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Restaurant Brands International Limited Partnership (RSTRF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was a mixed print: Total revenue of $2.11B grew 21% as-reported on RH consolidation but modestly +2.8% organically; GAAP diluted EPS fell to $0.49 while adjusted EPS rose to $0.75; management reiterated “at least 8%” organic AOI growth for 2025 despite a soft start, citing improving Q2 momentum and cost discipline .
  • Results missed Street: adjusted EPS missed by $0.03 and revenue missed by ~$41.8M versus consensus, driven by softer comps (0.1% consolidated; ~+1% ex-Leap Day impact) and category headwinds at Burger King US and Popeyes; International remained the growth engine (+8.6% system-wide sales) .
  • Guidance refined: 2025 Segment G&A (ex-RH) lowered to $600–$620M from $650–$670M; other guideposts (Adjusted interest expense $500–$520M, RH G&A ~$100M, total capex & cash inducements $400–$450M) maintained; Q2 dividend declared at $0.62 .
  • Narrative/catalysts: (1) reaffirmed 8%+ organic AOI growth for 2025, (2) remodel and operational progress at BK US, (3) International outperformance and refranchising roadmap, (4) BK China held-for-sale process and related near-term drag; near-term stock reaction likely framed by the miss vs consensus vs improved Q2 commentary and lower G&A outlook .

What Went Well and What Went Wrong

  • What Went Well
    • International continued to lead: system-wide sales +8.6%, comps +2.6%; ex-FX, INTL revenue +$5M and AOI +$4M on higher BK/PLK royalties despite absence of BK China revenue in PY .
    • Adjusted profitability stable-to-improving: adjusted EBITDA +2% to $642M and adjusted EPS to $0.75 (+$0.02 YoY) despite macro softness; organic AOI +2.6% .
    • Management conviction and cost control: “on track to deliver stronger results through the balance of the year and achieve at least 8% organic adjusted operating income growth in 2025,” and G&A (ex-RH) guide cut by ~$50M at midpoint .
  • What Went Wrong
    • Headline miss vs Street: adjusted EPS miss ($0.03) and revenue miss (~$41.8M) as consolidated comps were only +0.1% (≈+1% ex-Leap Day) with category pressure in BK US (-1.1%) and PLK US/Canada (-4%) .
    • GAAP deleverage vs prior year: income from operations down 20% (to $435M) and GAAP EPS down to $0.49, with higher “other operating expenses, net” and transactional/FX items excluded in non-GAAP AOI/EBITDA .
    • BK China/portfolio actions weigh optics: BK China acquired then classified as held for sale; loss of royalties/fees produces ~$19M headwind this year until a new partner is identified; refranchising and cleanup constrain reported NRG near term .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Consensus (Q1 2025)Vs Consensus
Revenue ($B)$1.739 $2.296 $2.109 $2.152 (calc: $2.109 + $0.0418) -$0.042B (miss)
Diluted EPS (GAAP)$0.72 $0.79 $0.49 NANA
Adjusted Diluted EPS$0.73 $0.81 $0.75 $0.78 (miss $0.03) -$0.03 (miss)
Income from Operations ($M)$544 $635 $435 NANA
Adjusted EBITDA ($M)$627 $688 $642 NANA

Margins (computed from reported figures; values approximate)

MarginQ1 2024Q4 2024Q1 2025
Adjusted EBITDA Margin %36.0% (=$627/$1,739) 30.0% (=$688/$2,296) 30.4% (=$642/$2,109)
EBIT Margin % (Income from Ops/Revenue)31.3% (=$544/$1,739) 27.7% (=$635/$2,296) 20.6% (=$435/$2,109)
Net Income Margin % (Net income/Revenue)18.9% (=$328/$1,739) 15.7% (=$361/$2,296) 10.5% (=$221/$2,109)

Segment Performance (Revenue, AOI)

SegmentQ1 2024 Revenue ($M)Q1 2025 Revenue ($M)Q1 2024 AOI ($M)Q1 2025 AOI ($M)
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)—432 —7
Intersegment Elims—(48) ——
Total1,739 2,109 —539

KPIs

KPIQ1 2024Q1 2025
System-wide Sales ($M)$10,512 $10,496
System-wide Sales Growth+8.1% +2.8%
Comparable Sales+4.6% +0.1% (≈+1.1% ex-Leap Day)
Net Restaurant Growth+3.9% +3.3%
System Restaurants (end)31,113 32,149

Brand-level selected KPIs (Q1 2025 vs Q1 2024)

  • TH: comps -0.1% (Canada +0.1%), system-wide sales $1,631M vs $1,725M, NRG +0.4%, units 4,523 vs 4,505 .
  • BK: comps -1.3% (US -1.1%), system-wide sales $2,700M vs $2,753M, NRG -1.1%, units 7,062 vs 7,139 .
  • PLK: comps -4.0% (US -4.0%), system-wide sales $1,475M vs $1,517M, NRG +3.0%, units 3,516 vs 3,412 .
  • FHS: comps +0.6% (US +0.3%), system-wide sales $322M vs $301M, NRG +5.9%, units 1,352 vs 1,277 .
  • INTL: comps +2.6%, system-wide sales $4,368M vs $4,216M, NRG +6.2%, units 15,696 vs 14,780 .

Guidance Changes

MetricPeriodPrevious Guidance (Feb 12, 2025)Current Guidance (May 8, 2025)Change
Segment G&A (ex-RH)FY 2025$650–$670M $600–$620M Lowered
RH Segment G&AFY 2025~ $100M ~ $100M Maintained
Adjusted Interest Expense, netFY 2025$500–$520M $500–$520M Maintained
Total Capex & Cash Inducements (incl. RH)FY 2025$400–$450M $400–$450M Maintained
Dividend per share/unitQ2 2025Target $2.48 for 2025 (Q1 $0.62 declared) Q2 dividend $0.62 declared Maintained cadence

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Macro/trafficQ3’24: consolidated comps +0.3%; resilient but softening; Q4’24: comps +2.5% Consolidated comps +0.1%; mgmt expected Q1 to be soft; notes improvement in Q2 to date Slightly negative in Q1; improving into Q2
BK US turnaroundReclaim the Flame, modern image push, intersegment dynamics introduced with RH US comps -1.1% (≈flat ex-Leap Day); progress continues; remodel pipeline; cost discipline Operational progress continues; sales softer
International growthQ3’24 INTL AOI +; strong NRG and comps System-wide sales +8.6%, comps +2.6%; FX headwind; ex-FX growth and royalties up Positive, consistent
Popeyes USQ3’24 comps -4.0%; company-run expansion via Carrols assets US/Canada comps -4%; focus on ops simplification, value and modern assets Needs improvement
BK China2024: master franchisee challenges flagged Acquired remaining interests; now held for sale; KPIs reported in INTL; near-term royalty/fee headwind Transitional; resolves with new partner
G&A/cost controlQ4’24: SG&A ex-RH guide $650–$670M Guide cut to $600–$620M; AOI growth 8%+ reiterated Positive surprise
Capital allocation/dividendsQ4’24: target $2.48 2025 dividend Q2 dividend $0.62 declared Consistent

Management Commentary

  • “We are making solid progress executing the fundamentals of our business, despite a slower start to the year… We’re seeing encouraging momentum in Q2 and… are on track to… achieve at least 8 percent organic adjusted operating income growth in 2025.” – CEO Josh Kobza .
  • “BK is executing its multi-year ‘Reclaim the Flame’ plan… we have funded $143 million out of up to $550 million toward the Royal Reset investments.” .
  • “On February 14, 2025, we acquired… Burger King China… [which] has been classified as held for sale… Results for BK China are therefore reported as discontinued operations.” .
  • “First quarter consolidated comparable sales were 0.1%… We anticipated that Q1 would be our softest quarter of the year and believe that some of the macro noise may have driven further softness.” – Prepared remarks (Q1’25 call) .

Q&A Highlights

  • Tim Hortons Canada resilience and macro: management emphasized “back-to-basics” execution with improving trends into Q2; highlighted innovation (e.g., loaded scrambled eggs box) supporting traffic recovery .
  • International share and markets: cited strong positioning in UK/Germany/Australia with diversified growth; confidence in international market share and partner execution .
  • BK US outlook and remodels: franchisee confidence, mid-teens lift post-remodels, ~400 remodels planned for 2025 with measured pace amid beef cost cycle .
  • Popeyes “Easy to Love” strategy: focus on operational consistency, kitchen simplification, and value to reignite core platforms (bone-in, tenders, sandwich) .
  • BK China headwind: ~$(19)M year-over-year impact from loss of royalties/fees while held-for-sale; active process to find new partner .

Estimates Context

  • Q1 2025 vs Street: Adjusted EPS $0.75 vs ~$0.78 consensus (miss $0.03); revenue $2.11B vs ~$2.152B consensus (miss ~$$41.8M). S&P Global consensus via our feed was unavailable for this quarter; consensus deltas cited from Seeking Alpha’s transcript header .
  • Where estimates may adjust: Lowered 2025 Segment G&A (ex-RH) to $600–$620M supports slight upward revisions to FY EPS/AOI despite Q1 miss; International strength and cost actions vs persistent softness at Popeyes US and BK US comp trajectories could drive dispersion across segment expectations .

Key Takeaways for Investors

  • Despite a revenue/EPS miss, management reaffirmed at least 8% organic AOI growth for 2025 and cut Segment G&A (ex-RH) guidance by ~$50M at midpoint—offsetting Q1 softness with cost control and Q2 momentum .
  • International remains the durable growth driver (system-wide +8.6%), while BK US turnaround and remodels progress but with near-term sales softness; Popeyes US requires operational and value execution to re-accelerate .
  • GAAP optics are pressured by non-GAAP items (e.g., “other operating expenses, net” of $83M) and portfolio actions; adjusted metrics better reflect underlying operations and leverage improvement (net leverage 4.7x) .
  • BK China is now held-for-sale; expect a near-term royalty/fee headwind until a new controlling shareholder is secured—resolution is a medium-term catalyst .
  • Capital return cadence intact: Q2 dividend $0.62 declared; prior full-year dividend target reiterated in February .
  • Near-term trading setup: the miss vs consensus and soft comps may cap upside until Q2 confirms acceleration; lowered G&A and reiterated AOI growth create a bar for positive estimate revisions if comps improve as indicated .
  • Medium-term thesis: multi-brand, capital-light franchisor with International runway and BK US remodel program; refranchising of RH assets and China partner resolution should simplify and enhance margin/FCF trajectory over 12–24 months .

Notes on sources and data:

  • Primary financials, KPIs, and guidance from Q1 2025 8-K press release and exhibits (May 8, 2025) and prior 8-Ks for Q4 2024 (Feb 12, 2025) and Q3 2024 (Nov 5, 2024) .
  • Earnings call transcript and consensus miss figures from Seeking Alpha/MarketScreener and Q&A summaries from Yahoo/GuruFocus pages .
  • S&P Global consensus via GetEstimates was unavailable this quarter; where consensus gaps existed, we cited publicly reported consensus deltas from Seeking Alpha.