Executive Summary

Q1 2025 was a softer start: total revenues $2.109B, Adjusted Diluted EPS $0.75, and organic AOI growth of 2.6%; management reiterated at least 8% organic AOI growth for 2025 and noted improved April momentum and cost discipline .
Versus consensus, Q1 revenue and EPS were below S&P Global estimates: revenue $2.109B vs $2.151B*, Adjusted EPS $0.75 vs $0.782*; EBITDA also trailed ($642M vs $671M*) — driven by calendar timing (leap day and weather), BK China reclassification to discontinued operations, and FX headwinds partially offset by segment G&A reductions and supply chain gross profit growth .
Guidance positive: Segment G&A (ex-RH) lowered to $600–$620M (from $650–$670M), dividend maintained at $0.62, FX headwind outlook improved to ~$15M (from ~$45M), and tariff COGS impact guided to ~100bps or less, underlining cost management catalysts .
Portfolio actions continue: BK China acquired and classified as held-for-sale, refranchising and remodel pace accelerating (target ~400 remodels in 2025), BK U.S. ad fund levy increased to 4.5% through at least 2026, supporting brand and franchisee profitability narratives .

What Went Well and What Went Wrong

What Went Well

International strength: system-wide sales growth +8.6%, comparable sales +2.6%; underlying royalties improved ex-FX and BK China revenue absence, supporting INTL AOI .
Cost discipline: Segment G&A was reduced; company emphasized operating leverage and reaffirmed 8%+ organic AOI growth for 2025; CFO highlighted improved FX headwind outlook to ~$15M from ~$45M .
BK U.S. relative outperformance: value ($5 Duos/$7 Trios) and premium innovation (Steakhouse Bacon Whopper), operational improvements, and remodels trending mid-teens sales uplift; “winning by running restaurants better” (Patrick Doyle) .

What Went Wrong

Consolidated comps were flat (0.1%) and BK/PLK comps declined; consolidated AOI roughly flat y/y, reflecting calendar timing, FX, and BK China accounting changes; GAAP operating income fell y/y .
BK segment AOI down modestly and TH revenues declined y/y on FX; Popeyes comps -4% with competitive chicken category pressures (though AOI up modestly on company-store integration) .
BK China disruptions: reclassified to discontinued operations, with expected 2025 revenue/AOI headwinds until new partner identified; net restaurant growth outlook reframed near term .

Financial Results

Consolidated performance (oldest → newest)

Metric	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($USD Billions)	$1.739	$2.291	$2.296	$2.109
Adjusted Operating Income ($USD Millions)	$540	$652	$578	$539
Adjusted EBITDA ($USD Millions)	$627	$748	$688	$642
Adjusted Diluted EPS ($)	$0.73	$0.93	$0.81	$0.75
System-wide Sales ($USD Billions)	$10.512	$11.433	$11.279	$10.496

Notes: Q1 2025 comps 0.1% (≈1.2% ex leap day), organic AOI +2.6% .

Segment breakdown (Q1 2024 vs Q1 2025)

Segment	Total Revenues Q1 2024 ($MM)	Total Revenues Q1 2025 ($MM)	AOI Q1 2024 ($MM)	AOI Q1 2025 ($MM)
Tim Hortons (TH)	$939	$903	$224	$220
Burger King (BK)	$350	$356	$106	$103
Popeyes (PLK)	$178	$194	$58	$60
Firehouse Subs (FHS)	$50	$54	$10	$11
International (INTL)	$222	$218	$142	$138
Restaurant Holdings (RH)	$0	$432	$0	$7
Eliminations	$0	$(48)	—	—

Operational KPIs (Q1):

KPI	Q1 2024	Q1 2025
System-wide Sales ($USD Billions)	$10.512	$10.496
System-wide Sales Growth (%)	8.1%	2.8%
Comparable Sales (%)	4.6%	0.1% (≈1.2% ex leap day)
Net Restaurant Growth (%)	3.9%	3.3%
System Restaurants (end of period)	31,113	32,149

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Interest Expense, net	FY 2025	$500–$520M	$500–$520M	Maintained
Segment G&A (excluding RH)	FY 2025	$650–$670M	$600–$620M	Lowered
RH Segment G&A	FY 2025	≈$100M	≈$100M	Maintained
Total Capex & Cash Inducements	FY 2025	$400–$450M	$400–$450M	Maintained
Quarterly Dividend	Q2 2025	$0.62 (Q1 2025)	$0.62 (Q2 2025)	Maintained
FX AOI Headwind	FY 2025	≈$45M	≈$15M (at current rates)	Improved
Tariff COGS Impact	FY 2025	Not specified	≈100bps or less (localized inputs)	New disclosure
Long-term NRG expectation	Through 2028	5%+ on average	Reach 5%+ towards end of period	Reframed
BK U.S. Ad Fund Rate	2025–2026	4.0%	4.5% through at least 2026	Increased

Earnings Call Themes & Trends

Topic	Q3 2024 (Nov)	Q4 2024 (Feb)	Q1 2025 (May)	Trend
BK U.S. operations & remodels	Intersegment revenues with RH; comp -0.7%; remodels driving mid-teens uplift; modern image 51%	370 remodels in 2024; plan ~400 in 2025; modern image target 85%+ by 2028	Relative outperformance; ops cleanup; ~400 remodels in 2025; family activation upcoming	Improving execution
International momentum	BK INTL comps +1.8%; system-wide +8%	INTL comps +4.7%; strong in AU/ES/UK; Popeyes INTL growth	INTL comps +2.6%; SWS +8.6%; strong UK/DE/Brazil/Japan/Australia	Solid, resilient
Tim Hortons (PM daypart & beverages)	Canada comps +2.7%; ops speed focus	Canada traffic growth; cold beverage & breakfast strength	Canada comps ~0.1%; PM foods/flatbreads and cold bev strategy; new espresso rollout	Mixed near-term, constructive
Popeyes “Easy to Love” & “Easy to Run”	Comps -4.0%; company restaurant integration	System upgrades (POS, kitchen); ad spend step-up starting April; remodel alignment by 2030	Comps -4%; stepped-up national ad; kitchen rollout; standards raised	Building for medium term
BK China disposition	Net closures impact NRG; BK China challenges	Expected resolution soon; financial context shared	Acquired & classified held-for-sale; AOI revenue headwind quantified; new partner process active	Transitional cleanup
Capital intensity & Capex	Reclaim the Flame investments underway	2025 Capex/TIs $400–$450M; liquidity strong	Capex $400–$450M; tapering post-2026–2028; long-run ≈$300M	Elevated near-term, taper later
G&A discipline	Segment G&A reductions vs prior year	2024 Segment G&A down; leverage targeted	2025 Segment G&A cut to $600–$620M; ~$20M savings; areas include headcount/tech/SBC	Positive leverage
FX & tariffs	FX unfavorable in TH/INTL	Upsized USD/CAD swaps; 2025 adj net interest down	FX headwind now ~$15M; tariffs ~100bps or less COGS impact	Manageable headwinds

Management Commentary

“Despite a slower start to the year… we’re seeing encouraging momentum in Q2 and… are on track to deliver stronger results through the balance of the year and achieve at least 8 percent organic adjusted operating income growth in 2025.” — CEO Josh Kobza .
“Burger King in the U.S. is winning by running restaurants better… rapidly remodeling… executing the fundamentals… you’re starting to see execution flow through into results.” — Executive Chairman Patrick Doyle .
“Calendar timing including leap day and tougher weather… reduced our AOI by about $10M… treating BK China as held for sale resulted in a $9M y/y headwind to revenues and AOI.” — CFO Sami Siddiqui .
“We expect total CapEx and cash inducements to be $400M–$450M in 2025–2026… stepping down to $350M–$400M in 2027–2028 and settling at ~$300M thereafter.” — CFO Sami Siddiqui .

Q&A Highlights

BK U.S. outlook: Relative outperformance driven by operational improvements, remodels (~400 in 2025), and balanced value/premium calendar; continued focus on Whopper and a bold family activation .
G&A savings: ~$20M y/y savings targeted via headcount, tech/services, SBC review; establishes a healthy ~$600–$620M baseline for investing while driving operating leverage .
Capex cadence: Elevated near term for BK remodels and TH Canada development; taper post-2028 to ~$300M run-rate; liquidity and deleveraging priorities maintained .
Tariffs & FX: Tariff impact guided ~100bps or less to COGS; FX AOI sensitivity ~$8M per $0.01 USD/CAD and ~$4M per $0.01 USD/EUR; 2025 FX headwind outlook improved to ~$15M .
BK China: Portfolio cleanup with closures of unprofitable units; limited SWS impact given low ARS; actively seeking new local partner within next year .

Estimates Context

Actual vs S&P Global consensus (oldest → newest):

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	Actual: $2.291 • Consensus: $2.355*	Actual: $2.296 • Consensus: $2.289*	Actual: $2.109 • Consensus: $2.151*
EPS ($) (Adjusted Diluted vs Primary EPS)	Actual: $0.93 • Consensus: $0.953*	Actual: $0.81 • Consensus: $0.792*	Actual: $0.75 • Consensus: $0.782*
EBITDA ($USD Millions) (Adjusted vs Consensus)	Actual: $748 • Consensus: $756*	Actual: $688 • Consensus: $675*	Actual: $642 • Consensus: $671*

Q1 2025: Revenue and EPS were below consensus; EBITDA was below consensus. Near-term estimate revisions may reflect calendar effects, BK China discontinued operations, and management’s improved FX headwind outlook alongside lower Segment G&A guidance .
Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Cost control is the near-term catalyst: lowered Segment G&A guidance and improved FX outlook support the 8%+ organic AOI growth target despite softer Q1 comps and BK China effects .
BK U.S. execution and remodels matter: operational upgrades plus a robust calendar (value + Whopper premium + family activation) and ad fund step-up to 4.5% underpin share gains; watch remodel throughput and refranchising pace .
International remains a growth engine: diversified markets (UK, Germany, Brazil, Japan, Australia) are delivering, with continued Popeyes international expansion providing incremental AOI contribution over time .
TH Canada: PM food and cold beverage strategies continue, with espresso upgrades and speed of service focus; FX has masked underlying growth, but April momentum cited .
BK China transition: expect near-term NRG softness and modest revenue/AOI headwinds until new partner is secured; portfolio cleanup limits SWS impact given low ARS .
Capital intensity elevated near term (BK remodels, TH Canada), tapering post-2026–2028 to ~$300M — a medium-term FCF tailwind as investments convert to returns .
Trading lens: Q1 miss vs consensus is offset by credible 2025 AOI framework, FX/tariff clarity, and brand execution; upside depends on sustained U.S. momentum, international resilience, and timing of BK China partner resolution .

Citations: All company figures and qualitative statements are sourced from the Q1 2025 8‑K/press release and Q1 2025 earnings call, plus prior quarter filings as cited above. Consensus values marked with * are retrieved from S&P Global.

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