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Restaurant Brands International Limited Partnership (RSTRF)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered 15.9% YoY revenue growth to $2.41B with global comps accelerating to 2.4% and system-wide sales up 5.3%; Adjusted EPS rose 9.2% to $0.94 while GAAP diluted EPS from continuing operations was $0.58 .
  • Organic Adjusted Operating Income grew 5.7% to $668M, led by Tim Hortons Canada comps of 3.6% and International system-wide sales growth of 9.8%; management reaffirmed confidence in delivering 8%+ organic AOI growth for 2025 .
  • Burger King U.S. continued to modestly outperform the burger QSR segment with +1.5% comps; Carrols refranchising began earlier than planned, and BK China comps turned positive under new operating focus, ahead of expectations .
  • Capital return and flexibility increased: Q3 dividend declared at $0.62 per share/unit and a new $1B share repurchase authorization through 2027; near-term capital allocation remains biased to deleveraging .
  • Key watch items: bad debt ($9M) and BK China “held for sale” headwinds (Q2 revenue/AOI impact, with full-year impact expected), plus beef inflation in the U.S. driving mid-single-digit commodity basket pressure; coffee prices normalizing benefits Tim Hortons over time .

What Went Well and What Went Wrong

What Went Well

  • Tim Hortons Canada posted its 17th consecutive positive comp quarter; Canadian comps accelerated to 3.6%, with strength in breakfast foods and cold/espresso beverages; “We remain confident in our ability to deliver 8%+ organic Adjusted Operating Income growth in 2025” .
  • International delivered 9.8% system-wide sales growth and 4.2% comps, with strong execution across major markets; BK China comps turned positive, “ahead of our expectations,” with improved unit economics QoQ .
  • AOI and Adjusted EPS expanded YoY (AOI +5.7%, Adj. EPS +9.2%); segment G&A was reduced, and ad fund “Fuel the Flame” costs lapped, supporting profitability .

What Went Wrong

  • GAAP income from operations fell 27.2% YoY to $483M, reflecting $149M in other operating expenses and continued FX/bad debt pressures; GAAP net income from continuing ops declined 34.1% YoY to $264M .
  • BK China “held for sale” removed revenues recognized in prior periods and created a $10M YoY revenue/AOI headwind in Q2; full-year headwind expected (~$37M revenue, ~$19M AOI) .
  • Popeyes U.S. comps declined 0.9% with consolidated PLK comps down 1.4%; beef inflation up high-teens YoY pressured BK U.S. margins and RH restaurant-level margins expected to compress ~100 bps in 2H .

Financial Results

MetricQ2 2024 (Oldest)Q1 2025Q2 2025 (Newest)
Total Revenues ($USD Billions)$2.080 $2.109 $2.410
Income from Operations ($USD Millions)$663 $435 $483
Net Income from Continuing Ops ($USD Millions)$399 $223 $264
Diluted EPS ($)$0.88 $0.49 $0.58
Adjusted Operating Income (AOI) ($USD Millions)$632 $539 $668
Adjusted EBITDA ($USD Millions)$721 $642 $762
Adjusted Diluted EPS ($)$0.86 $0.75 $0.94
System-wide Sales Growth (%)5.0% 2.8% 5.3%
Comparable Sales (%)1.9% 0.1% 2.4%

Segment breakdown – revenues and AOI:

SegmentTotal Revenues ($USD Millions) Q2 2024Total Revenues Q1 2025Total Revenues Q2 2025AOI ($USD Millions) Q2 2024AOI Q1 2025AOI Q2 2025
Tim Hortons (TH)$1,031 $903 $1,083 $269 $220 $278
Burger King (BK)$364 $356 $388 $114 $103 $121
Popeyes (PLK)$194 $194 $210 $62 $60 $66
Firehouse Subs (FHS)$53 $54 $59 $13 $11 $15
International (INTL)$232 $218 $250 $160 $138 $172
Restaurant Holdings (RH)$230 $432 $469 $14 $7 $16

Selected KPIs:

KPIQ2 2024Q1 2025Q2 2025
TH System-wide Sales Growth (%)5.4% 0.0% 3.9%
TH Comparable Sales – Canada (%)4.9% 0.1% 3.6%
BK Comparable Sales – U.S. (%)0.1% -1.1% 1.5%
PLK Comparable Sales – U.S. (%)0.6% -4.0% -0.9%
INTL System-wide Sales Growth (%)9.2% 8.6% 9.8%
System Restaurant Count (Total)31,324 32,149 32,229

Estimates vs actuals:

  • S&P Global consensus for EPS/revenue was unavailable for RSTRF Q2 2025 based on our query; therefore, an estimates comparison cannot be provided. Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Segment G&A (ex-RH) ($USD Millions)FY2025$650–$670M (Feb-2025) $600–$620M (May/Aug-2025) Raised (lowered cost baseline)
RH Segment G&A ($USD Millions)FY2025~$100M (Feb-2025) ~$100M (Aug-2025) Maintained
Adjusted Interest Expense, net ($USD Millions)FY2025$500–$520M (Feb-2025) ~$520M (Aug-2025) Tightened to ~$520M
Total Capex & Cash Inducements ($USD Millions)FY2025$400–$450M (Feb-2025) $400–$450M (Aug-2025) Maintained
DividendQ3 2025Target 2025 total $2.48 (Feb-2025) $0.62 declared for Q3 Maintained trajectory
Share Repurchase Authorization2025–2027Prior $1B through Sep-2025 New $1B authorization Sep-2025 to Sep-2027 Extended/renewed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology in operationsStrategic tech focus; modernization programs highlighted “We are very focused on what can happen with AI in our restaurants… improve customer experience and operations” Building momentum; more explicit AI roadmap
Supply chain/commoditiesCoffee at historic highs; beef inflation noted; Tim Hortons supply chain margin guidance Beef up high-teens YoY; BK U.S. basket up mid-single digits; coffee normalizing flowing through mid/late 2026 Beef headwind near term; coffee easing longer term
Tariffs/macroTariffs/macro risks cited in forward-looking statements Tariff-related impacts included among risk factors Ongoing monitoring
Burger King U.S. turnaroundReclaim the Flame, Royal Reset; remodel plans (85–90% modern image by 2028) BK U.S. comps +1.5%; remodels driving mid-teens lifts; refranchising started early Gradual operational/brand improvement
ChinaBK China issues, working toward resolution BK China comps positive; actively finding new partner via Morgan Stanley Near-term progress; strategic pivot
Product performanceTH beverages and breakfast; PLK mixed TH breakfast box, cold beverages; PLK wraps improve comps sequentially TH strength; PLK sequential improvement

Management Commentary

  • Strategic focus: “We made great progress in the second quarter advancing our strategic priorities… we remain confident in our ability to deliver 8%+ organic Adjusted Operating Income growth in 2025” — CEO Josh Kobza .
  • International ambition: “Chasing number one globally… become the most loved burger brand in every market we serve” — CEO Josh Kobza .
  • BK China turnaround: “Comparable sales turned positive… unit economics improved meaningfully quarter over quarter” — CEO Josh Kobza .
  • AI initiatives: “We are very excited about what we’re doing on this front… focused on AI and what we can do there” — Executive Chairman Patrick Doyle .
  • Capital structure and cash: “Adjusted EPS increased to $0.94… now expect adjusted net interest expense to be around $520M” — CFO Sami Siddiqui .

Q&A Highlights

  • Carrols outperformance and refranchising pace: Outperformance driven by strong operations and remodel ROI; refranchising started earlier than the originally planned years 3–7, with intent to place restaurants with top-tier operators .
  • Canada market dynamics: Sequential improvement from Q1 to Q2; Tim Hortons’ fundamentals and brand trust support continued outperformance .
  • International momentum: Strength in Spain, Germany, UK; France improving; APAC consistency in Japan/Australia; China better than expected .
  • Value architecture at BK U.S.: Stable $5 duos/$7 trios; balanced strategy across premium, family, value; no large-scale pricing architecture changes contemplated .
  • Commodities and margins: Beef inflation high-teens YoY; RH BK Carrols restaurant-level margin expected to compress ~100 bps in 2H; Tim Hortons supply chain gross margin ~19% for FY25 with Q4 seasonal low .

Estimates Context

  • We attempted to retrieve S&P Global consensus for RSTRF’s Q2 2025 EPS and revenue; consensus data was unavailable for this ticker, so a formal beat/miss analysis versus Street is not provided. Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • Given organic AOI growth and Adj. EPS expansion, plus improved comps and International strength, modest upward revisions to AOI/Adj. EPS trajectories for FY25 could be contemplated by analysts, offset by bad debt normalization and BK China discontinued ops impacts .

Key Takeaways for Investors

  • Momentum in core drivers: TH Canada and International continue to anchor AOI growth, supporting the reiterated 8%+ organic AOI target for 2025 .
  • BK U.S. turnaround on track: Modern image remodels and stable value platform drive comps and profitability; refranchising accelerates the path to a simpler, franchised model .
  • Near-term headwinds manageable: Beef inflation and bad debt elevate noise, but coffee normalization and cost control (lower segment G&A) underpin margin resilience over time .
  • Capital allocation discipline: Dividend consistency ($0.62 declared for Q3) and renewed $1B buyback authorization, with deleveraging still prioritized, enhance flexibility and potential upside optionality .
  • Watch BK China transition: Positive comps and operational improvements are encouraging; the selection of a strong local partner remains a key medium-term catalyst .
  • RH trajectory: Carol’s restaurant-level margin compression in 2H is expected; net AOI contribution from RH still positive as early-stage losses in PLK China/FHS Brazil ramp .
  • Trading lens: Narrative skewing positive on execution consistency and International strength; volatility could persist around commodity costs, FX, and RH/bad debt line items — setup favors continued AOI/Adj. EPS progression as Q4 tailwinds are lapped (Fuel the Flame and bad debt timing) .