Restaurant Brands International, New Holding (Issue #27)
Restaurant Brands International (NYSE: QSR — $18.12bn) Similar to the other holdings in the Pillars And Profits Portfolio this is a conglomerate of sorts. However, it is more concentrated in one industry than the current holdings. Restaurant Brands International (RBI) is the owner of Burger King, Popeye’s, Tim Horton’s, and Firehouse Subs.
All four brands are managed at the same headquarters and they are all similar enough to have some crossover in strategy between them. Between all the brands RBI has a combined >29,000 restaurants worldwide that produce $35bn system-wide sales annually.
Each brand is trying to increase its perceived and actual value. For example, RBI plans to invest ~$400m in Burger King’s “Reclaim The Flame” plan. This includes $150m in additional advertising funding and $250m in improvements to restaurants’ technology, kitchens, and more.
The most recent acquisition was Firehouse Subs which happened in December 2021 for ~$1bn or ~20x EBITDA. This is cheap considering the company produced $1.1bn in revenue in 2021.
Growth through acquisition is good, but each of the brands within the umbrella. For example, Tim Horton’s has expanded to 6 new countries since 2015 and added >1,000 restaurants too. Some of the new countries include China, Spain, the United Kingdom, and more. There are also plans for the brand to expand to India this year. Final point on Tim Horton’s is they are working to just improve their services in all possible ways including through their loyalty program which currently hosts 9m active users.
The company trades at a reasonable 16.5x Price/Cash Flow multiple with 34.3% Return On Equity (ROE). There’s a lot more to dig into on this company. I dove into one branch more than the rest, but let me know if you think it should be considered for the portfolio and/or have a deep dive written on it.
Portfolio Updates:
Now that Markel (MKL) was revealed as a holding there are now 4 listed stocks in the Pillars And Profits Portfolio! Stay tuned for the remaining current 3. Go here to access all of the deep dives so far.
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Until Next Sunday,
Soren
Disclaimer: Soren Peterson and Pillars And Profits Newsletter are not responsible for any investment results. This is not financial advice. Always do your own research.