that we can tell around all of the improvements that we've been making at the brand over the course of the last few years and acknowledging at the same time that we have a lot of work still to do.

And then finally, just once again, having that firm foundation allows us to now attract back kids and families into our restaurants and it can be a place that you're excited to bring your family, not scared to bring your family. And it's just been great to see that improvement on the tail end of the last couple of quarters in the Kids and family business.

Tom's been doing many, many calls with a ton of Burger King guests. So feel free to ask him for some of the feedback that's been getting. I think it's been pretty amazing to hear. So Peter?

Yes. So what I'd say first is I have 2 little daughters, 5 and 3. And my oldest still wants to go to Burger King every weekend. I'm trying to get her to fall in love with Popeyes, it's a work in progress. I'm excited [indiscernible] but she likes the cheeseburger at Burger King.

Let's keep it that way.

Yes. But at least at Popeyes, what's the focus, what's going to drive the growth? Fairly simple here. It's service first execution at the restaurants, a little bit of everyday value and once again, service execution at the restaurants. It's that simple.

So Mike?

Peter, kids love Firehouse as well. I think, first off, it's growing in the right category. So we're really focusing in 2026 on high-growth categories like chicken and steak, which have been really impactful in our space. We're also rolling out French fries as side, which is a real differentiator for us. We have half the system at the moment already with French fries. By the end of 2026, every restaurant will have them.

You guys get to try some today.

Yes. They're very good. We are also continuing to expand our digital business and leveraging first party. We're rolling out targeted offers this year, which we think could be a big tailwind for our business. And then three, being a bit more targeted in how we spend our media dollars this year. We're really ramping up our sports partnerships in 2026. We saw really strong momentum from that in 2025, and we're looking to expand them in 2026.

Amazing. Thank you, guys. You're all staying put. Patrick, Josh, Sami, if you can come up and join them. And for anyone following online, please feel free to submit questions to [email protected]. If we have time for questions from the online people, we'll take them. But in the meantime, I'll be walking around with microphones. So please wait until you have a microphone until you ask your question just to make sure everyone can hear. Thank you. Yes, we're going to just -- here you guys go.

I always try to save as far as I can away from Mike and Patrick, it's not flattering. So you can tell we're getting close to lunch, too, the number of product references keeps going up. So we'll take questions until everybody gets too hungry to ask anymore.

Dennis Geiger, UBS. Thanks for putting this great event together for us today. Very helpful to hear about the key drivers of the AUV growth by segment there at the very end. Can you talk a little bit more about that 3% plus average annual same-store sales target? I don't know if you're kind of breaking it down by segment or sort of -- obviously, the last few years, the macro certainly has been a pressure there, creating some of that gap. Anything more on the go forward and delivering against that average annual number?

Yes. I think you kind of -- you heard the plans. I think they're more focused within the business units. And I think the big part of getting probably over that 3% is one of the things that I referenced a little bit earlier, which I think is getting all the business units delivering together. The average, if you look at it, it was around 2.4%. And I think a little bit of that was some ups and downs. So I think as we get things like Popeyes back on track, we're going to be there pretty quick.

Anything anybody wants to add there?

Jacob Aiken-Phillips, Melius Research. Great presentation, everyone. I have 2 questions on technology. One with Patty and the Burger King, how is it actually affecting the hourly level employees? Is it reducing turnover, increasing satisfaction? And then more broadly, how do we think about technology across all the other brands and internationally?

Tom, do you want to start with the team impact?

I'll take the BK Assistant one. I see it in our -- we have so many -- a bunch of restaurants ourselves. So I see the impact of it every day and the satisfaction of the team members, how much they enjoy using it. And certainly, turnover has improved in our company restaurants. But I think where I'm most excited and where I'm sure you'll be most excited is just seeing the improvement in EBITDA.

So if you look at EBITDA net of control, we're looking at around a $3,000 uplift so far. So that's exciting. And I think in restaurants, and this gets back a little bit to the operational side of this, in restaurants that we've deployed BK Assistant and Patty into that are not performing well operationally, where a franchisee or one of our company restaurants has said, Hey, we need some help over here, and we've deployed it in there. I mean we've seen up to an $8,000 change in EBITDA in those restaurants net of control. That's exciting for the franchisee.

And if I can add maybe 1 or 2 other points. I think one of the fantastic things about the way that Thiago and Tom and the rest of the team built Patty is they built it together with our franchisees and our restaurant general managers. So it wasn't something that we built here in the office and tried to push out to the system. But I think it was much more asking the franchisees and the restaurant teams, what would be helpful to you? Like what would make your lives easier. And then we went back and put that together.

So I think the approach that you all took really made the product a lot better and also got a lot of the franchisees and the restaurant teams really invested in it and excited to have it in their restaurants. And I think that's characteristic of Tom's approach across everything in the business, but was a really important feature of this one.

As I step back and just to your broader question about how do we think about technology, I'd say we've evolved a bit there over the last 3 to 5 years. And our focus, I would say, on some of the -- like the core systems in the restaurants. So things like your point of sale and your network and your back of house, we've really focused on having standardization within each of the businesses, but relying on some of the experts in the industry who have -- already have great software platforms there. And I think we've sort of made tremendous progress.

Tom referenced it a little bit in his presentation, behind the scenes and standardizing those systems and vastly elevating the level of service and the consistency of availability of those systems. That's some of the underlying fabric of some of the operational improvements that you've seen across our businesses. And we decided -- we actually -- when I was involved in technology, we started down the road of building some of those systems ourselves.

And I think what we realized is that those are enormously resource-intensive undertakings, hundreds or thousands of folks, tens or hundreds of millions of dollars of investment and platforms that, frankly, third parties are doing a better job than we could do building and we didn't need to replicate. I think as we look forward, I think some of the work that's happening in AI is going to radically change how that software is developed and deployed.

So I think trying to do that ourselves, I think a lot of that would risk being obsolete and being too expensive. So I think we're on the right track there, and it's working for our businesses. What we are building in-house is some of what you saw with Patty, stuff like what [indiscernible] is working on. And the nature of that development is radically different.

So instead of hundreds or thousands of folks required to build it, we're doing it with handfuls. So the number of resources it requires to build on top of some of those third-party tools and build the AI stuff like what you see with Patty is just wildly different. So we're talking handfuls of people, single -- like single dollar millions of resource investment, which is really different and it allows us to build tools that are having a huge impact on our business.

And you saw we're at 500 restaurants. We're going to go to the whole system. I think we're still early in seeing the widespread impact. And as you think about how that goes across the company, we don't centralize at all, but you can trust everybody is watching. And because of the nature of the tools, we're able to replicate them across some of the other businesses pretty quickly and pretty easily. Patrick, anything else you want to add on technology front?

I think it's going to revolutionize how restaurants are run and we're going to hopefully be first, but every scale player is going to wind up figuring this out over time. It's going to be an advantage for scale players. But I think the gains on profitability that we talked about here, my prediction, way bigger, like way bigger than that. It makes it easier to train people to onboard them. It makes it a cool place to work because you're using great technology, which younger workforce expects that you're going to have access to that.

If you just think about it as a coach for the team members and for the restaurant on how to operate better and eventually, it's going to be operating in every part of the business, I think it's absolutely huge, absolutely huge. And I said before, I've seen what technology can do to a restaurant business, and it's going to happen again.

Jeff Bernstein from Barclays. Patrick, I think many of us were inspired 3 years ago by your investment and your message. And I think many came today with a similar inspirational hope, and I think you didn't disappoint and the talk about the valuation differential between RBI and the industry, I think, is apparent.

That's on you. You got to fix that.

We're working on it. With that said, I'm just curious, I mean, 3 years ago, you were very inspiring and you had a very strong management team at the time. I'm just wondering, what do you think surprised you the most over the past 3 years? I mean there's always going to be bumps along the way. It sounds like you took a step back and now you're confident again. But you've always had a great leadership team. Like what are the greatest risks from here that in 3 years, if things did play out, which, again, I think we're confident that they will. But what could surprise you over the next 3 years versus what surprised you over the past 3?

Yes. I mean I think there are kind of 2 questions in there. What was a surprise? We had a couple of things, a couple of businesses that were going to require real resets. And Burger King in the U.S. and Burger King in China are 2 pretty big ones. There is nothing else like that out there. I mean, Peter was just talking about Popeyes. Popeyes, the assets are fine and the cash flow is good.

We had one franchisee that I'm sure you saw they were in a completely different leverage situation than everybody else out there. We just -- we were in a very, very, very different place than what we had at Burger King. Getting Burger King U.S. fixed, and we are well on the way there and getting Burger King China into the hands of a committed local partner who's really excited about growing that business.

Those are really the 2 biggest things we can do. Tims, as you recall, I said then, I get questions about Tims. I don't get why people are asking questions because it's an amazing business. It has no need to be fixed. It's just going to keep improving. I think that's played out pretty much the way we saw it playing out. So look, there are always things that can happen geopolitically that are going to cause things to go off the rails a little bit, those sorts of things.

But the overall environment, employment levels are good. I mean those are the things you look for, for the health of a business. The biggest things as you look at what do you need to do to get to 5%, the 3%, we'll get the 3%. That part is not hard. The 5%, we laid out the building blocks for getting our NRG there as well and logically as we could. And we've got great visibility on -- as Josh pointed out, I mean, you've got the U.S. and Canada, you've got 10 markets in international.

You've got China, okay, you got 400 left that please believe us on international, it's a lot of markets, so we're not going to go through every one of those. Those are going to happen. I feel great about that. So what can derail it? I feel like we put the building blocks in place now that are critical and fundamental and some of those took some time, but as Peter was saying, Popeyes, that's quarters, not years, right?

Burger King was years, and it required capital and it required energy and investment from us and a lot of work with the franchisees, very, very, very different situation for us. And so we've just got to execute. We do have the right team in place. These are restaurant people up here. Everybody on this stage has well over a decade of experience in the restaurant industry, some of us many decades in the restaurant industry, and we know how to do this.

Those fundamentals are in place. And now you look at BK, I mean, we're starting to do some really cool stuff, whereas the last 3, 4 years, even before I got here, it was really foundational. That stuff takes time. But now it's getting there, and I feel like we can start doing some really great things on top of that foundation that will accelerate things.

Dave Palmer, Evercore ISI. Maybe more of a financial question, just doing the mental math about unit growth and the contribution to profit growth as a company, your 3% going to 5%. How many percentage points of operating profit comes from each of those 2? Where are we starting now? You talked about leveraging G&A. So I would assume 3% gets you more than that in terms of contribution theoretically today.

And then when I think about the mix of units, I think about 2 different things, the weighted average fee rate is going up, but some of the units are going to be added to this are going to be more like the China or Firehouse might have a lower AUV. So does this mean 2 points more profit growth is basically what I'm getting at?

Yes. I can take it and feel free to jump in, Josh. But -- so first off, as you kind of think about the build to 1,800 net new units that Josh put out there, not like a huge chunk is coming from China when you think about sort of the percentage on a total basis. If more comes, that's fantastic, right? That's a good thing. It means unit economics are working. The business is doing really well.

I think when you think about the AUVs in China, obviously, there'll be more -- a little bit more of a drag relative to the overall AUV of the system. But there's a lot of offsets in that 1,800. When you think about Axel growing with his business in Canada, right, that's well above the average. A lot of the top 10 markets that Thiago was talking about, France, for example, huge AUVs that are very accretive to it.

But the thing I think when you think about flow-through, and this is the way I think about it is the incremental cost to opening new units, I mean, the marginal margin, if you want to think about it that way, like it's basically like 100% flow-through when you think about the bottom line. And then we talked about royalty rate and kind of how that royalty rate changes over time.

When you look at where some of the growth is coming from, if you think about our average royalty rate today, the international growth actually becomes accretive. The royalty rate becomes accretive. And Mike mentioned a little bit about the dynamics there, and that's also accretive. So as you open more Firehouse units, you actually see that bring up the weighted average rate.

So I think we feel pretty good. I think you may see -- Josh had referenced, I think, in his prepared remarks around sort of the difference or sort of how system-wide sales relates to NRG plus same-store sales, you may see a little bit of divergence over time as China becomes a bigger part of the mix, but that will be more than offset by the royalty rate and the G&A discipline.

Yes. I was thinking about -- I was thinking back to your bridge where you showed there's -- when you get from 3% to 5%, there's a part of it which is BK China, which will be a little bit lower contribution per unit. But a big part of that is also things -- it's the Firehouse ramp-up. There's some Tims in there, and there's Popeyes International. And those tend to be higher contribution units. So I think those 2 things will kind of offset each other to some extent and give you a reasonable balance across the incremental growth as we ramp up restaurant growth.

I should also add, like as you think about China, right, the same-store sales, I think we're double digits through the back half of last year, right? The AUVs are coming up in that market, thanks in large part to the work that Thiago and Rafa and his team are doing that.

If I can go back -- just like, Dennis, I didn't go far enough into your question. I just want to add a little bit more to it. I had a chance to think about a little more. Maybe if I were trying to frame it to you a little bit, I think we need Axel and the Tim's team to keep doing the amazing work that they've been doing. They've been killing it and delivering great same-store sales and Axel walked through how.

The international business has already been comping over 3%. So we've got to continue that, and you heard all the fundamental reasons why Thiago thinks that will happen. I think Tom and the team have been outperforming the burger QSR industry. Now we need to get those absolute same-store sales going. And you heard about the elevation work that we're doing. That's what we're really excited about. We've been building the foundations.

Now we're going to go very front-footed, elevating the menu, and I think that's what can drive some tremendous same-store sales. Peter talked about getting Popeyes back to positive, and we talked about we think we'll do that by the back half of this year. And I think Firehouse, which has had good comps, I think can have much better. And that's -- we've got a big lineup of some cool innovations coming that Mike talked about in the chicken and the steak space in particular.

And I think if we put those things together, that's sort of your path to some really compelling same-store sales across the aggregate business.

John Ivankoe with JPMorgan. So the question is about staying ahead of the investment curve. We spent the last couple of years increasing G&A, increasing CapEx. And I'm going to ask this in the question of every company that I think I've ever heard said it was going to be capital-light. The capital intensity is always higher than what was previously guided. So the question that I'm going to ask you that I'm going to challenge you with is whether G&A 2% dollar growth per year in that $300 million out-year CapEx number, I love to talk about that out-year CapEx number is the correct number.

And $150 million, excluding Tims in Canada, Tims Canada being a contractual number, $150 million of CapEx across 4 global businesses is just not a high number. I mean you could certainly argue on a piece of paper, it's a very low number. So with $150 million over 4 businesses, are we sure that we're staying ahead of the future investment curve as we sit here today at an Analyst Day that $300 million is the right number going forward to allow you to stay competitive. In what various businesses you're spending many multiples of to make their own businesses correct. Hopefully, that question lands.

Yes, I'll take it and guys, feel free to jump in. A couple of thoughts there. I think, first off, if you kind of look at the last couple of years, which have been the most capital intensive, I think we probably -- you can probably remember since you've been covering the stock, and we've been slightly over $300 million, right? We finished kind of in the mid-$300 million, and we're at $330 million. And that's why we were making some of the biggest investments we've ever made behind Burger King Reclaim the Flame and some other things.

So I think even in those investing years, we were still kind of around that run rate that we pointed out. I will -- a couple of other thoughts is the $150 million at Tims, it's not all contractual, actually, right? A lot of that is going towards accelerating development, which we think is a really good high ROI decision to go out and accelerate development in Canada. So we are making investments there.

We're making investments across the business. And I think that $50 million bucket that we talked about, which is sort of what we have to play with as other things come up, things do come up from time to time, but I think a lot of the big opportunities have been addressed. And I think as we think long term about the business, this is a really healthy level of CapEx to support the business.

On the G&A side, I think similarly, right, you look at sort of the G&A step-up that we have had over the last 5 or 6 years, a lot of that G&A has rightfully gone into building brand and franchisee support, restaurant support. I think from a corporate perspective, we've actually been pretty disciplined. And I think you're going to continue to see that dynamic, particularly with kind of a lot of the tools that we're seeing.

Everyone in this building, right, is using AI every single day. We're seeing a lot of efficiencies come through in sort of the way we support our restaurants from this building. We don't anticipate a ton of growth as we think about this building. Any growth that does come is going to -- should come from these guys right up here.

Yes. John, the other thing I'd add on to it is you look traditionally at where restaurant companies have spent money and capital, a lot of it has also gone into technology. And we just -- we don't have to do that, right? I mean the old days, as I said, of 500 people in a room coding in Ann Arbor, those are behind us, right? We're using off-the-shelf stuff for the POS system and what we're doing with BK Assistant and Patty, and that's going to be in all of these businesses quickly.

That's very low investment stuff that has a terrific ROI on it. And so that's not going to be there. So you've got a big chunk on Tims, which has a very high ROI on it. You want us doing that. You had some catch-up on BK, right, that we had to get those assets back on track. The rest of it is kind of steady as you go. And so I'm very comfortable with it.

Jake Bartlett, Truist Securities. My question was for Tom. It was about the franchise cash flow per store and the growth to $230,000 by 2027. It seems like a pretty high CAGR from where you stand now, and that's including the beef headwind. I think it's about 11%, 12% CAGR from where you are now. And if you assume that beef is going to come down to historical levels, it's still a pretty high bar. It's about a 6% CAGR.

So the question is what that implies for maybe your expectations on the sales growth per store at Burger King. But also if there's any other profit drivers, margin drivers that you think are going to get you to that level?

Yes. I just truly believe that there are the catalysts in place that will enable us to get to $230,000 a unit. A lot of it comes from that the herd rebuilding that's going to start to occur that's -- we've seen a little bit come off in beef prices even recently. And then once again, as we continue to do that foundational work and we get that halo or that fortressing effect of all of the parts looking a lot better with the restaurants and all of the parts operating much better. That also is a catalyst for improved same-store sales and also profitability.

I think those things all coming together and plus the work that we're doing this year on the menu, this elevation campaign really make this a big news in our core menu. I mean you start to add up all those things together, and it's pretty easy to see how we get to 230 in 2027. By the way, I personally don't have any intent for us to ever go back to a 4% ad fund rate and our franchisees with the way they supported this vote agree with us that this is the right thing to do. There's a growth mindset in this business now, especially as we've watched some of our peers that's not going away. And so I think -- I know our franchisees are going to continue to support that. And there's very little in the way. There's far more upside opportunities with the things that I just went through than there are downside risks in us getting to $230,000 in 2027.

And look, I'd say broadly, Jay, there is more divergence in the performance of restaurant chains over the course of the last year or 2 than I've ever seen in my career. And there are restaurants that are leaning into growth and improving and reinvesting and they're getting results. And there are people that are on their heels and they're trying to save their way to greatness and it isn't going to work. And I'm proud of where all 5 of these businesses are because we are leaning in to generate growth, and we're seeing outperformance across these businesses. And hopefully, it's going to continue to even get stronger.

Danilo Gargiulo with Bernstein. A question for Tom. When you started at Domino's, the brand was nowhere near being #1 in the pizza category, and then it turned out to be #1. You have some proof points in France, where the brand has already almost $4 billion AUVs for Burger King. So I'm wondering over what time frame do you think it is feasible to reach the same aspiration of becoming the #1 player in the burger category in the United States? And which equities do you think you will need to lean in more in order for you to build the category further?

It takes a lot to try to triangulate when we become #1. It's the right aspirational objective for the system. And to be #1, you have to do everything better than everybody else. And you have to -- your assets need to be best-in-class and your menu needs to be best-in-class. And once again, we have not stepped into the menu to this point, even though I think, and I think many in this room believe that Burger King has a differentiated menu with flame grilling and all the things that we do to other QSR burger competitors.

We haven't brought attention to that. We're going to lean into that more, and that's going to accelerate our progress over time. And what happens to Patrick's point is I think that brands start to move very quickly in a direction as they get that inertia, and I saw it at Domino's. He led it at Domino's. He could speak to it better than I can. But just living that and watching that has me knowing in the tough times that we've been doing the right things, and it's just a matter of time.

The velocity at which it happened was remarkable and shocking. Nobody believed it when he said it. So I'm like, I believe it, and I'm going to say it, too. We are going to be the #1 burger brand. But it was shocking at Domino's how fast that actually eventually occurred. And I think I want to sit on the stage a few years from now and talk about how shocking it is the differentiate -- how fast we're moving versus our competitors.

Danilo, it's going to happen a lot faster in a number of international markets than it will happen in the U.S. I mean McDonald's is their terrific competitor. I have enormous respect for them and particularly their franchisees. I mean they do a really good job of running their restaurants. We had some foundational catching up that we needed to do in the U.S. That foundational catching up for the most part, doesn't exist in international, which is why the progress is faster.

And if you look at the growth of our Burger King business in international and in specific markets, you're going to see us competing very well with McDonald's outside of the U.S. We can't even think about how we're going to pass McDonald's in the U.S. if we've got restaurants that were built 60 years ago and have had a light refresh along the way, right? We have to get that done. We've got to be operating at a higher level.

But ultimately, how we win is with food. And we've got amazing food and ours is flame grilled and nobody in this room has ever invited a person over to your home to host them for the evening and fried a hamburger for them. You grill great hamburgers, right? And except for John Ivankoe apparently because he lives in a condo building that requires electricity not gas.

But we've got foundational work to do here. And by the way, when we set out that goal at Domino's, Pizza Hut was 50%, 60% bigger than Domino's. McDonald's is like 4x in the U.S., so maybe 5. So we've got a long way to go. The great news is just the journey of trying to get there creates a ton of shareholder value. And we do see in Thiago's world how we can compete very effectively where we've got the right operators and the right assets, beautiful restaurants. The food carries the day, but we've got to get to the point where we're executing as well in the U.S. But progress creates a ton of value for shareholders.

Sara Senatore from BofA. I have a question, actually, one for Tom and maybe one for Sami. Tom, I wanted to sort of go back to the Sizzle prototype and you're seeing, I think, $2.1 million, I think you said AUVs from that. It's a big ...

$2.2 million.

$2.2 million. Okay, even better. So that's a big difference from your average volume, I think, which is maybe closer to $1.6 million. If I think through the flow-through on that, the payback is quite good or at least kind of 4 years. Are you anticipating that maybe you'll see an acceleration in remodels based on this through franchisees? I think the extent to which you talked about you have to get to sort of a critical mass and even just from a contribution to the comp you probably need a faster rate of remodels to really see that. So does that ROI change? How you think about the pace of remodels?

Yes. A couple of things there. I think the pace of remodels is very often going to be a function of the franchise unit level P&L. And so to the extent that we have moved that in the right direction and to the extent that, that should move much quicker in the right direction this year, that will dictate an acceleration in the P&L because -- an acceleration in remodels because the conviction is there.

The conviction is there and the belief is there in our franchise system. These Sizzle remodels, which do get good flow-through and good returns that also can contribute to the capacity of the franchisee to go back and reinvest in some of the ones that needed to get work that were lower on the curve. And we have to work on cost engineering there as well. We need to remodel this entire system.

And we needed to put the money to work where it would get the greatest return first, and we've done that. And it's giving those franchisees the capacity and the ability to go back and invest in the ones that, frankly, sometimes needed it more, but didn't -- a percentage uplift there wouldn't get you as much absolute flow-through. So I think the way we've played this out is the right way. And certainly, as we move up the ARS curve, those returns continue to get better.

And then, Sami, just on the investment grade sort of targets. Why is that important? I guess, as you refranchise, you'll be very asset-light. So I guess, as I think about like kind of the optimal capital structure, it feels like you could carry more debt. Is the idea that there's maybe a halo for your franchisees and therefore, they get the benefit of that? Or maybe you could talk a little bit about that.

Sure. Sara, I'm going to stand because this stool is getting uncomfortable. So as you think about it, you're absolutely right and you're thinking about it the right way. I think this business has historically supported higher levels of leverage. We look at the balance sheet today at kind of being low 4x net leverage, and we feel very, very good about where we're at.

I think investment grade has 3 tangible benefits, which I sort of mentioned, but I'll sort of expand on. I think number one, when you just think about the size of the investment-grade market, and I think you may have seen it on a slide, it's more than 5x bigger than the high-yield market. So it is a deep market. When you think about sort of the cost of capital of the investment-grade market, I'd say today, actually, spreads in investment grade and high yield are actually tighter than they've ever been.

It's about a 50 basis point advantage today. But when you look over long periods of time, historically, the pricing benefit is actually a lot greater, like probably around 150 basis point advantage of being investment grade over long periods of time. And then you just think about kind of the duration of that debt, a good chunk of the investment-grade market has 20-plus year maturities. So there's a lot of tangible reasons to be an investment-grade company.

I think fundamentally, when we just kind of think about the business and kind of going to your question, there is an advantage of being corporate investment grade is as you think about us as a company and you think about our franchisees, who we work in close partnership with a lower cost of capital is good for everybody. It's good for systems. That is why some of the named brands, best-in-class folks who Patrick may have just referenced, they're also -- they're investment grade, and I think there is that benefit.

I think for me, as I look at it broadly, and I go back to the ownership point is we think about the business in decades. And when you think about the business in decades, I think no matter what's happening in the world, you're always good being investment grade.

It's Christine from Goldman. I want to take a step back. So one of the key constant debates, I think, is whether a multi-brand, multi-market platform can generate a meaningful synergy in development and store operations. So I think your earlier example on restaurant brand Europe was very helpful. But can you help us further bring to life with a few other examples on the key advantages of your franchisees when operating multi-brand and country combinations?

Thanks, Christina. And maybe I'll start. And Thiago, if you want to give any like of your favorite examples, please feel free to do so. When I walked through kind of the key advantages of our platform, the first one I started with was the ability to take brands global because I think that's the clearest, most valuable, most tangible one. And I think you've seen that with us where we've acquired new brands that didn't have much of a global footprint, and we've been able to take them global at scale and build really remarkable growth.

And I go back -- if I go back to Popeyes when we acquired it, I mentioned we were in 20-some-odd markets, but we were very thin in those markets. We didn't have any of the infrastructure. We didn't have really like structured or well-capitalized franchisees. So it was sort of a 300 restaurant, like pretty stagnant business that wasn't going anywhere. And I think what we were able to bring to the table is a team all around the world.

Thiago has hundreds of people stationed all over the world who have lived the restaurant business in those markets. And then we've got this network of partners who we can talk to, not just the ones we're working with, but we know everybody else in these markets. And it's allowed us to take Popeyes and our other brands around the world in ways that they would never have been able to do on their own. I think you can see it in the brands that we've acquired, but I think you could see it in other brands that like it's been very hard for anybody else to really build like a scaled global business after the first few brands built them in.

So I think it's a really unique characteristic of RBI, and it's something that allows us to create a lot of value with the brands that have joined the family. I don't know if you want to add any like any specific examples of ways we were able to do that?

Yes. I think you covered the main points. I think just to give a bit more color to the infrastructure that you said, right? So launching any of the new brands internationally requires a lot of work from our quality assurance teams or procurement teams or our few teams. It would be really hard to do that from scratch. We already have that for Burger King plus the network of vendors that we have. So -- and our few teams, they have deep understanding of their regions, which helps a lot every time we need to introduce a new brand, not only to introduce but also to navigate the different challenges that they will face because we can understand the market from different angles.

Yes. Just thinking of an example of -- if we were -- when we took Popeyes to India, that would have been an awfully challenging thing to do if you didn't already have a big international structure out in Asia. So we have folks that have worked in the India QSR market over a number of years from our Burger King experience who could go and like work with the local partner, figure out how to adapt the concept. They have an understanding of how much you need to change.

They know the whole supplier network. They know how to find local suppliers in India that can meet our criteria. We have quality assurance folks who know how that part of the world operates. They live in that market all day long. So our ability to support a local partner to launch one of these brands and then support it to become successful, and it's very hard. It takes a long amount of time. I think that's a very unique benefit of our structure.

I'd add one more thing, which is Paul Lacey Smith, who's in the back corner there. He and his team have done an amazing job of leveraging our scale across the brands for purchasing power. We buy a lot of chicken. We were serving with our great friends and partners at Coca-Cola, a lot of Coca-Cola products, but we didn't have a single contract in the U.S.

We had multiple contracts. We buy a lot of paper products. We buy -- I mean you think through our businesses, there are a lot of things that we buy that our scale is -- and leveraging that scale and the number that we put out this morning, I mean, Paul and his team have found $700 million of synergies for our franchisees, right, that's increased their cash flow by that much a year that they can then reinvest into the business. It's powerful. It's really powerful. And that team has been unleashed the last few years, and they're doing a remarkable job of creating value for our franchisees and master franchisees to give them competitive advantage where they're competing.

This is Lauren Silberman from Deutsche Bank. I wanted to ask about restaurant holdings. So 2-part question. One, you're planning to refranchise, I want to think, 500 to 700 BK units over the next couple of years. Big number. What visibility do you have into the pipeline of operators that will take over these units and the due diligence that you're doing around them to make sure they are the right operators, given how much work you've done to strengthen the system? And then the second part is Popeyes China, Firehouse Brazil. Is that -- are those businesses ready to be moved to a partner? Or is there still work to be done at the corporate level?

I can start, and then Tom, feel free to jump in. So on the first part of your question, Lauren, and thank you for the question. When you think about the amount of visibility we have into kind of refranchising pipelines, actually, that's precisely why we did pull up the time line is actually we have a ton of visibility into sort of great operators who are out there who want to acquire restaurants. Actually, I think Tom, Josh and I sit in a weekly meeting where we go through the operators. Tom meets every operator. We often sometimes meet operators as well.

So we are -- this is sort of a cadence and structure that we're looking at pretty regularly. And we have a ton of confidence because I think some of the videos showed it. Chris Johnson up there talking about how there's so much enthusiasm right now to become part of this brand who's on the precipice of doing something really, really cool in the industry.

So we feel pretty good about the pipelines. I think on the time line, and I do want to be clear about this, sort of the idea of kind of collapsing or winding down restaurant holdings out of your model that is a modeling sort of guidance type of thing. If we have a few more restaurants in sort of what were formerly Carrols restaurants, we'll pull them into the P&L. We want to make sure that the restaurants get into the hands of the right long-term local operators. That is the most important thing. We're not going to sacrifice anything on that. We want to do this once and we want to do it right. So Tom, I don't know if you...

I won't opine on Brazil, but I will say just to add to what Sami said and why you might hear a little bit more optimism on that refranchising side is where I've seen the most -- the outsized surprise for me has been on the internal people, the people that are in Burger King and in RBI that are raising their hands and saying, "Hey, I'd really love to get involved in this story." And frankly, what better testament to what we're doing than that.

These are people who see how this work goes every day. They see what this management team is focused on. They see the underlying strength of the brand starting to grow, and they want to push all their chips into the middle of the table and get involved. That creates a little bit more work for the HR team. But we got some hiring to do.

They are happy to help. I'll just add on Popeyes China. I think Firehouse Brazil is relatively smaller. Popeyes China is the bigger one of the 2. And Rafa, who's here in the room, runs our Asia Pacific business, him and his team have made a lot of progress in the last year or so since we took over Popeyes in China. Already, we're building units that are delivering good sales and much better paybacks and unit economics.

We've got much more attractive rents. So I think the stores we're opening now are much better than the ones we are opening before. And I think we've got -- we've built in some time here. 1.5 years, 2 years is an awful long time in China for us to make some more progress and then work on finding a new partner there.

Zach Fadem, Wells Fargo. I'm going to ask the GLP-1 question. Just thoughts on industry impact. Is it a drag? Is it an opportunity? And maybe talk about how each segment is positioned.

Yes, I'll start and anybody else feel free to add here. I think our point of view so far is that the adoption is not high enough. There's not enough people on it right now that we can really see it in our -- manifesting itself in our business. So hard to say that it's impacting us today, always possible that it will in the future. And the way I thought about it, at least, is we're always evolving our products. So if consumer preferences move, just like people move from -- they moved from hot coffee at Tims to cold coffee, we're always going to pay attention and figure out how we adapt. I always say -- I always like to make a plug for my favorite product, the Double Cheeseburger at Burger King. It's a very protein-forward product. So you can adjust kind of the things you focus on and the products that matter most to however consumer preferences adapt. So anybody else want to add anything there? I think Maybe less relevant to some of our businesses than others. I think like the Tims business, heavily beverage focused, probably a little bit less relevant.

We also have Timbits.

Yes. I would just put some numbers around it, right? I mean if you think about kind of collective operating income represented on this stage, you think about Tims in Canada, right, coffee, generally coffee forward occasion, generally less impacted if you look at the data and read all the reports. And you think about the international business, right, which -- where you haven't seen GLP-1 adoption really kind of take off yet. So that's like 70% of our AOI that I think is relatively well insulated. Of course, we always have to adapt and figure out the right menu options to Josh's point. But I think we feel -- it always comes back to what Josh opened with, which is the diversification, the breadth of this business is unparalleled. It's what makes us a world-class company.

I think -- you tell me if I'm wrong. I think we're going to try to wrap up Q&A. We're in the...

One more...

Okay, one more. Okay.

I'm sorry, just one more question. And then we're going to wrap up Q&A because we've got food upstairs and we don't want to get cold...

I'm going to say we're in the business of serving hot fresh food, and we do not want to do that wrong today.

Brian Mullan, Piper Sandler. Just a question about Tims in Canada. The system got back to net unit growth last year. From today's presentation, it sounds like that's going to continue. Can you just elaborate a little bit on the opportunity? Is there demand from existing franchisees? Is this about recruiting new franchisees? And then in addition to the slides, you showed some geographies where you might be underpenetrated. Anything else you'd point out that helps unlock this? Is it new formats or anything else that gives you confidence?

Very good question. Happy to go a little bit into that. So region-wise, we have less density in the West and in Quebec, for example, than we have in Ontario or the Atlantic. So that has to do a bit with our history. So founded in '64, we only really in '78 went into the western parts of the country. So we are just less dense there, and that creates a nice opportunity.

And then we like to grow with existing owners that we have in the system or second generation or restaurant managers of current restaurants. So really, a lot of people earned the right to grow in the business. And so that is a nice opportunity. And the density that we have today, you've seen on the slide earlier, CAD 10,500 per restaurant. We believe that this can be denser through different types of formats.

Our preferred format is the standard drive-thru restaurant. So this will be the majority. But then we also -- yes, like in some parts of the country, we have -- we need pressure relief valves kind of. So those will be done with smaller formats as well. And yes, it's a combination, but mostly our preferred model is the standard drive-thru, which we see quite a bit of opportunity for.

And Brian, I'd add here, right? I think the real estate model is a little bit different in Canada than it is kind of for our other home markets. So we put a lot of the capital into these. And so ultimately, we control a little bit more how -- sort of how the growth works. But ultimately, the paybacks are what drive everything, right? So the paybacks are less than 3 years for our franchisees. So as long as...

There is demand.

Exactly, there is demand. And as long as we have the right franchisee in the right area, there's opportunity.

Great. Well, thank you, everybody. I want to say one last thank you very much for joining us today. We try to do our best in this session to paint as clear of a picture as possible about what we're working on and where we think the company is going in the future. We think it's a pretty compelling vision of the future. And we all, as a team, everyone in the room and around the world are really excited to work on it.

We appreciate your feedback and your questions throughout, and we especially appreciate the support of all of our shareholders who are here and on the line. And so thank you very much for joining us. We're all going to go upstairs to the fourth floor for lunch, and we look forward to answering any other questions you have and continuing to update everyone as we progress on our plan over the coming years. Have a great day.

Good morning, and welcome to the Restaurant Brands International Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Kendall Peck, RBI's Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Restaurant Brands International's earnings call for the year and quarter ended December 31, 2025. Joining me on the call today are Restaurant Brands International's Executive Chairman, Patrick Doyle; CEO, Josh Kobza; and CFO, Sami Siddiqui. Following remarks from Josh, Sami and Patrick, we will open the call to questions.

Today's discussion may include forward-looking statements, which are subject to risks detailed in the press release issued this morning and in our SEC filings. We will also reference non-GAAP financial measures, reconciliations of which can be found in the press release and trending schedules available on our website. Please note that franchisee profitability referenced on this call is based on unaudited self-reported franchisee data. As a reminder, organic adjusted operating income growth excludes results from the Restaurant Holdings segment. In addition, on February 14, 2025, we acquired substantially all the remaining equity interest in Burger King China from our joint venture partners. Burger King China was classified as held for sale and reported as discontinued operations in our financial statements for 2025. That said, BK China KPIs continue to be included in our International segment KPIs. A breakdown of BK China's KPIs and its impact on our 2024 financial statements can be found in the trending schedules available on our website. For calendar planning purposes, our preliminary Q1 earnings call is scheduled for the morning of May 6, 2026.

And now I'll turn the call over to Josh.

Thanks, Kendall. Good morning, everyone, and thank you for joining us today. As I begin my fourth year as CEO, I want to start with a brief reflection on what worked well in 2025. When we stay focused on the basics and make the right long-term investments, results tend to follow, and this year was another example of that. Our brand delivered solid results, reinforcing the strength of our portfolio and the impact of our continued focus on delivering quality, service and convenience to guests. This year, we also took decisive action to position us well for the next phase of growth. In China, we temporarily took control of our Burger King business, built a strong local leadership team, elevated marketing, optimize the restaurant portfolio and strengthened operations, driving three consecutive quarters of positive same-store sales. Importantly, we attracted an engaged local partner, CPE, and established a strong foundation for long-term growth. At Popeyes, we took important steps to refocus the leadership team. and begin returning the brand to the level of performance we know is capable of delivering. And at Burger King in the U.S., we continue to invest in operations, marketing and modern image, while also beginning our refranchising efforts 2 years ahead of schedule.

Over the past few weeks, Tom and I spent time in the field together. Road tripping from D.C. to Philadelphia, visiting restaurants, sitting in on [ oil ] roundtables and checking in on remodeled sizzles. These restaurants are a great example of getting all of the basics right. Operations are dialed in, teams are energized and managers are focused and engaged. As a result, these stores are delivering annualized average restaurant sales of nearly $3 million, a clear tangible illustration of what strong execution looks like in practice. That same focus on the fundamentals was evident across the business in 2025. For the full year, we delivered comparable sales growth of 2.4%, net restaurant growth of 2.9% and system-wide sales growth of 5.3%. We translated those top line results into organic adjusted operating income growth of 8.3% and nominal adjusted EPS growth of over 10%. It's now our third consecutive year of delivering roughly 8% organic adjusted operating income growth, a level of consistency that remains differentiated within the industry.

I'm proud of how our teams and our franchisees showed up. Our three largest businesses, Tim Hortons, International and Burger King, all outperformed their respective categories this year. Tim Hortons Canada and International have now each delivered 19 consecutive quarters of positive comparable sales, and Burger King U.S. made visible progress executing our Claim the Flame. While 2025 represented a low point for our consolidated net restaurant growth, we believe we've turned the corner and are excited to reaccelerate growth in 2026. Stepping back, this year reinforced the resilience of our model and the progress we've made strengthening our brands. We delivered solid top line growth and on algorithm adjusted operating income growth amid a tougher consumer backdrop, strengthen the quality and durability of our earnings and exited the year ready to build on that momentum in 2026.

Lastly, I'd like to provide a quick reminder of our upcoming Investor Day on February 26. This year marks the midpoint of our long-term growth algorithm. And our Investor Day will serve as a check-in on our progress and an opportunity to address some of the biggest questions we get about the business. Tom will provide an update on our Claim the Flame and all spend time discussing our path to 5% plus net restaurant growth. Sami will walk through our plans to return to a 99% franchise business model and discuss capital allocation. And you'll hear from Patrick and our brand presidents with additional time for Q&A. As a result, today's call will largely focus on our quarter and year-end results, and we'll address most of our forward-looking plans at Investor Day. We look forward to seeing you there.

With that, let's turn to our segment highlights, starting with Tim Hortons, which represents roughly 42% of our operating profit. 2025 was another year that underscored the strength and durability of Tim Hortons. We started the year amid macro uncertainty and weaker consumer sentiment in Canada. Yet Tim's delivered solid performance by staying focused on executing against the basics and delivering great experiences for our guests. That consistency carried through the fourth quarter, with comparable sales in Canada growing 2.8%, outperforming the broader Canadian QSR industry by nearly two points. Brand health continues to be a key advantage with Tim's leading in affordability, trust and relevance with guests. That connection to the communities we serve was evident during our holiday smile cookie campaign, which raised approximately CAD 13 million across Canada and the U.S. for local charities and our Tims Foundation camps. During the quarter, we kept a disciplined balance between innovation and core offerings. Breakfast food sales grew 3.5%, supported by innovation like our 100% Canadian freshly cracked scrambled eggs alongside strength in our core, such as our Farmers Wrap. Baked goods grew 2%, driven by seasonal offerings like the Biscoff Boston Cream Donut and Croissant. In the PM daypart, Main Foods grew modestly, supported by our holiday meal offering. PM remains an important long-term opportunity for the brand, and we continue to refine the menu, value platforms and execution to drive growth. Q4 beverage sales grew 3.2% year-over-year, with strong guest response to seasonal offerings like our Biscoff and brown sugar beverages. Cold beverages remained a standout, growing 8.6% despite colder-than-usual temperatures in December and reaching nearly 27% of total beverage sales in Q4, the highest fourth quarter mix on record. This growth was largely driven by our ICE Despresso-based beverages platform, including Iced Chai Lattes and Protein Lattes. We also began rolling out our new espresso machines to support improved quality and consistency for this growing category. Tim's ongoing industry outperformance wouldn't be possible without Axel and his team's constant focus on delivering a great guest experience. Speed of service improved across dayparts in 2025 and guest satisfaction reached record levels, including in the PM.

Digital engagement also continued to build with digital ordering and payments reaching all-time highs in Q4 and kiosks expanding to over 800 restaurants. We're excited to give guests even more reasons to engage with Tims and accelerate loyalty adoption through the launch of our partnership with Canadian Tire later this year. On development, Tim Hortons returned to net restaurant growth in Canada for the first time since 2021. As expected, growth this year was measured and targeted focused on suburban developments, capacity-constrained markets and urban densification. This represents a positive step forward for the system. And with a strong pipeline, we're confident in our ability to accelerate development again in 2026. Meanwhile, in the U.S., TI'm sorry delivered its highest level of new restaurant openings in the past decade, reflecting continued progress in both existing and new markets like Florida and Virginia.

Lastly, I'd like to touch on franchisee profitability in 2025. In Canada, Tim Hortons delivered solid top line sales performance, which helped offset headwinds from tariffs and increased operating commodity costs, including coffee. While cost pressures impacted P&Ls, average four-wall EBITDA proved resilient at approximately CAD 295,000. This underscores the strength of the Tim Hortons business and the durability of its franchisee economics. Overall, the fourth quarter capped another year of steady performance for Tim Hortons, supported by strong brand fundamentals, delicious menu innovation and consistent execution. That foundation positions the business well as we move into 2026.

Turning now to International, which drives about 27% of our operating profit. 2025 was a standout year for this business. Across a diverse set of markets, our teams and franchisees executed a balanced operational and marketing playbook that led to another year of double-digit system-wide sales growth. While International is often viewed as a unit growth story, it's worth filing that this segment has also delivered strong comps and double-digit system-wide sales growth for years with a mid-single-digit average royalty rate that flows efficiently to AOI. For the full year, comparable sales grew 4.9%, including 6.1% in the fourth quarter, and net restaurant growth was 4.9%, driving system-wide sales growth of nearly 11%. Performance was strong across several of our largest markets, reflecting the quality of our brands and the effectiveness of our local strategies.

In France, Burger King delivered another strong quarter, led by the Duomi Stairbox, where guests receive a surprise dual for EUR 5 and our Stranger Things activation. In Australia, the launch of Jack'd Up sodas, which is Hungry Jack's stake on dirty sodas, helped drive record beverage incidents. And in Brazil, our King and Duplo platform continued to resonate by delivering compelling core value. Q4 was also an important quarter for Burger King China with comparable sales growing 9.2%, driven by improvements in restaurant fundamentals, growth in delivery and refreshed marketing. Most importantly, during the quarter, we announced a joint venture with CPE, an experienced Chinese investment firm with a proven track record of scaling consumer brands in China, under which CPE would take majority ownership of the business. The transaction closed on January 30th, and CPG injected $350 million of primary capital to fund growth.

Together, we share an ambition to roughly double Burger King China's restaurant footprint to at least 2,500 units by 2030. I couldn't be more excited to welcome CPE to the RBI family, and I'm looking forward to sharing more about their vision for Burger King in China at our upcoming Investor Day. We also made progress at Popeyes China, opening 55 net new restaurants in 2025 as we continue to build brand awareness. With a clear path to accelerate development in 2026, we remain focused on scaling this business thoughtfully and look forward to eventually getting it into the hands of a long-term local operator. Reflecting on 2025, International stands out as one of our strongest growth engines and a clear competitive advantage. We've now built five $1 billion businesses in Burger King, Spain, Germany, Australia, Brazil and the U.K. along with a $2 billion business in Burger King France. We're also seeing consistent success in markets just outside our top 10 that we don't always highlight like Burger King Japan, where we've beaten the industry for 11 straight quarters, delivering 22% same-store sales in 2025 on top of 19% same-store sales in 2024 and adding 84 net new restaurants this year, or Popeyes Turkey, which more than doubled its store count in the last 4 years, ending 2025 with nearly 500 restaurants. In addition, we're scaling newer markets like Popeyes in the U.K. or Tim Hortons in Mexico, where we crossed $200 million and $100 million in system-wide sales, respectively, as brand awareness and market adoption continue to build. While these markets are diverse, they're winning by executing the same fundamentals, locally relevant marketing, disciplined development and consistent operations, all managed by strong local operators. These fundamentals give me confidence that International is well positioned to deliver durable growth in 2026 and beyond.

Turning now to Burger King, which represents roughly 18% of our operating profit. U.S. comparable sales grew 1.6% for the full year, including 2.6% in the fourth quarter. We have now outperformed the burger QSR industry in 9 out of the last 12 quarters, demonstrating how Claim the Flame is strengthening the brand and its relative value proposition for guests. Marketing and menu innovation played an important role during the quarter. In December, we launched the SpongeBob SquarePants menu, featuring the Krabby Whopper with an iconic square yellow bun alongside with cheesy bacon tots. Bacon tots, a Starberry Store Cake Fi and a frozen pineapple float. The activation drove strong guest engagement and broad families back into our restaurants, with kids meals reaching their highest incidence level in the last 10 years. This is an exciting proof point as we think about the potential of our family business.

Importantly, we were able to retain traffic after the promotion ended with new SpongeBob guests coming back to Burger King in January. This innovation was supported by our consistent value platform, $5 Duos and $7 Trios, which remained on the menu all year. Duos and Trios continue to perform well by offering guest choice, price certainty and consistency. In a year when there was significant noise across the industry around value, this dependable platform allowed us to focus on our marketing behind wafer-led innovation and family partnerships that attracted new guests to the brand. Looking ahead, we'll continue executing this balanced strategy. But that sales momentum only translates into the same traffic when it's supported by solid operations. Throughout the year, the team remained focused on improving execution. Tom and his team are completing their fourth annual royal roundtables, bringing together every restaurant manager in the country to sharpen operational focus across the system. We see the impact of consistent operations. Speed and service quality reflected clearly in the performance of our A operators, who outperformed the system average profitability by nearly $50,000 in 2025. In addition to improving operations, we remain dedicated to modernizing the asset base, and ended 2025 at 58% modern image, up from 51% in 2024. While we previously discussed reaching 85% modern image in 2028, the current cost environment is influencing the pace of remodel activity. And as a result, it will take a bit longer to reach that level. This doesn't change our strategy or the role of remodels and Reclaim the Flame. Remodels continue to deliver compelling uplifts and the team's net of control, reinforcing our confidence in the program, and we will continue to make steady progress alongside our franchisees. We also continue to modernize Carrols, completing roughly 60 remodels in 2025, including 54 sizzles. Comparable sales grew by 2.4% in Q4, slightly behind the rest of the system as Carrols Restaurants were more heavily impacted by weather, given their geographic concentration in the Northeast.

Finally, franchisee profitability was about $185,000 in 2025, down from about $205,000 in 2024. This was driven primarily by beef costs, which Sami will discuss shortly. While 2025 was a step back, we're well ahead of where we were just a few years ago. Fundamentals continue to strengthen, and we're confident profitability will expand as beef costs normalize. Overall, I'm encouraged by the progress Tom and team made in 2025. Burger King executed compelling marketing, offered consistent value, improved operations and continue to make progress on modern image, helping the brand once again outperform the burger QSR industry and reinforcing my confidence in the brand's trajectory as macro pressures ease. I'm excited for you to hear from Tom directly on February 26 about how we plan to further elevate the brand moving forward.

Now turning to Popeyes, where net restaurant growth of 1.6% was more than offset by comparable sales down 3.2% for the year, resulting in system-wide sales growth of negative 0.7%. As a result of softer sales this year, franchise profitability declined roughly $235,000, which remains a healthy level, but one we are focused on improving. Our performance this year reinforces a clear reality. While the chicken category remains competitive, Popeye's biggest opportunity is improving restaurant level execution and reengaging with our core guests. We know Popeyes is capable of much more, and we're taking decisive action to put the brand back on the right path, while supporting our franchisees to deliver stronger results at the restaurant level. In November, we announced that Peter Perdue, former COO of Burger King in the U.S. would step into the role of President of Popeyes U.S. and Canada. Peter has a clear mandate to raise operational consistency, and he's moving quickly, resetting his leadership team and engaging with our franchisees. At its core, the Chicken business is a service business, and winning requires consistent speed, accuracy and reliability in every restaurant every day. To support that, we're expanding field engagement and providing targeted support to our lowest performing restaurants. We've increased our field operations team by approximately 75%, launching in-restaurant coaching visits and are hosting our first-ever restaurant general manager experienced rallies across the U.S. this spring. Alongside operations, we're also sharpening our core product focus, prioritizing offerings that define Popeyes and resonate with both new and legacy guests, including our incredible hand battered and fried bone-in chicken tenders and sandwich. I'm excited for Peter to share more detail at our upcoming Investor Day. In the meantime, I want to reiterate my confidence in the underlying strength of the Popeyes brand. We have a great group of engaged franchisees, a relatively modern asset base, solid unit economics and some of the best chicken in the industry. With disciplined execution and sustained focus, I'm very confident Popeyes will return to the level of performance it's capable of delivering.

Finally, Firehouse Subs had a solid year with comparable sales up 1.1%, including 2.1% in the fourth quarter and net restaurant growth of 7.7%, driving 8.6% system-wide sales growth. As a result of this growth, franchisee profitability grew to over $100,000. Importantly, Mike and the team opened 104 net new restaurants across the U.S. and Canada and accelerated net restaurant growth from approximately 6% in 2024 to 8% in 2025, led by Canada. In fact, Firehouse was one of the fastest-growing QSRs in Canada in 2025. I'm excited about the growing momentum of this brand, and I'm looking forward to even more success in 2026.

With that, I'll hand it over to Sami.

Thanks, Josh, and good morning, everyone. 2025 was a year of execution-driven performance, which translated into solid top line results 8% organic AOI growth and double-digit adjusted EPS growth, with performance improving as we went through the year. We also took important steps to simplify the business and strengthen our foundation for future growth. announcing a new partner for Burger King China, beginning refranchising at Burger King U.S. ahead of schedule and maintaining disciplined investment behind the initiatives that matter most for long-term value creation. As we exit 2025, the fundamentals of our business are stronger. Our portfolio is more focused, and we have improved visibility into earnings and cash flow growth, all of which give me confidence in our ability to build on this momentum in 2026. Today, I'll focus on our full year 2025 financial results, and I'll touch on a few modeling related items for 2026. As Josh mentioned, the bulk of our forward-looking commentary will be reserved for our Investor Day on February 26.

Now on to our results, beginning with our financials. For the full year, we delivered comparable sales growth of 2.4%, net restaurant growth of 2.9% and system-wide sales growth of 5.3%. We translated that to organic AOI growth of 8.3% and nominal adjusted EPS growth of 10.7%. Compared to our long-term algorithm, comparable sales came in modestly below target, though we continue to outperform the industry. Meanwhile, net restaurant growth of 2.9% was roughly in line with our full year guidance. Importantly, we believe 2025 represents a low point for NRG. And from here, we expect to ramp back towards 5% unit growth by the end of our algorithm period. In 2026, we expect to see modestly positive NRG from Burger King China following our portfolio cleanup and the transition of the business to our new local partner, CPE. For reference, returning Burger King China to neutral NRG would imply a positive impact of 70 basis points on our consolidated 2025 unit growth. We look forward to providing more color on our future development outlook during our Investor Day.

We continue to translate system-wide sales growth into even stronger earnings growth, delivering our third consecutive year of roughly 8% organic AOI growth. There were some specific puts and takes in 2025 that I'll walk you through now, all of which we've discussed on our prior calls. First, we lapped over the roughly $60 million BK Fuel the Flame ad fund contribution. In 2025, those expenses moved over to the P&Ls of our franchisees and our company restaurants, which was a tailwind to our organic AOI growth. Second, moving the other direction. We did not recognize revenue from Burger King China in 2025 as we recorded results from the business in discontinued operations. As a result, the International segment saw a $37 million revenue headwind in 2025. Of course, we expect these results to phase back into our P&L prospectively, which I'll touch on shortly. Third, segment G&A stepped down by $38 million year-over-year in 2025. This reduction was primarily driven by lower stock-based compensation and headcount efficiencies identified during the first half of the year, in addition to continued cost discipline. We believe our business is at a healthy level of G&A, which will grow modestly with inflation over time. And last, net bad debt expense totaled $21 million, modestly lower than $24 million in 2024. Together, these factors enabled us to translate 5.3% system-wide sales growth to organic AOI growth of 8.3%.

Now turning to EPS. For the full year, adjusted EPS grew 10.7% to $3.69 per share. EPS growth was driven by our AOI growth as well as a $43 million year-over-year decrease in adjusted net interest expense, reflecting the benefits of our 2024 refinancing activities and our cross-currency swaps. Our adjusted effective tax rate was 18.6%, in line with our guidance and our expectations for 2026.

Now turning to cash flow and capital allocation. We generated nearly $1.6 billion of free cash flow this year, including the impact of $365 million of CapEx and cash inducement and $138 million cash benefit from our swaps and hedges. We also returned $1.1 billion of capital to shareholders this year through our dividend. For 2026, we are increasing our dividend target by roughly 5% to $2.60 per share, marking the 14th consecutive year of dividend growth. We ended the year with total liquidity of approximately $2.4 billion, including $1.2 billion of cash and a net leverage ratio of 4.2x, successfully meeting our low 4x net leverage target for 2025. In line with our priority to return to a more simplified business model, we plan to refranchise 50 to 100 Burger King restaurants in 2025, and I'm pleased to say we slightly exceeded that guidance.

Now before shifting to 2026 financial guidance, I'd like to touch on two additional modeling items, Burger King China and beef costs. As a reminder, throughout 2025, Burger King China was classified as held for sale, and its results were reported under discontinued operations and excluded from our International segment P&L. Following the close of our joint venture transaction with CPE, royalties from Burger King China are once again being recognized in our International segment P&L. For reference, in 2024, we recognized $32 million in royalty revenues from Burger King China at a full royalty rate. In 2026, the royalty rate will begin a couple of points below our standard 5% rate for traditional Burger King international locations and will ramp to 5% over time.

Next, I'd like to discuss beef costs. Burger King U.S. approximately 7% commodity inflation in 2025, largely due to beef, which increased over 20% for the full year. This drove the year-over-year decrease in average four-wall profitability, which would have been roughly flat year-over-year if beef prices stayed around where they were in 2024. As previously discussed, we believe these pressures are cyclical as the increase is largely tied to U.S. herd rebuilding coupled with tariff impacts and upstream labor shortages. Importantly, the key to reaccelerating franchisee profitability growth will come from driving strong top line results, and we continue to work closely with our franchisees to drive improvements in areas that are under our control.

Now finally, I'd like to discuss our 2026 financial guidance. Most importantly, in 2026, we're committed to delivering a fourth consecutive year of on-algorithm 8% AOI growth. This is supported by a strong top line and continued flow-through to earnings. A couple of points to note. First, we expect segment G&A, excluding restaurant holdings, of about $600 million to $620 million, representing modest inflation relative to $594 million in 2025. Second, we expect net adjusted interest expense to stay approximately flat year-over-year in the $500 million to $520 million range based on a mid-3% sulfur rate, which flows through to approximately 15% of our debt. Third, we expect 2026 CapEx and cash inducements, including capital expenditures tenant inducement and incentives to be around $400 million compared to $365 million in 2025. This increase is primarily driven by higher CapEx associated with Tim Hortons development and renovations as well as acceleration in Carrols remodels. Fourth, we expect Tim Hortons supply chain margins to be roughly in line with 2025 levels. From a seasonal perspective, we expect Q1 margins to be the softest of the year more or less in line with Q4 of 2025. And last, there are a couple of things to keep in mind for restaurant holdings, which, as a reminder, is not included and not included in our AOI algorithm guidance. BK Carrols Restaurant level margins will continue to be impacted by commodity inflation, primarily related to elevated beef costs. For 2025, BK Carrols full year restaurant level margin was 11.1%, and we expect similar full year margins in 2026. For 2021, we expect total RH AOI of roughly $10 million to $20 million with favorability in beef cost bringing us towards the higher end of that range. The expected year-over-year decline in RH AOI reflects the impact of Carrols Restaurant refranchising and incremental investments in our international start-up businesses Popeyes China and Firehouse Brazil that we expect to continue until we transition ownership to new local partners.

To wrap up, stepping back 2025 demonstrated the strength and resilience of our business model and the benefits of the strategic investments we've been making over the past several years. We spent much of the year talking about how our business was at peak complexity. And I'm pleased to say that we are entering 2026 with a simpler, more focused portfolio and improved visibility into future earnings. That positions us well as we move into the next phase of growth and work to deliver another year of 8% organic AOI growth in 2026.

With that, I'll turn it over to Patrick.

Thanks, Sami. 2025 was my third full year at RBI. And I'd like take step back and talk about what this year taught us about the health of our business and the progress we've made strengthening it. 2025 was a demanding year for restaurant operators. The consumer was under pressure, costs were elevated and macro and geopolitical uncertainty weighed on confidence across many of our markets. Taken together, it was the kind of environment served as a pretty good test of the fundamentals of a restaurant business. In that context, our performance demonstrated that the underlying fundamentals of our portfolio are not only resilient, but improving with our brands continuing to strengthen their competitive positions despite a challenging backdrop. Of course, the most important metric we look at is franchisee profitability. While profitability was pressured in parts of the system in 2025, a closer look tells an important story about the strength of our portfolio. At Tim Hortons, despite elevated coffee costs and tariff-related headwinds that weighed on consumer confidence in the first half of the year, average four-wall EBITDA held at around CAD 295,000. While we're always striving to drive growth in franchisee profitability, we believe this is a healthy outcome given the context and reflects the consistency of Tim Hortons business, strength of its restaurant owners, and benefits from its continued outperformance versus the broader QSR industry over the course of the year. And while we don't report franchisee profitability at International, given its scale and structure, it's fair to say that with mid-single-digit comparable sales growth and net restaurant growth of 7%, excluding BK China, our International franchisees are doing quite well overall and continue to see attractive economics. At Burger King, we faced a meaningful headwind this year from over 20% inflation in beef our largest commodity, which caused franchisee profitability to step back year-over-year. But what's important to me is what didn't happen. Even in an environment with a lot of value noise, we didn't need to rely on deep discounting to drive top line results. The core business continued to improve and the systems showed far more resilience than it would have four years ago before Tom and the team launched Reclaim the Flame. The investments we and our franchisees have made in operations, marketing and modern image have fundamentally strengthened the system, and that showed up clearly this year. There's absolutely still work to do. But relative to much of the burger QSR category, I think it's fair to say that our franchisees are feeling pretty good about where they stand and our ability to grow from here. We've also been disciplined about growth in capital. In a year like this, the wrong response is to push development or investment faster than the economic support. Instead, we've prioritized protecting franchisee balance sheets, pacing remodels thoughtfully and placing restaurants in the hands of operators who can execute at a high level. simplifying the business and moving toward a more purely franchised model are part of that same mindset. At Popeyes, we also saw a step back in unit economics year-over-year, and this is a different situation. We've been very upfront that sales are not where they should be, and you saw us make leadership changes in 2025 and earlier this year as a result. I'm confident that the steps we're taking particularly the renewed focus on operations, consistency and brand standards will translate into better performance over time. Average profitability of roughly $235,000 is not where the system can or should be, but Popeyes has a strong franchisee base and there is real engagement and momentum around the changes Peter and the team are leading.

And lastly, at Firehouse, we saw average profitability grow to about $100,000, reflecting the steady progress Mike and the team are making despite some lingering category headwinds. Given Firehouse's lower-cost in-line build model, that level of profitability supports attractive paybacks on new openings and positions the brand well to continue accelerating unit growth. I mentioned earlier that a year like this can serve as a real test of a restaurant business. And when I look at how we performed, I think our overall grade is pretty strong. We outperformed the industry across our three largest businesses, included by 2 points at Tim's Canada and 3 points at Burger King U.S. Tim Hortons Canada and International each extended their multiyear streaks of positive quarterly comparable sales. And our teams delivered over 8% organic adjusted operating income growth and double-digit EPS growth for shareholders. That marks the third year in a row of roughly 8% organic adjusted operating income growth. That is the type of consistency we want to continue to deliver moving forward. This combination of industry outperformance, margin discipline and earnings growth doesn't happen by accident. It reflects improving fundamentals, strong execution and real partnership across the system. I'm proud of what our teams and franchisees delivered this year, and I feel good about the progress we've made strengthening this business for the long term.

With that, I'll turn it over to the operator for questions.

[Operator Instructions] And our first question will come from Danilo Gargiulo from Bernstein.

Well, it's very encouraging to see solid sales momentum in U.S. and Canada in the quarter despite the tough backdrop we are describing. I'm wondering if you can maybe talk about how you're thinking about the comparable sales evolution and trajectory in 2026, which ankle point may provide upside gains for importance and Burger King. And specifically to Tim Hortons, you seem to have a cheap result with the beverages with the PM food growing a little bit more modestly. So what's the next evolution to drive greater PM expansion.

Ganilo, thanks for the question. I think in terms of the same-store sales, I agree it was a very good year, and I think a positive Q4. And I think that sets us up well as we step into 2026. I think importantly, because the reason that we were achieving those same-store sales is we're delivering on the fundamentals across all of the businesses. So I think that's a great setup. And I think our expectation is for a similar consumer environment in 2026 to 2025, and we'll keep focusing on building on those basis. The one thing I would call out so far in 2026, that sure anybody in Toronto or New York is aware of is that it's been a bit of a tough weather environment so far in 2026. So I think that's an important to flag. That should normalize as we get out of the next couple of months, and we look forward to building back another great year. In terms of the Tim same-store sales, I think you characterized well. I think we made a ton of progress across cold beverages. It was a big highlight throughout the year. And as I mentioned in the prepared remarks, even in Q4, which is not traditionally the strongest time of the year for cold beverages. We had our highest incidence ever, which tells you we're really building a better portfolio of offerings, and we're building new habits with our guests. So that's something we're very mindful of. And I think you'll see us bring even more exciting innovation. I think you'll see that cold bed mix keep taking higher as we move through the year. In terms of PM Foods, I do think we've made good progress there. We've expanded the portfolio and introduced some really great offerings, and we're going to build on that in 2026. We've got a whole calendar planned up of initiatives that build upon what we did in 2025. But I think brings some exciting additional innovations that will help us to build that habit with PM Food. I think we've always viewed our efforts to move into the PM as a long-term initiative, something that will take a lot of years. That's a big new front to open up for a concept that historically was really focused in the morning and that kind of 6 a.m. to 10 a.m. windows. So that kind of shift. It will take a number of years to build those habits to build those product portfolios. I think we're well on the way to doing that, and we're making good progress, not just on the product portfolio, also in operations and make sure that we're delivering the same great experience through lunch in the afternoon that we deliver in that morning day part. Axel and the team have been really focused on that. I think that as much as the product innovations are going to be critical to making Tim's a destination for folks in the PM. I think we're going to make some more progress on that in 2026 and also in the years beyond.

The next question comes from Brian Bittner from Oppenheimer.

Congratulations on a strong 2025. The important international segment really seems to be hitting on all cylinders recently, over 6% comps in the fourth quarter in the face of much stiffer compared Burger King and Popeyes seem to be the standouts in international. And I know the segment covers a lot of geographies, and you touched on a few in your prepared remarks. But generally speaking, can you just unpack for us how much of this momentum internationally is being driven by a healthier backdrop that you're operating in versus perhaps share gains that you're taking, or what you're doing from a bottom-up perspective at Burger King and Popeyes.

Thanks, Brian. I think it's a bit of all of the above. I'll walk through a few pieces. I think the backdrop has been decent in a lot of our markets, especially the European and Asia Pacific markets. And I think our brands benefit from a few different structural tailwinds in those markets broadly. We've talked about it a lot, but just there's a -- I think there's a lot of structural growth in those markets. As you have more folks moving into the workforce, you have more folks getting into the middle class. You have more formalization of the restaurant segment in a lot of those markets, especially in places -- I think of places like India where we're very early in what I think will be a long road of growth for decades to come. So I think you've got a really supportive structural market. And within that, our brands are also well positioned. We've got modern assets. We're new in those markets. The brands are more aspirational. We are highly digitally enabled. And we have really great operations that are led by wonderful local partners in each of those markets. So I think brands are just well positioned broadly across the International segment, and that's a big part of how you consistently drive same-store sales. And as you mentioned, I think same-store sales that have exceeded many of our competitors in a lot of those markets. If you look across the regions, I would tell you, EMEA, in particular, has shown consistent strength across a lot of our biggest markets. So that's been a consistent tailwind for us. And then in Asia Pacific, things have really gotten a lot better over the last year or so. Obviously, we've talked a lot about China, where we went from negative same-store sales to meaningful positive same-store sales. So that was a very intentional set of steps we took that moved a big market there. But I also mentioned markets like Japan that aren't historically huge growth markets for folks. We're doing double-digit comps on top of double-digit comps and growing the restaurant base there. We've got a lot of markets in Asia Pacific that are really performing well over the last year or so. I think our team has been doing a really nice job out there. And some of that's allowed us to outperform the competition.

This is Patrick, I would add just one other thing to kind of highlight in calendar year '23, our system sales for Popeyes outside of the U.S. were $927 million. Last year, they were $1.7 billion, we did $0.5 billion in the fourth quarter. So we're already at a run rate of $2 billion. It is a stunningly great business outside the U.S. and really excited about what we're going to be able to get done with Popeyes brand.

And I'll just add just a couple more on some of these international markets that are doing well. I think if you see our business in a place like France, it's really fantastic. We have wonderful locations, beautiful new assets, highly digital. The product quality is great. Axel and the team are truly passionate about the product quality. And that's why we've driven tremendous growth there. And I can go to the other side of the world and go to Japan. And I'll tell you, if you're in Tokyo, I think you'll have one of the best wafers you're going to eat anywhere in the world. And so these markets are really doing a great job at the fundamentals, and that translates to a great business model as well, which is driving growth. So lots of good reasons that the international business is doing well.

The next question comes from David Palmer from EFCO ISI.

I wanted just to follow up on Brian's question about sort of walking around the world here. And I think a lot of us really know the U.S. market in terms of the fast food consumer and the fast food market trends here in the U.S. know them less well in Canada, less well in Europe, it feels like Europe in general, and I'm really focusing on this developed market side of things in this question. It feels like Europe is remarkably strong when it comes to fast food, particularly you contrast it with some of the CPG commentary that we get in the consumer staples world with regards to European consumer, and then you -- it looks like you're gaining share in a lot of these markets. So maybe just kind of sort of summarize contrast, what you're seeing in the U.S. It feels like canvas may be a little weaker, maybe more like the U.S. And just how you think about the setups for key markets and help us get comfortable with that the strength can continue in markets like Europe.

Dave, thanks for the question. So if you -- I'll maybe comment on both the EMEA markets and particularly Western Europe and a little bit on Canada as well. So if you look across the big Western European markets, so places like France, Spain, Germany, Great Britain, every one of those markets was positive low to mid-single digits. So we had a lot of consistency of positive performance across those markets. And I think that's what you see in the results. We also within EMEA, I mentioned this about Popeyes having a fantastic year in Turkey. Burger King in Turkey also was a standout performer. So a lot of unit growth and tremendous same-store sales growth. So we had a really good year across the board in Turkey. So I think it's that consistency across all of the biggest markets within EMEA they almost across the board had a positive year and quarter that's driving the results that you see. And then if you go to Canada, I think with around 3% same-store sales in the quarter, that's a pretty good result, I think, for a pretty developed business in a mature market. And I think importantly, within those results, we saw positive sales growth across all dayparts and all categories of the menu. So it was pretty broad-based. And I think that illustrates a pretty healthy business across the board.

Next question comes from Dennis Geiger of UBS.

I wanted to ask a little bit more about BK US given the continued industry outperformance in the quarter and your execution against plans despite the difficult environment. Anything more at a high level to talk about as it relates to opportunities for growth and share gains in '26. And perhaps any thoughts you can share kind of on franchisee sentiment right now and if that's got any implications for your confidence in the Carrols Restaurant refranchising trajectory that you're thinking about?

Good morning, Dennis. I would tell you, I'm really proud of the work that Tom, Niko, Joel, the whole BK U.S. team are doing. It's been 3 or 4 years of working on the fundamentals, improving operations we've come so far improving the franchisee base, remodeling restaurants, they've been doing all the basics and I think for us, it was really interesting to watch what we did with SpongeBob in the fourth quarter. And I think Joel and the marketing team did such a nice job on all of the elements of that, the IP, the products that they develop, the packaging, and then we executed it well at the restaurant. And I think really, it was great work but it delivered great results because of all the underlying work that we've done in the business. And it really told us that I think we're ready to take this business to the next level and really elevate the brand based on the work that we've done in the fundamentals, and I mentioned it in the prepared remarks, but we saw both a lot of new folks coming into the restaurant, and then we saw them come back, and that tells me they had a good experience and they really enjoyed what they saw. They were surprised by the Burger King that they found the changes that we've made. And I think that's what we're so excited about as we go into is we think we've got the fundamentals to a place where we can now get really on our front foot and go bring a lot of new folks on the restaurant, people who love whoppers, bring families back. I think it really opens up the doors for us. And I think our franchisees feel that. They've seen that improved -- they've seen those improved fundamentals they've seen us doing a nice job on the marketing side. I think they're pretty excited about the direction that we're planning to go in the coming year.

Sami, do you want to touch on the refranchisee?

Yes, I can take that. Good morning, Dennis, and actually, similar to what Josh was touching on, I think you see that excitement in sort of the calendar and innovation. You see that translate into excitement around refranchising. When we first spoke about the Carrols transaction, we talked about refranchising really beginning in earnest in years 3 through 7. We started actually refranchising much ahead of schedule in year 1. We said we would do about 50 to 100 refranchise restaurants in the first year, and we exceeded that. We actually did over -- a little bit over 100. So I think that reflects a lot of the interesting excitement from local owner operators and investing in the Burger King brand. to step back, and we've talked about this a lot on previous calls is the most critical thing is that we get the restaurants in the right hand, the hands of local owner operators are going to be aligned to driving great guest experiences. And we're seeing that in all of our conversations, and we look forward to actually accelerating that number here in 2026.

I'll actually add one thing, which is the partnership with the franchisees is working because they know that we are focused on their success. We've been doing that now for a number of years. And they're seeing that what we have said we're going to do, we've done. And the remodels are generating a good lift in sales for them, as we've been talking about for a couple of years. but we still have a lot more to do, which will continue to drive sales as we get more done. The service improvements that they're driving in their restaurants are giving guests a better experience which means we're seeing things like Josh talked about, we do Spongebob and not only does that increase sales, but we see increased retention of those customers who've tried us because of it. because they had a good experience driven by our operators, driven by our franchisees and in our Carrols Restaurants. You see our improved marketing working and the focus that we're putting in there. So I can look at the glass half full, which is the things we've been doing are what have been driving the results that we're seeing in BK. And I can look at the glass half empty, which is we've still got so much more to do, and we know exactly what we need to do and what we're going to be doing over the course of the next couple of years. And that's what gives me confidence that we're going to continue to generate good growth and hopefully outperform the category. And all of that being done with just consistent value that our customers can count on. We don't have to play around with a bunch of price points. We know what works, and we're doing that consistently. And their ability to count on that is a real value for our guests.

The next question comes from John Ivankoe from JPMorgan.

The question is on Popeyes U.S., and if I were to go back in the street, you launched an incredible sandwich line in August of '19, I do use the internet to check that. In 2019, fried chicken is a great category. I mean there are so many different people that want to be in the category and quite frankly, have been successful in the category, and yet your results have really slowed down in the past six quarters, including some fairly low numbers in the fourth quarter of 25%. So I would want to go a couple of places. So what do we kind of learn from the experience in the last couple of years, for example, what could you have done differently? In other words, what will you do differently to allow success? And then really, I guess, maybe the bigger part of the question is large franchisee, the clear bankruptcy in the Popeyes system and looking at the comps, looking at that franchisee, are we kind of at the point at this point where we should stop thinking about new unit expansion and perhaps you even consider contraction until we get the franchise system and just the brand and the operating platform in the right place to where it can materially grow again because I'm sure me like many others, had unit growth expectations for that brand '26, '27, '28 for the Popeyes U.S. business. And hopefully, you absorbed that question.

Thanks, John. I'll try to get through as much of that as I can and feel free to add...

It's a big topic to address regardless. So thanks for that.

For sure. So just to start off, I agree with you. I think the chicken category is amazing. It's a great category to be in, and I think we have a wonderful brand, both for the U.S. and around the world. That's it, as you pointed out, we've had weaker performance than we'd like over the last few quarters, and that's why you saw us make a change in leadership. And I think Peter is exactly the right person for what we need to do. And I'm super confident in both what he's already starting to do and where he wants to take the brand. If I would break down the learnings into two simple buckets that shape what we're going to be focused on One is making more progress on the consistency of operations. The leading players in the category, on average, have very good operations. And we need to make more progress on that front. Peter's background is in operations, and that is exactly where what -- where he knows how to make progress. So I'm very confident of what we're going to do there. And then I think on the marketing and product side, we spent more time in categories that were a bit more noncore over the last year, 1.5 years. And I think we're going to bring that focus back to the core. We're going to bring it back to the things that made Popeyes great our hand battered and fried bone and chicken tenders and our sandwich. So we're going to narrow the focus a little bit that I think is going to help us to bring back our core customers and to execute at a much higher level. So you'll hear more from Peter directly here at our Investor Day on February 26. I encourage you to kind of hear from directly because I think it's very compelling. But I'd give you that outline of overall where he'll generally be focused. In terms of your question on the franchisee situation, obviously, we did have a filing from one of the large franchisees. I would tell you that the rest of that franchise system across the U.S. is actually in a quite healthy place. Leverage levels are in a healthy place, even though EBITDA stepped back a little bit. So I don't think that's at all representative of the rest of the system. And as a result of that, while NRG has stepped back already. I think we'll continue to see growth in the Popeyes U.S. business over the next couple of years. Just one last stepping back comment. I think -- and John, you kind of pointed out at the beginning, in terms of stepping back and looking at the history, we acquired this business about 9 years ago. It has been a tremendous one. It's had a little bit of some ups and down on the way, but it's really been great, both in the U.S. around the world. If you actually go back to when we got involved in the business in 2016, what created that opportunity was a bit of a hole in the business at that time. And that created an opportunity to acquire a brand in one of the most attractive, if not the most attractive segments in the entire world. And after that point in time, we managed to produce an incredible 9-year growth. I think we've tripled or quadrupled that business. And I hope we'll do that again now under Peter's leadership.

The next question comes from Brian Mullan from Piper Sandler.

Just a question on Tims in Canada. I wanted to ask about speed of service. I believe that's been a tailwind for some time now. I'm just wondering if you still see opportunity to continue to improve from here? And then separately, can you just talk about the loyalty program, your efforts -- talk about your efforts to continue to grow membership in that program, which we know it's important. It correlates with exitation and spend.

Brian, I'll take both parts of that question. So on speed of service, we've mentioned, I think repeatedly over the last few quarters or years, we have made good progress there. I think Axel and Naira and the team are doing a very nice job. We are awfully fast in the morning. The car is just flat to that drive through sometimes every 20 seconds, which is remarkable. So it's pretty impressive, that we continue to make progress there. And we'll continue to seek to do so. There are a couple of things that we're doing there that help -- one of the big ones is actually the remodels. So I think we mentioned we've been ramping up the pace of remodels. And one of the big things that we do in those remodels is rework the back of house in a way that accommodates some of the new things that come in the restaurants think about cold beverages, allow us to enhance the speed of service in the morning. The other prong I would say there that's really important is our speed of service in the PM. And that's where historically we haven't been as fast as the AM side of the business. And I think that will be a place where we can make maybe even more progress than we can in the AM over the next couple of years. In terms of the loyalty program, we have made a lot of progress. We've got that up to about 1/3 of the business. And we'll continue to push adoption through everything from some of the events that we put out there, the things like roll up the rim where we can drive more digital engagement. But there's a new direction we're going with that as well, which I mentioned in my prepared remarks, which is partnerships. And we announced recently that we're going to do a loyalty partnership with Canadian Tire. We think it's a really obvious and very logical partnership in the brand. Two of the most in retailers in Canada coming together to tie together their loyalty programs. We think that brings even another compelling reason for Tim Hortons guests to become part of our loyalty program. And we'll see how that goes. We're quite excited for it, but the -- it opens a lot of doors to further places we could take that loyalty program to cause even more a higher percentage of our guests to want to engage ditto our digital channel with us in the future.

And Brian, I'll just -- I'll add a couple of hats here on the loyalty program just because really incredible stats. What we're seeing is about 33% of sales came from loyalty members in 2025, which is incredibly strong 7 million active members, and our active members are spending more than 50% of sort of post joining versus pre-joining and they visit more often than nonmembers. So a lot of good things to highlight in the program, and Josh brought up strategic partnerships that we think will further drive that business. And we also think that member-only offers through the app and the loyalty program are also going to help drive more penetration. So we're really pleased about the future of the loyalty program, and I think it's just the beginning.

The next question comes from Andrew Charles at TD Cowen.

Okay. Great. You talked about your confidence in achieving 8% AOI growth in 2026. And I know you're saving the forward-looking commentary for the Investor Day. But the release reiterated a 3% plus system same-store sales as part of the long Jamalco. So I'm wondering about confidence this level can be achieved in '26, and what you described as a similar consumer backdrop domestically is '25 maybe certainly, is your belief in 8% AOI growth in '26 commission on reaching 3% same-store sales?

Andrew, I'll take that question, and Josh, feel free to chime in here. I think, look, first off, we are very pleased to have delivered 3 consecutive years of roughly 8% AOI growth and are excited, I think, to work again towards that target in 2026. Typically, kind of as we think about budgeting for the year and our targets for the year, we do target around that 3% same-store sales level, which is kind of consistent with our algorithm. I think as we think about sort of that 3% comp and the unit growth kind of building towards system-wide sales. Obviously, the unit growth was a little bit lighter in 2025, though, I think that still sets a strong backdrop for system-wide sales, rough math, if you're assuming around a 3% comp and just the math of it of 3 or kind of around that unit growth from 2.9% unit growth from 2025, that equates to a top line of around 6% system-wide sales. And then I think there's a couple of other puts and takes that kind of bridge to that 8% AOI growth. I think we've done a really good job on the G&A side. We've done a fantastic job in terms of kind of adding discipline and really setting a new baseline for the business at $594 million of G&A in 2025. We expect that to grow slower than the top line. So you'll see operating leverage through the P&L from that. And then you'll also see the Burger King China royalties come into the P&L in '26 at a couple of points lower than our standard rate, but still kind of coming back into the P&L. When you take all of that together, I think that gives us confidence around the 8% organic AOI growth for a fourth consecutive year.

The next question comes from Christine Cho of Goldman Sachs.

I really appreciate the color on beef prices as well as the impact on franchisee profitability at Burger King. And you've mentioned that you expect improvement as these costs normalize. But Beyond that, are there any organic cost efficiencies or margin opportunities you've identified across the P&L that helped strengthen the four-wall economics as we look into 2026.

Christine, I can take that question. I think, look, the beauty of being a multi-branded organization and having having the scale and the size and scale we have all over the world is we're able to share best practices all of our sort of partners around the world and ultimately drive franchisee profitability. And there's a variety of things that we're working on when you think about from procurement and our global procurement scale to thinking about digital contracts to thinking about just thinking about operational efficiencies like to share those best practices across our brands. And ultimately, that's kind of what helps drive franchisee profitability, whether it's at Burger King U.S. or Tims in Canada. I would say, particularly on the beef prices. Obviously, we've seen beef prices be at record highs over the last year or so. And any of those levels have sustained, this is very regular and kind of normal in the market. And I think it has -- if you look at the beef market over many decades, the herd rebuilding cycles are a very common sort of pattern in this industry. We anticipate there will be relief at some point, though, I think likely, if there is relief on that side of things, it's likely closer to the second half of the year on beef in particular. So -- but look, I think stepping back, as you think about franchisee profitability, it was down year-on-year for the Burger King system, though I think we see when you normalize for those beef prices, actually roughly flat to even slightly positive year-on-year when you kind of incorporate the step to back fund contribution as well.

The only other thing I would add, Sami, is the best possible way for us to grow the franchise profitability of Burger King is through growing sales in a profitable manner. I think that is what's front and center with Tom and the franchisees. How do we do a great job growing the area of this business in a profitable way. And I think the stuff that we're focused on, things like making the walker as amazing it can be and bring families back in the restaurant with awesome IPE partnerships. Those are great and that they bring more guests in the restaurant, they drive more sales, and it's very -- it's profitable traffic for the franchisees. So I think the sales -- we're always looking at cost opportunities, but I think the sales part is just as we're more important.

Our final question today comes from Brian Harbour at Morgan Stanley.

I'm curious where new unit paybacks are. I guess I'll focus my question on North America for sort of the unit growth brands. Do you think those are where they should be? How do you think it compares to some peer concepts? Or what else do you think you need to drive those besides obviously driving AUVs like you just mentioned?

Yes. Brian, I can take that one and Josh can jump in as appropriate. I think as we think about, obviously, new unit paybacks are very tied to the franchisee profitability metrics that we disclose. And when we think about new unit paybacks, I think it's also important to think about who's developing. And so really critical to across all our brands is that we are developing with strong operators, a operators. And if you actually look at a operator profitability we typically are disclosing averages, but the operator profitability is typically much higher than that. So when you're -- when we're looking at new unit paybacks and the investment case for building units, particularly in the home market, you see actually pretty compelling paybacks across the operators. I'd say some of the most compelling, if you kind of tick through the brands, certainly continue to be at Tim Hortons in Canada at around $300,000 and four-wall profitability and often with the corporate contribution towards real estate. When you think about the paybacks, the franchisees typically are looking at investing in FF&E equipment packages and with us sitting on the head lease that typically creates very strong paybacks on the order of like three years in Canada. When you kind of come to the U.S., and I'll tick through actually what was nice to see as the fastest-growing U.S. brand being Firehouse. When you think about the Firehouse paybacks, that's a totally different development model. It's an in-line development model. It's very scalable. And the increases in profitability, combined with some of the great work that Mike and the team are doing, that's also leading to around 3-ish year paybacks on new 3- to 3.5-year paybacks on new Firehouse units. And so the two faster growing in our home markets are very strong payback. At Burger King, as we've talked about extensively now, we have a little bit of work to do on the profitability side. Josh said it best when the best thing we can do is drive sales and drive top line to improve those ROIs, but we do still have a lot of our franchisees who are developing those operators are seeing compelling returns with their higher average profitability. And I would say the same thing on Popeyes as well. Our A average -- our A operator profitability at Popeyes is still close to $300,000 of four-walls. So when you think about paybacks they are still quite strong.

I will now hand the call back to Josh for any closing comments.

Great. Well, thank you, everyone, for joining us today. And importantly, thank you very much to our teams all around the world and our franchisees for a great year in 2025. We look forward to seeing many of you on the call here in Miami in two weeks, and we'd all a great day. Thank you very much.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Good morning, everyone, and thank you for joining us, both in the room and on the webcast. My name is Jeff Bernstein, and I'm the restaurant and foodservice distribution analyst here at Barclays. I want to welcome all to day 2 of our 11th Annual Eat, Sleep, Play, Shop Conference. Just for background, we're excited to have 12 restaurant and food service distribution companies here with us in New York. Yesterday, we had Bloomin', First Watch and Kura Sushi. Today, we have Restaurant Brands actually sitting up here with next to me, along with Cheesecake Factory, Dine Brands and Texas Roadhouse. And tomorrow, we have Shake Shack, Brinker, Wendy's, McDonald's and Performance Food Group. So we hope you find the conference a good use of time. And hopefully, we'll get a chance to chat in the halls between meetings. But at this point, I'd like to introduce our first presenting company, which is Restaurant Brands International. With me on stage from Miami, Florida, we have Josh Kobza, CEO; and Sami Siddiqui, CFO.

By way of background, for those not familiar, Restaurant Brands is a multinational quick service portfolio comprised of 4 well-known brands: Tim Hortons, Burger King, Popeyes and Firehouse Subs. Their longer-term algorithm calls for annual 8% plus system sales growth that's supported by both positive 3% or so comp growth and over time, 5% or so net unit growth. The latter will likely benefit from recent news of a JV partnership with CPE, which is a new Burger King master franchisee in China, which we look forward to talking about this morning. But we want to thank Restaurant Brands very much for joining us this morning, Josh and Sami for joining me on stage. I've got a number of questions that I will pose, but then I will definitely stop and pause and see if there's any questions from the audience. But with that said, I look forward to our discussion.

Thank you.

So I thought I'd just start bigger picture on the QSR segment, which you guys are quite familiar with, and that is your ticker. So you're very well versed. I'm just wondering if you could talk just high level for an audience that is more consumer broadly focused. How do you describe the health of the consumer across different groups you guys tend to focus -- or quick service often focuses more on younger guests, more on lower income households. Those are areas that investors have heard recently have been a little bit more challenged in terms of lower income and younger. Wondering what you see in terms of spending patterns, whether there's anything you can make us aware of as you think about those cohorts within your industry?

Yes, Jeff, I'll take this one to start, and good morning, everybody. Thanks for taking the time. Maybe I'll talk about the couple of different geographies and mention a couple of the points that you raised. I think first off, our biggest business is in Canada. So I'll mention a little bit what's been going on up there. And you've obviously seen our performance in Canada has been quite good this year. I think the consumer environment has been a bit softer, but kind of stable. I think you would see consumer confidence that it's kind of taken a couple of dips, especially when you have moments of kind of Canadian and U.S. relations that get more tense, but it's come back a little bit from there.

And unemployment has been a little bit elevated, though in the most recent reading that I saw, it actually started to get a little bit better. So I'd say a little bit of a mixed environment. And in that context, we've been outperforming and happy to get into later kind of what some of the reasons are for that. Within the U.S. consumer, so that affects about 30% of our business, primarily the Burger King, Popeyes and Firehouse U.S. businesses. I think we've seen pretty consistent dynamics throughout the year, and you hinted at a couple of points. We have seen the lower-end consumer be a little bit softer. That's been pretty persistent throughout this year. And we've seen a little bit more strength in the middle and upper tiers.

We haven't seen as much of the dynamics you mentioned of kind of the younger generation being weaker. At least that hasn't been the case in our business. That may be due to some of the stuff that we're focused on and what that's doing to -- or how that's appealing to those cohorts. And then in our international business, that's always harder to characterize because it's so many geographies and so many dynamics. But I think as everyone's noted, that business is actually doing really well and it improved throughout the year. So we've seen some really good pockets of strength across our international business. So hopefully, that gives some sense of what's going on in a few of the different geographies around the world.

Right. And that's kind of a tie-in to that, there's lots of talk of the battle that food away from home or restaurants has to deal with versus food at home. And obviously, that's your biggest competitor presumably. And many have talked about restaurants, have taken a lot of price, and therefore, some consumers are feeling pinched and are doing more food at home. Just wondering how you think about restaurant positioning in an environment where there is perhaps that trade-off and how you best position yourselves to battle food at home.

Yes. I think we always have to be mindful of pricing, I think, in any environment. And you do see a little bit of that dynamic where the lower income consumers, if they're a little bit pressured, they're going to be definitely paying attention to where they're spending their money. And I think across our businesses, we've been pretty prudent about pricing. Our Tim's business provides incredible value for money. Just to give a couple of data points on that, I think for those folks who don't spend as much time in Canada. For a medium cold brew, we're about USD 2 for that product. And for breakfast sandwich, we're about USD 3. So the value for money that we provide in Tim's is really incredible. And across our U.S. businesses, we try to be prudent on pricing and also provide consistent value.

So if you look at our Burger King business in the U.S., we've been providing the $5 Duos and $7 Trios throughout the year. It also ties in with, I think, Burger King's positioning. We let our guests have it their way. So they can -- they know they've got that dependable price point, but they can kind of mix and match and pick and choose. And I think that's appealing to folks. And I think the value positions of those 2 businesses are one part of what's allowed us to perform pretty well despite a reasonably tough environment this year.

I should just mention for the audience, I mean, Restaurant Brands is a primarily franchise business. So while we talk a lot about menu pricing, franchisees make their own pricing decisions. So having franchisees who are disciplined and doing the right thing around pricing goes a long way. Just curious in terms of -- you meet with a lot of investors, each management team will tell me, you know what, there's something that just investors don't fully appreciate or misunderstand about our business. I'm wondering what question or questions you get that maybe surprises you more than most or maybe a question you don't get that you think why wouldn't people want to know about this?

I can take that one. And actually, before I answer the question, we want to answer all your questions actually at an upcoming Investor Day. So I want to announce an Investor Day that we're going to be doing in late February '26, Q1 -- kind of post Q1 earnings. It will be in Miami at our headquarters. and we're hoping everyone can join us. We thought it's been a couple of years since we did an Investor Day, and it's a good excuse for people in New York to come down to sunny Miami in the winter. So we hope everyone can join us. We'll be sending invites out in the next couple of weeks. But to that point and to your question, I think I speak with a lot of investors, Josh and I both do.

And I think often, I'm surprised that the conversation sometimes is a little bit myopically focused on our U.S. business and doesn't spend as much time talking about our non-U.S. businesses. And of course, we love Burger King U.S. We are incredibly excited about the progress that Tom and team are making there. But at the end of the day, it's also 17% of our AOI. And our non-Canadian -- our non-U.S. business, our Canada business and our international business are about 70% of our AOI. So -- and they are both incredible businesses have been performing consistently well. Both of them actually, coincidentally, 18 consecutive quarters of positive same-store sales in both of those businesses. I think if you look at kind of the international business, it's really a function of amazing partners.

We have amazing partners in 200 brand market combinations all around the world. It is the biggest driver of our growth as you think about aggregate, whether it's system sales or AOI, that business has consistently been producing results. And then -- and I would add still a lot of white space, right? A lot of untapped potential with Burger King, which is the most developed of the international brands. But one that I'm particularly excited about is Popeyes. Popeyes, as we enter new markets around the world, really just doing incredibly well, which we can talk about more later on. And then the other big kind of non-U.S. business and actually the biggest business is the Canadian business, the Tim's Canada business.

And that has just been -- it's just been sort of strength on top of strength, right? Also 18 consecutive quarters of positive same-store sales. Josh was talking about the value for money consistently positioned at the top on value for money. And we are just getting stronger. We're continuing to grow share in all the categories that we already lead in. So whether that's breakfast food, hot brewed coffee, baked goods, and we're entering new spaces like PM Foods, cold beverage, we're not quite the leader yet, but we continue to grow in that space, too. So those businesses are -- I guess we like to love all of our children equally, but I would say we love getting asked questions about our international and Canadian businesses.

I think I'm probably at fault for that as well because it's so easy to talk about the U.S. We got one country with 50 states, whereas asking you about other 100 countries, I'm sure it's for everybody. But one last just broader consumer question just because we get it a lot, and I'm not sure how relevant it is for your segment. But GLP-1s have gotten a lot of attention a couple of years ago. Things kind of faded a little bit, but it does feel like it's getting a lot more attention.

It seems like maybe medications are becoming more affordable, covered by insurance, easier to swallow, pun intended versus shots. It just seems like there's a lot of positives there, and maybe this is a formidable challenge for the restaurant industry, but whether or not it's quick service versus casual dining or maybe it's just too small. I'm just wondering data you've seen or any thoughts around GLP-1s impact on the restaurant business.

Yes. So I think at this point, it's only sort of, I think, mid-single digits usage right now. It's hard to say that that's a big factor in what's going on today. I think we are certainly mindful of what could happen over time. And I think it's something to keep an eye on as to your point, if you get broader access or different delivery methods, lessening of side effects and such. I think it's something we should keep an eye on. But I would say, as you look at our business, it's probably only most relevant to a relatively small piece of that business. And I think the Tim's business being focused on coffee in Canada, probably a little bit less relevant and same thing for our international markets. So probably more of something to be mindful of in the U.S.

And I think there are some things that we have in the back of our minds that we could focus on people, for example, get more focused on proteins. We have some pretty protein-forward brands, and you might see us focus on things like our Double Cheeseburger. We actually just started putting more weight on it. Just coincidentally happens to be my favorite product on the menu, and has been since I was a kid. But it's 2 flame-grilled patties, pretty great beef-to-bun ratio, no middle bun stuck in there or anything. And that's a wonderful product. And I think some of those things can really appeal to folks who are looking for more protein-forward options. And so I think that's maybe a direction that we could go to the extent we see consumers wanting to go in that direction.

Being that we're only 28 days away from 2026, I'm just wondering, as you look ahead to the next 12 months, 2025 has been an interesting year. What are you most excited about for your portfolio as we think about the next 12 months?

Yes, I can take that one. I think it's going to sound a little bit boring as we're excited about being, I think, boring and continuing to execute on the plan that you've heard us talk about now for a couple of years. I think we're seeing tremendous progress. And I think the theme of 2026 is going to be around simplifying the business. I think over the last couple of years, we've talked about really addressing some of the biggest opportunities in our system, whether that's the $700 million commitment to Reclaim the Flame in the Burger King U.S. business, the $1 billion acquisition of Carrols, the acquisition of Burger King China earlier this year. I think we've made a lot of important and needed investments in the business, 2026 and actually even in 2025 has now been about simplifying and getting a little bit of that complexity out of the business.

And I think the best and most significant example of that is Burger King China. We acquired the business in February of this year. I'm losing track of time, but it was February of this business, and we just announced the sale and the injection of $350 million of fresh primary capital into the Burger King China business just a few weeks ago. And so we actually got that transaction done far ahead of schedule. And I think that was one of the biggest steps we could take to simplifying our story. At the end of the day, our goal is to be predominantly asset-light, predominantly franchised, almost fully franchised business. And I think owning restaurants in China wasn't part of the long-term plan. And I think bringing in a partner who could run those restaurants, be in the market and invest a lot of capital was part of the plan. And that's exactly what we did.

You're going to continue in '26 to see us simplify. I think probably one of the biggest steps in that simplification is the refranchising of the Carrols restaurants. Initially, when we acquired Carrols, we had said that we would start refranchising basically in years 3 to 7 we're already -- we're just a little over a year into the deal. We're already refranchising restaurants. So we will refranchise 50 to 100 restaurants this year in 2025, and we expect that number to grow in 2026. So I think you will see a lot of conversation from us in 2026 around simplification of the business model and a return to kind of this asset-light fully franchised, predominantly franchised business.

I think that will be very well received by investors who have always thought of you as a very asset-light model, but no, thank you for that. Investors tend to spend most of their time focused on day-to-day comp trends. Not that that's the primary driver of your top line. We'll get to the unit growth side of things. But just to address the same-store sales growth, your biggest brands, Tim Hortons, Burger King, relatively strong trends of late in the environment that investors have been more cautious. I'm wondering if you can maybe weave what you think has been the -- or maybe prioritize the drivers of success in this difficult environment and your confidence in being able to sustain that as we look to 2026, whether it's value or premium or obviously, it's a barbell of all these things. But just how you think about what's been the greatest driver of your success there?

Yes. So for Tim's in Canada, first of all, the comps have been pretty remarkable, I think, over the last couple of quarters. A few drivers in my mind. One, I do think that value for money positioning, less kind of discounting or any specific promotion, but just the everyday value positioning, I think, has been really important to their performance. And that comes through, as I think Sami mentioned earlier, we're #1 in value for money with customers in Canada, best rated and have been for a while. I think that's really important in this environment. But on top of that, we've been successful in the innovation that we're doing. We talked -- I can't remember how many years ago that we were going to move into cold bev and PM food. We've been saying the same thing for years, and we've been building out really successful platforms there.

We talked about over the summer, how some of our iced drinks and ice espresso-based drinks were really successful. So I think the innovation process has been really good there, and we've got a lot more to come over the next few years. So I think that's been helpful. And also just getting the rest of the basics right, like we're improving operations, we're remodeling restaurants. Those are the kind of things that quietly give you sustained momentum. So I think that's it in Tim's. Burger King, I also think in the U.S. did a nice job sticking to the plan throughout what was, I would say, a challenging year for the broader sector. I think I set up at one of these conferences almost a year ago and kind of laid out the 3 parts of their plan.

They're going to have consistent everyday value promotions, and we had our $5 Duos and $7 Trios. We were going to focus on the Whopper, and you saw -- you heard a lot about the Whopper. You've heard about the Whopper by you that we've done. So we've done a lot of different iterations of focusing on the Whopper. And we've done some pretty impactful family activations. We've made a big focus to bring families back into the restaurants. And you saw a number of ways that we activated that. Those tend to be some of the best moments for our business.

We actually launched our most recent one yesterday with SpongeBob, which we're super excited about. We think we have a -- one, it's a wonderful property. It's a great property that fits well with Burger King. But I think also our culinary team did a really nice job with some very unique, distinctive and compelling products that I hope everybody gets a chance to go out and try.

I would just say having seen that SpongeBob promotion yesterday, just knowing what it does for adults with children and the children when you can touch multiple generations, I think it -- and we've seen other brands who have touched on SpongeBob, but it is a very powerful platform.

I think you hit the nail on the head. I mean there are a lot of wonderful things about that property. But one of them is that it appeals across so many different age profiles, and it can bring in the whole family or individuals in all kinds of different generations. And I think that's one of the great things about it.

I'm looking forward to that one. Tim's Canada, you touched on it earlier. I think because many of us -- many of your investors are U.S.-based, it doesn't garner as much attention. Meanwhile, if you go up into Canada, it should garner a lot of attention. Just wondering the positioning that Tim Hortons has versus your peers, the health of the franchisees, I mean, we often see numbers that just show very, very healthy franchisees in Canada from a financial perspective. So just maybe what's the most exciting thing going on with Tim's front and back of the house that keeps you excited going into next year?

Yes. As you said, Jeff, it gets a lot of attention up in Canada for a good reason. It is the #1 most loved brand in Canada. And as I said, it's #1 in value for money, too. So it's incredible. But there are so many other things that are great about it. We're #1 in convenience. We have the most stores with about 4,000 restaurants up in Canada. So we're the most convenient concept up there. We have an incredible franchisee base. They live in their communities, on average, run about 4 stores. So they're in their stores every day. And it's a very profitable business model with good unit economics, really good paybacks. We're very responsible with the leverage that's put on that business. So yes, franchisees that are in a place to invest and reinvest in the business, and we keep the assets really fresh.

So I think across all the things that make a restaurant business great, this one is really at the top of the heap. And that's why we love that business so much, and we think it's such a great business. I would say on top of that, Axel and the team have done a good -- a really nice job over the last, I think, now 6 years. So we've had a lot of consistency up there, both of leadership and of the plan. And it's one of many great things about Axel is he's all about executing against the plan. He's way into the details and focused on making sure we do everything really well. So they've been focused on the same stuff.

They've been focused on growing in cold bev and PM Food, as I mentioned earlier. They've been focused on improving operations, which we've consistently moved in the right direction. And they've been focused on keeping the assets fresh. We remodeled the assets every 10 years and keep them in nice shape. And now more recently, we started growing the number of restaurants again. So I think as we've talked about, we'll get back to growing the restaurant count this year, making Tim's even more convenient than it already is, which we're excited for. So those are some of the things that I think are going well, but it is a tremendously good business.

Right. And thinking -- obviously, that is international for us in the U.S. But as we think about the rest of international, like you said, that's perhaps underappreciated. So I was hoping maybe you could just share what couple of examples of maybe what's been your strongest markets. And maybe I'm sure there are some markets where you say, this has proven a little bit more challenging. So I'm just wondering if you can shine a light on a couple of the biggest, strongest markets and maybe a market where you've learned things that maybe hasn't been as strong.

Yes, absolutely. I think -- so for context, our international business today, it's about 30% of our operating income. We're in -- as I said earlier, we're in 200 different brand country combinations. So it is hard to kind of paint it with one brush often, which is why I think sometimes doesn't get the appreciation it deserves. But 18 consecutive quarters of positive same-store sales is the growth engine. I think as you think about sort of the business top to bottom, we have built actually in the last 10 to 15 years, really, we've built multiple billion-dollar revenue businesses. And actually, France is a $2 billion revenue business, which we entered about a decade ago.

So if you kind of think about the biggest markets, I would say the top 10 international markets represent a little bit over 50% of the sales for the business. So France being the largest. But then we have several billion-dollar revenue businesses, a couple kind of including Burger King Germany, including Burger King Australia, Burger King Spain. Burger King Brazil is, I think, almost there, just a touch light of $1 billion. But we've built these businesses really most of the growth coming in the last decade. And so I think we're really excited not only about the businesses we've built, but the really cool thing about these businesses is there's still tons of untapped potential. In most of these markets, we are not the market leader yet. And then there's a whole kind of -- I almost call it a second line of businesses like you think about Burger King India, you think about Burger King Japan, Burger King Korea, places where we are still growing and growing very fast, and they represent massive market opportunities.

So that's kind of the Burger King side of the international business. It is the vast majority of the earnings today. But Popeyes, as we've -- we're now in about 40-plus markets with Popeyes around the world, which is a significant acceleration since we bought the business in 2017. We've seen incredible results really when we launched Popeyes in markets like China or Mexico or the U.K. And the U.K. is a great example. Just a few years ago, we had no Popeyes in the U.K. Now we have 100 Popeyes in the U.K. and some of the best unit economics over $3 million top line boxes, some of the best unit economics that you'll see anywhere in the world.

So I think really critical when we talk about the international business as we talk about the paybacks of some of these markets because ultimately, the paybacks on those units is what drives acceleration in growth. And we're really pleased with the paybacks we're seeing with Popeyes. And just scratching the surface, I have to mention is Firehouse. I think Firehouse, as we think about the global subs category, it is still an underpenetrated kind of category in a lot of the markets we're entering. And typically, there's really only one major Western competitor. And so we view that as opportunity for Firehouse, too, as we accelerate Firehouse in into new markets.

And 5 years from now, what market do you think will you look back to today and say it was tiny and then it will be something huge in 5 years? Are there markets that are really still ramping in very early days?

Yes. Look, the natural answer to that one is China, just not because we've just -- we haven't built the business to be as large as some of our competitors have. And I think we took the right steps on China. So I will be very pleased if China is a much more meaningful contributor. But hand-in-hand with that, I think, is India. I think India, we have a pretty big business with Burger King, about 600 restaurants now with Burger King. Popeyes is still small and Tim's is still small in India. But I think as you see -- as you think about the demographic trends in India, we could see that business being much larger over time, too. So I know I -- those aren't very original answers, but kind of the truth, I think those are big market opportunities.

Right. And I'd be remiss if we didn't touch on the CPE partnership because everyone does talk a lot about China. You did a full evaluation of your China business. You said you owned it from February until just a few weeks ago. So can you just maybe just talk about your confidence in your new partner that you found the right partner? Maybe any recent fundamental trends or any economics you can share on that business because, again, most companies do talk about how China is the biggest opportunity. And hopefully, this is your partner for decades to come.

Yes. I would frame the outcome that we got to with our BK China business and having CPE as a partner and all is probably the best possible outcome we could have imagined when we undertook taking on that business in February. Our teams did a really nice job turning around the direction of the business. And we went from negative same-store sales to, I think we mentioned we were plus 10% in the last quarter. So they really changed the direction, the trajectory, built a local team which will continue under CPE. So I think we did a really nice job during the time that we owned it, and that set us up to run a really great process and find an amazing partner like CPE. They're one of the most experienced local operating and investment groups that's in China.

They were a spinout a while back from CITIC, if you've heard of that group. But they have a ton of experience, have done a lot of different deals, including in consumer retail. They've been invested in businesses like Pop Mart, if you've heard of the Labubu dolls -- and another business called [indiscernible], but they've done dozens of different investments there. So really knowledgeable about how to operate in China and what can work with Chinese consumers. I'd say we're -- they're even better because they're partnering with Johnson Huang, who's going to be our Chairman as an operating partner for CPE. Johnson previously ran KFC in China, which is a tremendous business, and he's a wonderful person. I think it's going to be a fantastic fit. We've loved working with him so far.

He also previously worked with Danny, who's our CEO. So they had already worked together. And so I think that sets us up for a wonderful working relationship. And I think both Johnson and the CPE team have a ton of conviction about where we want to go. You can probably see that in both the capital that they committed and the ambitious plans to roll out restaurants. They're putting in USD 350 million day 1. I think that is, for sure, the biggest primary capital investment to any of our master franchises in the history of our company by more than a factor of 2.

And I think one of the biggest investments that anybody has made in an international master franchise of a Western brand. Plus, I think there are reasonable commercial terms under the contract where we'll give a couple of points of discounts in some of the early years. but we do eventually get up to our standard 5% royalty rates in the market. So I think for me, the combination of all that, it gives us tremendous confidence in where the BK business can go in China. And I think like I said, I think that was the best possible outcome that we could have anticipated when we took on the business in February.

That starts at roughly a 3% royalty. And then as the business progresses and they achieve certain targets, that goes up.

Directionally.

Directionally. Yes, which brings me to kind of unit growth, which a lot of large cap multinational businesses like yourselves, it seems like a lot of people have circled around this 5% is a great net unit growth number. And I know that is your kind of longer-term target, but there's been some challenges of late, certain markets or brands as we just talked about, brand markets, I should say. Your confidence in reaccelerating towards that 5%. I believe you have said by 2028, you expect to be at that 5% -- but directionally '26 versus '25, I mean, should we just assume with China and other markets that we're going to see steady increases getting back towards 5%? Or is that not the right way to think about it?

Sorry, one thing on China that was relevant and then you can take -- I would say in terms of the -- what we're doing in China pertains to that question, you can see in our disclosures that we have been cleaning up the store base over the course of this year before we brought on a new partner. So you can see what the closure impact is on this year. And with the new partner and kind of plans that we have there, we'd expect to be modestly positive at least in 2026 in China. So that plays into the rest of Sami's, I think...

Yes. That's a very -- that's an important sort of building block to, I think, what we view as kind of the path to 5%. And so I think we've been pretty clear that 2025 has been a little bit of a reset year from an NRG perspective. We still kind of expect to come in around this plus or minus 3% unit growth for 2025. I think as you look forward, and we are, as you said, still confident in our ability to hit 5% plus unit growth by the end of the algorithm period, which is 2028. I think in between, we think 2026 will accelerate kind of off that low point of kind of plus or minus 3%. And a big driver of that is what Josh just pointed out. I think going from some of the cleanup that we've been doing at Burger King China to modestly positive net restaurant growth in China, that swing factor will help accelerate the unit growth ultimately, and I think sort of paves the way to ultimately that 5% over time.

I think there are other drivers here, right? We talked about some of the biggest markets in international in one of the previous questions. But I think there's a lot of markets that still have a ton of untapped potential on the Burger King side. We talked about China, we talked about India. But even you look at markets like Japan, where we're comping 20% same-store sales right now and the paybacks are between 3- or 4-year paybacks on new units. that's a good reason to build and build faster. You think about other -- Turkey is a really good example. We're actually the market leader there, and we're continuing to grow at a really strong pace there with our partner there. So there -- I can go through a long laundry list of international markets, but we're feeling really good about kind of the trajectory of that business.

And then as you actually think about the home markets, we're excited about the home markets, too. Josh mentioned earlier that Tim's Canada is going to return to modestly positive unit growth this year actually, and we're excited about that. And the one that we don't talk a ton about, but is Firehouse. And as you look at Firehouse in North America, actually, in the most recent quarter, we hit 100 net new units on an LTM basis with Firehouse. So 100 net new units opened in the last 4 quarters. And if you think about the pace of growth of when we just acquired that business just a few years ago, that's like 3 to 4x the pace that we were at before. So there are meaningful contributors in our home markets, too. I think the market -- the one sort of brand country combination, I'd say where we are very focused and it's probably stepped down growth a little bit is Popeyes in the U.S. I think that's been a deliberate focus for us as we are very focused on getting operations right and growing with the right [audio gap]

Good morning, and welcome to the Restaurant Brands International Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kendall Peck, RBI's Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Restaurant Brands International's earnings call for the third quarter ended September 30, 2025. Joining me on the call today are Restaurant Brands International's Executive Chairman, Patrick Doyle; CEO, Josh Kobza; and CFO, Sami Siddiqui. Following remarks from Josh, Sami and Patrick, we will open the call to questions.

Today's discussion may include forward-looking statements, which are subject to risks detailed in the press release issued this morning and in our SEC filings. We will also reference non-GAAP financial measures, reconciliations of which can be found in the press release and trending schedules available on our Investor Relations website. As a reminder, organic adjusted operating income growth excludes results from the Restaurant Holdings segment. In addition, on February 14, 2025, we acquired substantially all the remaining equity interest in Burger King China from our joint venture partners.

BK China has been classified as held for sale and reported as discontinued operations in our financial statements, as we are actively working to identify a new controlling shareholder. That said, BK China's KPIs continue to be included in our International segment KPIs. A breakdown of BK China's KPIs and its impact on our 2024 financial statements can be found in the trending schedules available on our website. For calendar planning purposes, our preliminary Q4 earnings call is scheduled for the morning of February 12, 2026.

And now I'll turn the call over to Josh.

Thanks, Kendall, and good morning, everyone. Thank you for joining us. Q3 was a strong quarter for us. In a tougher consumer environment, our teams and franchisees once again delivered results that set us apart. Comparable sales were up 4%. Net restaurant growth was 2.8% and system-wide sales grew 6.9%. Combined with disciplined cost management across the business, this top line performance drove 8.8% organic adjusted operating income growth and double-digit nominal EPS growth.

These results demonstrate that our strategy is working, fueling continued momentum through the strength of our brands, the dedication of our teams and franchisees and the value we're delivering to guests every day. Across our largest segments, we continue to see strong execution. Tim Hortons Canada and our international business, which together represent roughly 70% of our adjusted operating income, delivered another quarter of impressive results. Both are performing at a high level and have delivered 18 consecutive quarters of positive same-store sales, underpinned by great food and beverages, strong operations and engage franchisees.

I'm also encouraged by the continued progress at Burger King in the U.S. The team is making meaningful strides strengthening the brand's value proposition through delicious menu innovation, better operations and impactful remodels. The benefits of this work are showing up in solid absolute results and sales outperformance versus the burger QSR segment. Even in a challenging macro backdrop, we continue to deliver great results the right way. providing best quality products, exceptional service and unmatched convenience.

With that focus and with disciplined execution across our teams, we remain confident in our path to delivering at least 8% organic AOI growth in 2025. Now let's turn to our results, starting with Tim Hortons, which represents roughly 44% of our operating profit and stands out as a consistent performer and contributor to RBI's growth. Tim Hortons in Canada continues to exemplify what happens when you get the fundamentals right and keep innovating. It's a business built on strong brand love, great restaurant level execution, affordable everyday value and a steady stream of menu innovation that keeps our guests coming back. Comparable sales grew 4.2% in Q3, outperforming the broader Canadian QSR industry by roughly 3 points. We continue to build on our breakfast leadership and saw a 6.5% growth in breakfast foods, driven by our 100% Canadian freshly cracks Karambeli platform and the launch of our loaded Krassan breakfast sandwich.

Guests also responded enthusiastically to our fall baked goods like the Spice vanilla filled donut and Halloween Timbits bucket. In the PM daypart, the team is thoughtfully expanding our menu. The Thanksgiving stack, a seasonal in addition to our premium hot sandwich platform performed well. And our 899 dinner deals after 5:00 p.m. are attracting new guests and strengthening our position in dinner meal occasions. Total beverage sales grew 4%, reaching record highs in both cold and espresso-based beverages. Our improved [ ice lanes ] were a particular standout and helped to drive 10% growth in cold beverages. Our fall beverage lineup is also performing well, featuring Chai Lattes, the return of Pumpkin Spice and new protein lattes that are resonating with health-conscious guests.

We also expanded the rollout of our new espresso machines, an important investment from our franchisees that will further enhance espresso beverage consistency and quality as this category continues to grow. Operationally, our restaurant owners and team members continue to deliver excellent guest experiences. Guest satisfaction remains at record highs, and speed of service has improved across every day part, now reaching our fastest Q3 levels since 2019. Importantly, PM execution and guest satisfaction scores keep improving, a key focus area as we work to capture share and is historically underutilized daypart.

We're also advancing our digital initiatives. Kiosk installations are on track to reach about 800 restaurants by year-end, and are driving higher average checks and strong adoption among younger guests. And we recently announced an exciting new loyalty partnership with Canadian Tire, one of Canada's largest and most trusted retailers launching in late 2026. This partnership is together 2 of Canada's most iconic brands, allowing guests to link their rewards accounts and unlock even more benefits. It's one of several initiatives designed to expand our loyalty base and deepen guest engagement.

With over 7 million active Tims reward members already spending about 50% more on average than they did before joining, we see significant potential ahead. Finally, we remain on track to return to modest net restaurant growth in Canada in 2025. In August, I joined Axle and its team in Nova Scotia and Prince Edward Island, where we saw firsthand that even in some of our most established markets, there is still room to grow given the strength of demand for Tims. I'm proud of the results the team delivered in Q3 from strengthening our leadership in breakfast and beverages to unlocking growth in PM food. With a continued focus on innovation, operational excellence and digital engagement, I'm confident in the long-term growth trajectory for Tim Hortons.

Now our international business. which drives 26% of our operating profit and accelerated meaningfully this quarter. Same-store sales increased 6.5% and net restaurant growth of 5.1% drove system-wide sales growth of more than 12%. These results reflect the strength of our global franchise network and the effectiveness of our balanced playbook across menu innovation, marketing, digital and operations. Our same-store sales outperformed the industry in several key markets. including France, the U.K., Spain and Germany. In France, performance strengthened with the successful launch of our Baby burger boxes in July, a shareable snacking platform that's been a big hit with our guests.

In September, we expanded our chef collaboration platform to the U.K. with the launch of the Gordon Ramsey Wage burger made with 100% British Wage beef, which drove strong engagement and sales. This quarter, we also leveraged our global scale with a cross-market promotion of Naruto, the popular anime series, which performed well across countries like Germany, Brazil and China. I visited several international markets this quarter, including the U.K. and China and was impressed to see the consistency of execution and enthusiasm across the system. In the U.K., Burger King is now our fifth international business to surpass $1 billion in system-wide sales and continues to deliver strong top line growth, adding more than $115 million in sales over just the last 12 months.

Meanwhile, Popeyes in the U.K. is set to open its 100th restaurant in November, just 4 years after its debut in East London. Popeyes is seeing strong traction across EMEA, where the brand now has more than 1,000 restaurants. In Turkey, the team will open 100 restaurants this year, reaching nearly 500 locations by year-end. Both markets are great examples of the brand's international potential. Popeyes now ranks among the world's top 10 Western QSR brands outside the U.S. and stands out as the only one that's been growing system-wide sales by over 35%.

In China, we're making significant progress at BURGER KING with results again exceeding our expectations. Comparable sales grew 10.5% in Q3, with momentum building throughout the quarter, and unit economics once again improved quarter-over-quarter. Performance was driven by elevated marketing, including the launch of our new CRISPR chicken burger, strongest response to the Narito campaign and continued growth in delivery. Under the leadership of our new local team, we've also continued to strengthen operations to build a stronger foundation for long-term growth. The results we're seeing at BURGER KING China reinforce our conviction that is a high potential business. supported by strong brand awareness, favorable category dynamics and improving unit economics.

Sami, Tiago and I spent time in Shanghai in September, meeting with several of our prospective partners, and we left encouraged by both the level of interest in the brand and the alignment around our vision for the business. We see a clear path to reigniting growth in this important market and remain confident we'll find the right partner to continue driving it forward. While in Shanghai, we also spent time with the team at Popeyes China, which continues to perform well and remains on track to open around 50 restaurants this year. Looking ahead, we believe we have a clear runway to accelerate development and capture share of the growing chicken QSR segment in China. Taken together, our results highlight the strength and diversity of our international portfolio with strong execution, great local partners and a shared commitment to the guest experience, fueling double-digit system-wide sales growth.

Turning now to Burger King, which represents roughly 17% of our operating profits. In September, I joined the team in Phoenix for their convention. The energy was amazing with franchisee confidence in the plan and team near all-time highs. That confidence has been earned over the past 3 years, as Tom and the team, together with our franchisees, execute reclaim the plan with focus and consistency, raising the bar on food and service quality, elevating our marketing and modernizing the restaurant experience. This focus continues to translate into results with our U.S. comparable sales growing 3.2%.

We've outperformed the burger QSR category for many quarters by staying true to our balanced marketing strategy. We're leaning into the Whopper, providing everyday value that guests can trust and reigniting Burger King's connection with families through innovation and fund partnerships. Our Wapperbiu platform is delivering strong results, engaging our guests through personalized takes on their favorite flame grilled burger. The Barbecue Brisket and Chris union Whoppers exceeded expectations, reinforcing the power of our flagship product, and the platform's extension to offer Junior is broadening our reach with women and Gen-Z guests.

Our $5 DUO and 7 Trio value platforms are also performing well, and the launch of our Urolo-Value campaign builds on that success. Celebrating guest choice and personalization while further strengthening Urolo positioning. In an environment where peers are leaning into short-term deals or headline price cuts, our disciplined value strategy continues to resonate. Looking ahead, we'll maintain this measured approach while keeping our flame-grilled burgers at the center of our story. And we'll support our efforts with innovative family promotions like our recent Monster menu. Our marketing and menu innovation are being matched by steady improvements in operations, which are equally as important to delivering guests great everyday value.

Since launching reclaim the flame in 2022, Burger King consistently improved in [ gain ] operational surveys and revisit intent now ranks among the top 3 out of 12 QSR brands. These gains reflect a sharper focus on the fundamentals, quality, accuracy, friendliness and consistency and close collaboration with our franchisees to sustain that momentum. We're also making good progress modernizing the system. With remodeled restaurants having strong uplifts in the team's net of control and average restaurant sales post remodel of around $2 million, with beef costs elevated, we're mindful of the near-term impact on franchisees. While we still expect roughly 400 remodels in 2025, -- we're mindful of the commodity cycle and impactson profitability as we manage future remodel schedules with our franchisees.

At Carol's, performance again outpaced the system, underscoring the importance of strong operations and the impact of modern image. Comparable sales at Carrols were 4.8%, and remodels are delivering updates -- uplifts ahead of the system average, reflecting the success of our new image, which is now featured in nearly 2/3 of Carol's remodels completed since 2023. We're also advancing the refranchising of King restaurants through a kronor career program as well as with experienced restaurant operators.

Overall, Burger King's results show that our plan is working. Operational improvements, creative marketing and strong franchisee alignment are driving sustained outperformance versus the broader burger QSR category. Finally, turning to Popeyes and Firehouse Subs. At Popeyes, results were softer this quarter, with U.S. comparable sales down 2% and net restaurant growth of 1.9%, resulting in system-wide sales growth of 0.9%. We are not satisfied with our performance and know there's more work to do. While our limited time offers like differs, drove solid trial from new guests, repeat visitation fell short. And while our wings revamp in August delivered improved guest satisfaction, it proved to be only modestly incremental.

It's clear that we need to do a better job focusing on our core offerings, especially our bone and chicken, tenders and sandwich platforms, and we need to deliver consistent value for everyday guests. We also know that price is just 1 piece of the value equation. And Jeff and his team are stepping up efforts to improve the overall experience at Popeyes by reprioritizing resources to support our franchisees, focusing investments on restaurant and equipment upgrades that have the biggest impact ensuring that new units are opened exclusively with our top operators. It may take some time for these operational improvements to flow through to sales, but we remain very confident that Popeyes has every right to win and take share in an increasingly competitive chicken QSR environment. Popeyes has the best chicken in QSR. It's marinated, hand battered and fried in-house and is rooted in authentic Louisiana heritage.

On top of this, we have a relatively modern asset base. with roughly half of the Popeyes system having been opened in the last decade, good unit economics and strong franchisee alignment. Finally, Firehouse Subs delivered a solid quarter with comparable sales up 2.6% and net restaurant growth of 7.7%, which drove 10.7% system-wide sales growth. Performance reflects continued progress in expanding our footprint across North America with great engaged operators and a standout result in Canada. Mike and his team have already opened 100 net new restaurants over the past 12 months, which is 5x the pace of growth from when we acquired the business. This strong result keeps us on track for another year of accelerating development in 2025, supported by enthusiastic franchisees, solid paybacks and growing brand awareness.

With that, I'll hand it over to Sami.

Thanks, Josh, and good morning, everyone. I'm excited about the momentum we're seeing in our business, and I'm proud that we were able to accelerate both top line and bottom line results in Q3. Our focus on balanced marketing and great guest experiences is driving that performance. And I feel confident that the groundwork we're laying today positions us well for consistent long-term growth. At the RBI level, we're complementing strong brand execution with financial discipline and thoughtful capital allocation, setting us up to deliver another year of 8% plus organic AOI growth, while continuing to invest in areas of the business that will drive sustainable returns over time.

Today, I'd like to discuss our Q3 financial results, capital allocation and guidance for the remainder of the year. Starting with our financials. For the third quarter, system-wide sales grew 6.9%. Organic AOI grew 8.8% and nominal adjusted EPS increased 10.7%. Organic AOI grew faster than system-wide sales this quarter with operating leverage driven by disciplined cost management, including an $8 million reduction in segment G&A and an $8 million tailwind from lapping last year's fuel to flame ad fund contribution at BKUS.

These benefits were partially offset by an $8 million year-over-year AOI headwind from BK China. As a reminder, consistent with prior quarters in 2025, we are recording results from BK China in discontinued operations as we work to find a new local partner. Adjusted EPS increased $1.03 -- increased to $1.03 per share this quarter from $0.93 last year, representing nominal growth of 10.7%. This was driven by our AOI growth as well as a $14 million year-over-year decrease in adjusted net interest expense from $142 million last year to $128 million, reflecting the benefits of our 2024 refinancing activities and cross currency swaps.

Our adjusted effective tax rate this quarter was 17.8%, bringing our year-to-date rate to 18.1%. For the full year in 2025, we continue to expect our adjusted effective tax rate to be in the 18% to 19% range. Now turning to cash flow and capital allocation. We generated $566 million of free cash flow, including the impact of $110 million of CapEx and cash inducements and a $35 million benefit from our swaps and hedges. We also returned $282 million of capital to shareholders through our dividend and we fully repaid the approximately $100 million remaining on our Tim Hortons facility that was maturing in October, consistent with our plan to prioritize deleveraging.

As a result, we ended Q3 with total liquidity of approximately $2.5 billion, including $1.2 billion of cash and a net leverage ratio of 4.4x. Looking ahead, our capital allocation priorities remain unchanged. We'll continue investing in our business, maintaining an attractive dividend and reducing leverage. As I said before, one of our key priorities is to return to a more simplified business model. As part of this, we're refranchising Burger King restaurants, and we remain on track to refranchise between 50 and 100 restaurants in 2025. About half of these will be through our Crown year career program, which means the actual deconsolidation of those restaurants will take place over time as candidates graduate from the program.

In addition, we're actively engaged with Morgan Stanley to sell Burger King China, and we feel confident in the progress the team is making to find a new local partner. Together, these initiatives are key steps towards simplifying our structure, strengthening our franchise model and creating a more capital-light platform for long-term free cash flow generation. Before shifting to our 2025 financial guidance, I'd like to touch on beef costs. As Josh mentioned earlier, our Burger King U.S. business is seeing elevated beef costs, which are creating some short-term margin pressures. Beef represents roughly 1/4 of the Burger King U.S. commodity basket and year-to-date prices are up high teens versus last year. This equates to a mid- to high single-digit increase in the overall commodity basket for Burger King U.S. in 2025.

We expect this to be temporary as the increase is largely tied to the cyclical nature of U.S. herd rebuilding and we're optimistic prices will normalize over time. In fact, you've already seen cattle futures come down in the last week or so, and we continue to monitor movements in that market. In the meantime, we're working closely with our franchisees to identify efficiencies and margin opportunities across the P&L.

Now I'd like to discuss 4 updates to our 2025 guidance. First, we continue to expect Tim Hortons supply chain margins to average around 19% for the full year, with Q4 as the softest quarter in the mid-17% range, reflecting the typical seasonality of the business, and the impact of higher average cost of inventory, including within our CPG business. Second, we now expect segment G&A, excluding restaurant holdings, to come in at the low end of our guidance of $600 million to $620 million. Third, we expect 2025 CapEx and cash inducements, including capital expenditures, tenant inducements and incentives to be around $400 million, down from our prior guidance of $400 million to $450 million.

And fourth, within Restaurant Holdings, BK Carol's restaurant level margins will continue to be impacted by the 50 basis point add-fund contribution step-up year-over-year and commodity inflation, primarily related to elevated beef costs. In addition, our early-stage investments at Popeyes China and Firehouse Brazil resulted in a net AOI drag of $7 million in Q3, and we will expect a similar impact in restaurant holdings in Q4. We anticipate these expenses will continue until we transition ownership to new local partners.

Finally, we continue to expect 2025 interest expense, NRG and organic AOI growth to remain consistent with our prior guidance. This includes adjusted net interest expense of around $520 million, net restaurant growth of around 3% and organic AOI growth of 8% plus. As a reminder, organic AOI growth in the fourth quarter will see a $52 million net benefit from lapping 3 items: $41 million of BK fuel to flame ad fund expense and $20 million of net bad debt expenses in Q4 of '24, partially offset by $9 million of BK China revenues also recognized in Q4 of '24.

Stepping back, I'm confident we're making good progress towards our goal of returning to a more simplified and highly franchised business. We're ahead of schedule on refranchising the Carols restaurants and continue to make great progress on the Burger King China sale process. And even as we execute on these strategic initiatives, we remain firmly on track to deliver another year of 8% plus organic AOI growth in 2025. And with that, I'll turn it over to Patrick.

Thanks, Sami. This team is driving strong results. And importantly, they're doing it the right way. Quarter after quarter, our teams and franchisees are delivering for guests and staying focused on what matters most, creating value for guests by improving their experiences in our restaurants while maintaining discipline around our pricing. That's what sets RBI apart right now, and it's working. We've got 5 amazing businesses that are each at a different point in their journey.

Tim Hortons and our international business continue to set the standard with steady high-quality growth built on strong fundamentals. At Tims, Axle and team keep raising the bar with exciting menu innovation and outstanding execution in the restaurants. You can feel that momentum from the strength that we're seeing in cold beverages to continued leadership in breakfast. The brand is connecting with guests in a way that feels fresh and relevant every day. Tim's is firing on all cylinders, and our runway for consistent growth is long. Internationally, Tiago and team are delivering another year of great results. growing system-wide sales double digits and outperforming our peers in many of our largest markets.

What I love about our international business is how consistent the playbook is, great food, engaged local operators and an unwavering focus on the guest experience. That model scales. We've proved it with Burger King, and now we're proving it with Popeyes which is generating the best system-wide sales growth in international amongst our scaled global peers. Burger King U.S. is showing what focus, patience and follow-through can deliver. Franchisee confidence is near all-time highs. Operations are improving, and the brand is clearly earning its way back. After nearly 2 years of outperforming the broader QSR burger category, you can feel the turnaround taking hold. These things don't happen overnight. But you know when a brand starts to click again, and that's exactly what we're seeing at Burger King.

I'm proud of our franchisees, and I'm proud of Tom and the team leading BK. Popeyes on the other hand, has some work to do. We know it's not performing where it should be, and Jeff and team are leaning in by simplifying and improving operations, sharpening the value proposition and getting back to what makes Popeyes so special. It's incredible food and Louisiana heritage. As we increase the pace of operational improvements in our restaurants, Popeyes food is too good and the brand is too strong for us to not be growing faster. And FIREHOUSE continues to build momentum with strong development and a lot of enthusiasm from franchisees who see the long runway ahead.

Mike and his team are moving the brand in the right direction and starting to accelerate the pace of scaling this business. What makes RBI stand out is our bias for action. When something isn't working, we move aggressively to make it right. We run this business like true owners and take a long-term view, investing in the areas that strengthen both our business and our franchisees. From investing in back to basics at Tims to supporting reclaim the flame at Burger King U.S., to stepping in to stabilize BK China. We're not afraid to do the hard work to make every 1 of our business is great. There is no kicking the can here.

Long-term success means creating an ever-improving guest experience, compelling franchisee economics that attract and grow great restaurant operators and efficient use of RBI's resources to achieve that growth in order to generate consistent and compelling returns for our shareholders. We also know that we need to simplify our business back to being nearly 100% franchised. So we're taking steps to get that done, refranchising our Carrols restaurants and finding a new partner for Burger King China. We are going to be a much simpler story. We've got engaged franchisees, motivated teams and a culture that values doing things the right way for our guests, our operators and our shareholders.

That combination of long-term investment, operational discipline and accountability gives me a lot of confidence in where we're headed. I'll close by saying thank you to everyone across our system. These results don't happen without incredible teamwork and passion from our restaurant operators, managers, crew members and corporate teams around the world. You're building something that lasts and it's a lot of fun to be a part of it.

And with that, I'll turn it over to the operator to take questions.

[Operator Instructions] Our first question comes from Dennis Geiger from UBS.

Great. Congrats on the solid results. I wanted to ask a little bit more on Burger King U.S. given the continued industry outperformance, the continued execution against plan despite the difficult environment. I think, Patrick, you and Josh both spoke to like feeling the turn. But could you speak a little more to that turnaround trajectory that the brand is on and maybe if it's possible to draw some parallels to the Tims turn in previous years. And I know you guys spoke to the ops, the marketing, the franchise, the alignment, but just maybe highlighting some of the biggest opportunities still from here to get to where you want the brand to be.

Yes, thank you for the question. I'll start, and Patrick feel free to add on. I think we're really pleased with the work that Tom and the team have done now over a number of years. When we set out on this plan, we sort of -- we listen to our guests and our franchisees and understood what they wanted from the brand. And I think they wanted things like more modern assets. We're working on that. They wanted more consistent operations. We've made tremendous progress on that over the last few years. Our franchisees wanted to see a better focus on profitability. We brought that and saw a lot of progress. And we wanted to see the outcome of all of that being outperformance versus the segment, which we've been lagging behind in the prior periods.

And we've now seen that pretty consistently over the last couple of years. So I think that combination of sort of listening to guests, understanding what they wanted from the brand and making sure that we were really well coordinated and working together with our franchisees, I think, is what's driven progress. As I look forward over the rest of this year, we're going to stick to the same things that we talked about at the beginning of the year. I think I laid out a couple of different focus areas, we said that we wanted to focus on the Whopper in flame grilling. We want to bring families back in the restaurants, and we wanted to have consistency in our value offerings through the year.

And throughout all the macro ups and downs of various quarters, we stuck with that plan. And I think that really has paid off. And I think you kind of see that in the results and especially in the Q3 results. And the things that we talked about doing will be basically what you see from us in Q4. As I look forward from there into next year, I think that gives us a great foundation to build off of. And Tom and Joel and the team shared some of that plan with our franchisees recently at our convention.

I think there was tremendous excitement and enthusiasm from those plans. And I think kind of what we've done gives us the base to then further elevate the brand and to keep focusing and elevating the focus on flame grilling the Whopper, I think we'll take it kind of into its next chapter next year. We'll have more to share probably in the next few months or on our Q4 call to give you a little bit more specifics around that, but that's basically the plan going forward. Patrick, anything you want to add to that?

Yes, Dennis, I think that the parallel though is exactly right. I mean what we did at Tims in Canada is exactly the same thing we're doing at Burger King. The needs may have been different. The restaurants -- at Burger King, we're in more need of updating and remodeling than they were at Tims. The food was great and is great at Burger King, but we're going to continue to do work on that. One of the interesting things is as you know, in Canada, you have contractually more control around pricing. And so our pricing in Canada was very consistent. We were very careful about making sure we were delivering value across the menu.

And I think Burger King and our franchisees have done a very nice job of making sure that we're not getting ahead of ourselves on pricing, and that's created consistent value. But the improvement in value that you're seeing for consumers at Burger King is not because we are doing deep discounting or anything like that, it's because we're improving the consistency of execution, the attractiveness of the restaurants that they're going to the service levels, the food quality, all of those things are what are improving the value for consumers.

And we aspire to the 18 straight quarters of positive comps that we've gotten at Tims now, and by the way, 18 straight quarters of growth in our international business, which is from doing the exact same thing, terrific execution in the stores, on average, great compelling franchisee economics, which allow them to reinvest into the stores, keep them looking great and that delivers very consistent results. And so it's still -- we've got a lot of innings to work through on Burger King, but we're very comfortable that we're seeing the results starting to play through.

Our next question comes from David Palmer from Evercore ISI.

Thanks for those comments on BURGER KING. Just as a follow-up, and you were talking about beef costs and the impact that that's having on cash flow, no doubt, you also talked about the fact that you're having some pretty good sales momentum. And so I would imagine that there is optimism in the system, but you're dealing with a cash flow hit from some of the stuff on the inflation side. Is there any impact from that even if temporary in terms of the plan to get the restaurant count reverse reimaging invested on pace, refranchising of Carrols ad fund contribution. Is there any impact from that even if it's temporary. .

And then separately, on BURGER King U.S., there's always this concern that a major competitor is going to hurt the brand with their recovery, and we're now a week -- a year away from a food safety incident and a major burner player that rocked their results. Do you see that as something that will -- as we begin to lap that, that will impact BURGER KING indirectly through the rest of this quarter? Or any comments on that would be helpful.

Dave, it's Sami. I'll take the first part of your question, and then I'll pass it over to Josh to comment on the second part. With respect to Burger King U.S., we are pleased with the sales progress, particularly in Q3 and really the pretty consistent outperformance to industry. With respect to beef costs, in particular, those have been a clear headwind. I mean beef costs this year have been at all-time highs. And as we think about that and we think about sort of the dynamics there, being up high teens percentages year-over-year being about 25% of the commodity basket that does impact us. .

I think it is impacted by sort of 2 dynamics. One is sort of this herd rebuilding cycle in the U.S. But it's also impacted by some of the trade agreement dynamics for markets where beef is sourced from. I think we view these kind of impacts as temporary and our franchisees view it that way as well, although they are a significant impact. We've actually been monitoring the market. And even if you look at the last week, as there's been optimism around some trade deals, whether it's been with Argentina, whether it's been with Mexico, whether it's been with Brazil, we're sensing our optimism that there could be some relief on beef costs.

And with respect to the impact on the plans, I don't think that changes our plans. We're still on track to do around 400 remodels this year. on the margin, that may shift things from 1 year to the next, but franchisees are confident they view kind of this as a temporary sort of headwind and that it will reverse, and we're going to continue to out-execute the competition.

Dave, just on the strategy and type of impact of competitors, I don't think anything that the competitors are going to -- are doing is impacting Tom and the team's plan. I think that's one of the strengths of what we've done all year long is we haven't deviated from the plan. We've kept consistent even as you've had some macro ups and downs and you've had some shifts in focus from different competitors. I think sticking to our playbook, focusing on our strength and being consistent, things like value, one of the best things that we can do is making sure that we have consistent value propositions. Guests who are focused on their budgets. They want to know when they go to Burger King or anywhere else. They want to know what they're going to get. And we've stuck with our $5 Duos and $7 Trios and make sure that they know when they come to Burger King, that's what's going to be available over a long period of time.

We give guests options. We let them have it their way a little bit and pick what they want to have as a part of that -- those bundles, but we're trying to have a bit more consistency in some of those constructs. And I think that seems like it's been working well for the business.

Our next question comes from Danilo Gargiulo from AB Bernstein.

Just I was wondering if you can comment on your satisfaction about the launch of the protein latte in Canada, specifically whether you think you've got the right level of advertising behind? Or if you think it was overshadowed by some incremental menu offering over there. And given that you don't have major competitors that are necessarily focusing -- overly focusing on the protein platforms over there. What do you think the comp uplift could be as you're expanding the platform and potentially think through innovation for the coming quarters and years?

I would frame the protein latte as one part of our broader push to innovate in cold beverages. And I think Axle and hope and the team here have done a fantastic job on that. I think we've been talking about it for at least 3 years now that our strategy was going to be cold Bev and PM food. And I think we've made consistent progress there, bring exciting new innovations to market.

Within the cold beverage push, we've been focused on ice latte a lot, and that overall platform has been a huge success for us. We saw growth well into the double digits of ice latte in this quarter. So I think that's great. Protein lots are just -- they're 1 more iteration of that idea. I think it's been working pretty well so far. We've seen high incrementality of that new product. So I think it's great, but I think we'll have to see where it goes in the future. We'll probably bring some new innovations around it. We're happy with it so far. But I think we've got to give it time and see what new things we bring over the next couple of quarters there.

Our next question comes from Brian Bittner from Oppenheimer.

And congrats on the impressive results. Sticking with Tims, obviously, the results continue to be solid, hitting on all cylinders as Patrick highlighted, can you talk about the share trends for the brand in Canada? Are you seeing those share trends accelerate? And just secondly, can you paint a picture of what type of macro environment you're operating in, in Canada. Everyone is obviously talking about a much softer and softening environment in the United States. So curious what you guys are seeing in the Canadian macro maybe relative to the U.S. macro?

Brian, what I would point to in terms of share trends is one of the comments I made in our prepared remarks we're outperforming by a pretty consistent margin, and we have over the last couple of quarters. I think I mentioned a little bit ago. Our same-store sales are about 3 points higher than the other large QSRs. So I think we're taking share on a pretty consistent basis by a healthy margin, and that's a result of all of the great work that the team is doing up here and the strength of the brand.

In terms of the macro here in Canada, there are some softer stats on things like unemployment or consumer confidence, but I wouldn't say it's been changing so much sequentially. I think that's sort of been the case for a few quarters now. And I think the results this quarter with over a 4% comp show you our ability to deliver even in some of those tougher macro environments, and I think that comes down to doing the fundamentals right and having a great everyday value proposition.

If you look at -- I think Patrick sort of mentioned it a little bit earlier, we were really disciplined about price over the last few years. Tims has always been known for delivering great everyday value with compelling price points, and we kept disciplined in that. People know they can come to Tims for a really good quality product at a very fair price. And that's the kind of thing that I think allows you to perform well even in some of the tougher macroeconomic environments, which I think we observed over the past quarter or 2.

Our next question comes from Gregory Francfort from Giggenheim Securities.

My question is actually on the international business. I mean, pretty impressive comp from Burger King and also, I guess, across the brands. Some of the major markets there that are driving that, are you guys seeing your share gains accelerate or do you see kind of uplift in the macro in those markets that may be you have the biggest overlap. And I'm just curious what you're seeing on the ground and how much of it was share gains versus the overall market for QSR improving.

Greg, it's Josh. Thanks for the question. I think we've seen pretty broad-based improvement across the international business, especially in our European markets and some of our Asia markets. There are some places where I think the macro has gotten a little bit easier, but there are an awful lot of cases of improvements in relative share. I'll give you just a couple of examples. There are quite a number underpinning the overall results. I'd say probably the biggest one is in France. That's our largest market within the International segment. And we had a -- we had been seeing a bit of softer comps prior to Q3. And Alex Simon and the team there at Burger King in France did a fantastic job with some really great new product launches.

The baby burgers that I mentioned was a huge success and we really shifted the trend in terms of relative market share there in Q3. So that was a big win and definitely a departure from trend. We've also seen improvement in some other markets. China is, for sure, one of those, where it has been a tough market for us over the last couple of years. And I would say the thesis that we went into China with this year has played out even better than we expected. We made some changes to the teams, put in place some really talented and experienced local leaders, we improved some of the marketing, launched some new products, brought back some media focus and have really turned the corner in a meaningful way on the same-store sales.

I mentioned we were plus 10% in the quarter, which is a terrific result and shows you the kind of the potential of the brand there. So that -- I think that was a big shift in relative market performance. And then we had another one that's top of mind for me is Japan. I've talked about it for a while. It's been doing really well. But the comps there have been great. The restaurant growth is terrific because the paybacks are good. So I think we're -- we have a huge opportunity in Japan. It's always been one of our biggest opportunities in the world. And the team there is really doing a great job going after that and growing our market share in the market.

So not exhaustive, but gives you a few examples of some of the places where on top of some macro that maybe is a little bit better, I think we're doing a better job in each of those markets, too.

Our next question comes from John Ivankoe from JPMorgan.

Two-parter, if I may. Firstly, Josh, in your prepared remarks, you mentioned the [ 400 ] reclaim to flame remodels in '25 and then mentioned beef prices. And it did seem like that you may have been talking down the number of reclaim the flames expected in '26. So tell me if I kind of caught that inflection or not? And if it's appropriate, how many remodels we should expect in '26 just to kind of level set everyone? And then secondly, also in prepared remarks, I heard that it would take a while to deconsolidate the units that were part of reclaim the flame, I just want to understand what that means. So it will be a refranchising transaction that the store fully remains on balance sheet. So I just want to understand that. And how long of a transition period are we talking about until those units can be fully refranchised from a practical perspective as part of your career.

John, I'll take the first part on the remodels, and then I'll let Sami talk about some of the Croner refranchising. So in terms of the remodels, as we said, we expect to do about [ 400 ] this year. We're really pleased with the uplift, and I think there are even better uplifts in some of our company stores and the sizzles that Carrols are doing. I think the intention of the comment is just to be mindful of the fact that beef prices have been elevated and that does have some impact on our franchisees' profitability. It's not going to change our long-term plan. Our vision and plan continues to be very much the same that we want to get to around 85% of the system on modern image.

We're obviously just keeping an eye on those beef prices and any impacts that, that can have on our franchisees' profitability. The good news, as Sami mentioned, is that we've already started to see those beef prices come down, which will be helpful to franchise profitability and provides more cash flow for our franchisees to fund those remodels. And I think in terms of 2026 remodel numbers, I don't think we're ready to put a number out there quite yet, something we'll probably look at doing once we get into the beginning of the year, maybe the Q4 earnings call.

And just quickly on your deconsolidation of refranchised restaurants ViaCon your career. I think a couple of things, and we've talked about this in the past. When we think about refranchising the Carrols restaurants, there's sort of 3 categories of folks we're refranchising to. Number one is existing operators who have capacity for more or strong operators in our system. Number two is kind of traditional refranchisings to new operators, new franchisees who are entering our system. And then the third bucket is this crown your career bucket, which are typically smaller restaurant managers above restaurant leaders, folks who may have a little bit less capital but are focused on running very small portfolios of restaurants, call it, anywhere from 1 to 5 or 10 restaurants and really growing with the brand.

And those Croner career restaurants and as part of that program, what we do is someone enters the program and they stay in the program from anywhere from 1 to 3 years as we monitor kind of their progress, how our sales, how are operations performing and then they graduate from the program. And we don't have set graduation dates. It's really around how quickly are the restaurants turning around and how ready is the operator to be a full-fledged franchisee. And so those may vary over time. The good news is, as you think about it, we're already ahead of schedule in our refranchising. We want to do between 50 and 100 refranchisings this year.

Of those, about half will be in the Crown year career program. And then those folks will graduate over the next 1 to 3 years. and those restaurants will come off our books in that appropriate time. So we're really pleased. We also think the Crown or Career program is an excellent pathway to ownership for small operators, and that's ultimately what powers the Burger King brand.

Our next question comes from Christine Cho from Goldman Sachs.

Great. Great to hear that you're on track with your Burger King remodels this year. And I think you mentioned the mid-teens average sales lift for these stores. and redev and higher performance for the pavilimages. I was wondering if you had any insight you can share on the 2 and 3 sales trajectory post the remodel. Do these stores continue to outperform? Or do they eventually kind of return to a similar comp trajectory with the broader fleet, and additionally, how should we think about kind of the impact on Burger King's comp and returns over the next few years as the mix of digital image continues to increase within the portfolio?

Christine, like Josh mentioned, we're really pleased with the remodel uplift that we're seeing in the teens and particularly with the Carrols remodels, where we're seeing with the sizzle images even better than that. I think as we look into kind of year 2 uplifts, it's about 100 basis point continued uplift from the remodels. That sort of evolves over time as new restaurants kind of enter our data set. But we've kind of been consistent around this 100 basis point uplift. And you can kind of flow that through the comp impact. We expect to end this year around high 50 percentages in terms of the percentage of the portfolio that's modern image and continue to kind of be on track for around 85% modern image by the end of 2028. .

Our next question comes from Andrew Charles from TD Cowen.

Okay. Great. I know we'll get an update on the 4Q call for 2025 store level cash flows by Bram, but it's no secret that U.S. industry cash flows are hurting this year, just given elevated beef prices and consumers seeking value, you have a target for $230,000 of BK store level cash flow in 2026. In order to sustain 50 basis points of marketing spend incurred by the franchisees, I'm just curious your confidence to reach this as well as key priorities to reach this beyond sales growth?

Yes. Thanks, Andrew. I would say on the ad fund, there are 2 ways that we can extend the higher ad spend, both by -- one by hitting the franchise profitability target or through a franchisee vote. So there are kind of 2 pathways to that. I think, obviously, there has been some headwinds from beef costs in 2025. So we're cognizant of that. And like I said, thankfully, those costs have started to come down. So I think it's too early to say kind of exactly where we'll land next year, but we're certainly keeping an eye on it.

I think the other piece of that is just our relationships with the franchisees are really great. I think we all have a lot of conviction that we did the right thing in increasing the ad fund rate. I think if you look at the same-store sales performance over the last couple of years, it's very clear that on top of the other important changes we made in BK, the advertising spend, the increased advertising spend and the quality of the advertising are having an excellent ROI for everybody in the system. So I think everybody gets that. And I think because of that, I think we should be able to find a good path to extend it over time.

Our next question comes from Sarah Senatore from Bank of America.

Okay. I just wanted to ask a couple of questions on Tims, and I apologize if I missed anything, but I wanted to first ask about the top line drivers. You mentioned loyalty members increase in spend by about 50% versus prior to joining, can you give me a sense of how -- what percentage of your total -- like unique customers, the 7 million loyalty members might account for, I'm just trying to think about as you -- the opportunity to grow that loyalty base as a top line driver because it's a pretty big increase. And then maybe the second point about top line is just you mentioned total beverage sales grew 4%. Obviously, if coal is growing 10%, the implication is maybe brewed coffee decline. Are there any margin implications for franchisees just in terms of that product mix shifting?

So Sarah, just first on your first question in terms of loyalty members as a percentage of unique customers, we'll have to come back to that, we just don't have it in front of us right now. In terms of the beverage mix, we have seen a shift. I think the shift from hot to cold beverage is something that you've seen across the industry, both in the U.S. and in Canada. And it's one of the reasons why it was a big part of our innovation focus over the last few years to make sure as the customer preference shifts towards cold beverage, we've got all of the products that they want, and we're leading that shift in Canada.

So you're naturally seeing if beverages are growing 4%, you're seeing higher growth in your cold bevs and you're seeing lower growth and your hopes that something we anticipated. And that's why the kind of the innovation priorities are what they are. In terms of margins, they're both good margin products, both very healthy businesses. for our franchisees. So no big impact that comes out of that shift, I would say, in terms of the percentage margins.

And Sarah, it's Patrick. The one thing I'd add is the cold bev can be a little bit more complicated. And one of the things that I'm proudest of with our franchisees in Canada is our speed of service is better than it has ever been in Canada. They're doing just a terrific job of managing that as you continue to see the shift from hot bev to cold bed.

Our next question comes from Brian Harbour from Morgan Stanley.

Yes. I guess just on the Popeyes side. I appreciate there's sort of some of the opportunities you laid out there. But any -- is there anything from your perspective with like customer exposure, sort of like competitive dynamics that's also affecting that business right now? Or what do you see as sort of the real hurdles to seeing improvement there?

Yes, Brian, I think there's a lot of controllable stuff. I think it's been the case that we know we've got the best products in the industry, but we've got some inconsistency in our operations. And we're making some progress there, but I think we need to make more sustained progress. And I think that's what's going to allow us to improve the sales trajectory. So I'd say that's the biggest focus from my perspective.

I think secondarily, as I mentioned, I think we can shift some of our marketing and innovation focus from a little bit more LTO focused. You've seen things like dippers and pickles, which gain a lot of customer interest, but sometimes don't drive the sustained sales growth that we'd like to see. So you're probably going to see us shift back a bit of that focus to some of our more core platforms. So those are the places that I'm focused on. I think that's what's going to drive the turnaround.

I don't see something in kind of a customer-based SKU or anything like that, that's probably responsible for sales. If you go back over the last few years, we grew our same-store sales tremendously when we focused on the core and got things right. So I think this brand is amazing. It's in exactly the right segment. It has every right to win. We've got relatively new assets. I think like half of the stores were built in the last 10 years. It gets tremendous reaction when we do new things.

It gets a lot of engagement online. So I think we've got every right to win. We've got a couple of things we need to work on, and we're very much focused on those.

Our next question comes from Jeff Bernstein from Barclays.

Great. This is Pratik on for Jeff. I had a broader question on the quick service category in the U.S. Can you comment on whether you're seeing the lower-income consumer trade back into fast food with greater frequency now that there's emphasis on value across the board? And also, are you seeing signs of middle and upper-income consumers finally trading down from some of those higher priced options as maybe there's more caution around discretionary spending.

Pratik, what I would say in terms of the income cohorts is we haven't seen a big departure over the course of the year. I think we mentioned over the last couple of quarters that we did see a bit softer relative performance of the lower and middle income consumers. That hasn't changed too much, so nothing too new there. I think we've been operating in that environment pretty much all the year. And what's worked for us is that we've been staying focused, executing well and delivering consistency and consistency in value among other things. And you saw that play out in our results in Q3. The one thing I would call out is that October has started out a bit choppier in the U.S., though nothing that would cause us to change any of our plans at this point. .

And I would just keep in mind, we do run a large global and diversified business where 70% of our AOI is generated outside the U.S. So we feel good about the overall trends globally and ability to deliver our 8% AOI growth. But I do want to call out the U.S. trend in October, which I imagine a lot of you guys have already seen.

We currently have no further questions. So I will hand back to Josh for closing remarks.

Great. Thank you, everybody, for the time today. We appreciate very much the hard work by all of our teams and franchisees around the world in helping us to produce a good quarter here. We look forward to updating everyone on our progress on our Q4 call and wish you a great day.

This concludes today's call. Thank you for joining us. You may now disconnect your lines.