Restaurant Brands International CEO says its 'doubling down' on its drive-thru business, expanding by 10K

Jose Cil, Restaurant Brands International CEO, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss the restaurant company's third-quarter earnings report, future outlook and much more.

Video Transcript

ALEXIS CHRISTOFOROUS: Restaurant Brands International topped analysts' estimates for earnings for its third quarter, but the company did say quarterly revenue fell 8%, dragged down by fewer sales at Tim Hortons and Burger King. Popeyes, once again, was a bright spot.

Joining us now is Restaurant Brands CEO Jose Cil. Jose, good to see you this morning. Let's start with that bright spot and Popeyes, double-digit same-store sales growth. Why are customers so drawn to Popeyes during this pandemic?

JOSE CIL: Hey, good morning. Good to see you all. Look, the story of Popeyes has been incredible. Our franchisees, our teams here at the restaurant support center have done an incredible job developing an awesome product, and then working closely with our teams in the restaurants to deliver that product consistently.

And we've seen the business grow tremendously over the last 12 months since we launched the product, the chicken sandwich is the product I'm referring to. The business has really grown. We're now trailing 12 months about $1.8 million in average sales for drive-through locations and some of our in-line locations as well.

And the profitability of the business has grown tremendously during that stretch of time. So we're really excited. I think it's just the beginning of this-- this opportunity to grow the brand and make it more accessible to Americans and to folks all around the world. And we're really excited about-- about bringing Popeyes to more people every day.

BRIAN SOZZI: Jose, you mentioned the earnings release today. You're now going to start making, I believe what, 10,000 digital menus for the drive-through? Pretty big initiative. Take us through it. And what could the sales bump look like?

JOSE CIL: Yeah, Brian, look, the drive-through business off-premise has been, obviously, a business that's been in the center of focus throughout the pandemic. I think it's been a big part of our business at Burger King, Popeyes, and Tim Hortons for decades. And we've seen it, obviously, be a very important significant growth opportunity in the last seven, eight months.

We've been investing in that part of the business for quite some time. But we felt it was important to double down, if you will, here in North America where we have over 10,000 drive-through locations for all three brands. And what we announced this morning is that we've got a commitment and really strong alignment with all of our owners across North America to make investments into the drive-through, modernize the experience, outdoor digital menu boards with predictive selling technology and other capabilities that allow greater efficiency, greater interaction for our guests with our brands at the drive-through, and to be able to personalize those experiences for them based on where they are, daytime, weather, as well as what they order and how to enhance that experience for the guests.

So we're really excited about that. It's something that we believe in, our owners believe in, and it's something that we are going to be investing in, and hopefully be done with the journey of installation and rollout by the end of '21, middle of '22 at the latest.

ALEXIS CHRISTOFOROUS: That's definitely exciting stuff. But what do you make of what's happening at Tim Hortons? Same-store sales down 12 and 1/2%. I know that typically the Canadian coffee chain, I think-- doesn't it account for about half of revenue for you?

Why do you think we're seeing that drop? Is it because people are not going out and grabbing that coffee on the way into work in the morning? And what are you doing to try to turn things around there?

JOSE CIL: Yeah, Tim's is an amazing business, a dominant brand in Canada with nearly 4,000 locations, of which 2,700 of them are drive-through locations. It's a very strong breakfast and kind of routine-based, high-frequency type of business that has been greatly impacted by the pandemic. It's probably the daypart in our space, in the quick service restaurant space, that's been most impacted by the pandemic and the resulting lockdowns that you see in different communities across North America.

Canada has been-- has taken, I think, really strong measures to ensure that the spread of the pandemic is limited, and so as a result, you've seen stronger lockdowns. There's been a renewed focus in some areas in Ontario, as well as Quebec. And we see that the mobility numbers, which hit a low point, transit mobility, which we track on a regular basis, dipped by 80% at the beginning of the pandemic. It kind of improved to minus 50% in the summer.

It's made considerable progress throughout September-- or throughout Q3, through the end of September. But now we're seeing it kind of go back into the summer months of minus 50-ish, thereabouts. So mobility has a big impact on our business. It has a big impact on the morning daypart.

People are still working from home. Routines are still being impacted. And so we know that's the situation or the reality. Our focus is to ensure that those transactions that we can deliver to guests every day we do so safely, take care of our team members and take care of our guests.

And then we're also investing in the long term. We've invested in a lot of different quality initiatives on the breakfast daypart for coffee as well as for the product. We've invested in modernizing the brand with our loyalty program in Canada, as well as our drive-throughs. And we continue to innovate in the core, including lunch and other cold beverage innovation, which we think over time will help us continue to grow that great business that we have and the great brand that we have in Canada.

BRIAN SOZZI: Jose, I think a lot of my friends in the restaurant industry, really, they are buzzing right now over Inspired Brands potentially acquiring Dunkin' Brands for nearly $9 billion. Now, you have $2 billion in cash, and you have reduced your debt. Do you have any interest in getting involved in making a play for Dunkin'? And do you still believe in building out the Restaurant Brands portfolio?

JOSE CIL: Look, Brian, we don't comment-- I don't comment on rumors, so hard for me to answer the first part of that question. We do have an incredible business. We generate a lot of cash. And it gives us a lot of flexibility as it relates to capital allocation and kind of bringing-- creating value for our shareholders.

We've done it with the best-in-class dividend and continue to do it. We announced our $0.52 dividend this morning at the earnings call. We continue to invest in our business, whether it's drive-through menu boards, remodels, and other aspects, we've invested in our supply chain in Canada. We've also bought back shares through-- through a process that we have for unit exchange earlier this-- this quarter-- or last quarter, excuse me.

So there's a lot of ways that we can use our cash to generate shareholder value, including, potentially, M&A down the road. But our focus is on managing our great brands, managing our great business, and making sure that we continue to grow our unit sales-- our same-store sales, as well as our unit count. And we're working closely with our owners during this challenging time to do so and do so well.

ALEXIS CHRISTOFOROUS: Got to touch on Burger King with the 60 seconds we have left. Same-store sales there down 7%. Any innovation in terms of menu for Burger King in the coming months, Jose?

JOSE CIL: Yeah, there's a lot of stuff in the works, but our focus in the quarter and our focus the last several months has been on ensuring that our incredible food, our Whopper in particular, our flagship product, we announced that it's now got clean ingredients, so we've spent a lot of time and a lot of work with our suppliers, as well as our teams in the restaurants, to ensure that that product, the flagship product of Burger King, is the best that it can be.

And I think we've done some really good work on that front. And our focus continues to be on long-term sustainable growth in different dayparts, breakfast as well as our lunch and dinner. And we're investing in technology, as well, and our delivery business has been growing tremendously, as has our drive-through off-premise business. So we're-- we're excited about the long term. Lots of work to do to deliver on the plans that we have and look forward to keeping you posted on our progress at Burger King as well.

ALEXIS CHRISTOFOROUS: And we look forward to having you do that. All right, Jose Cil, CEO of Restaurant Brands International. Thank you.

JOSE CIL: Thanks so much. Have a great day.