Restaurant Brands’ second quarter saw strong revenue growth, surpassing Wall Street’s expectations, but non-GAAP profit fell short, contributing to a negative market reaction. Management attributed the mixed performance to ongoing operational improvements at Tim Hortons and within international markets, while noting cost pressures and complexity surrounding its Burger King China transition. CEO Josh Kobza highlighted, “Our two largest businesses, representing nearly 70% of adjusted operating income, delivered strong performance,” but also acknowledged persistent challenges in key segments, particularly margin pressure and bad debt expenses.
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Restaurant Brands (QSR) Q2 CY2025 Highlights:
- Revenue: $2.41 billion vs analyst estimates of $2.34 billion (15.9% year-on-year growth, 2.9% beat)
- Adjusted EPS: $0.94 vs analyst expectations of $0.97 (2.8% miss)
- Adjusted EBITDA: $762 million vs analyst estimates of $769.2 million (31.6% margin, 0.9% miss)
- Operating Margin: 20%, down from 31.9% in the same quarter last year
- Locations: 32,229 at quarter end, up from 31,324 in the same quarter last year
- Same-Store Sales rose 2.4% year on year, in line with the same quarter last year
- Market Capitalization: $21.48 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Restaurant Brands’s Q2 Earnings Call
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Brian John Bittner (Oppenheimer & Co.): questioned the drivers of Carrols’ outperformance and the implications of accelerating refranchising. CEO Josh Kobza attributed success to operational fundamentals and effective remodels, while refranchising aims to transition restaurants to strong local operators more quickly.
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David Sterling Palmer (Evercore ISI): asked about competitive dynamics in Canada and Burger King U.S. Kobza asserted that Tim Hortons’ consistent execution is fueling outperformance, and recent competitor promotions in the U.S. have not disrupted Burger King’s momentum.
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Dennis Geiger (UBS): sought more detail on international momentum and the longer-term development trajectory. Kobza described robust results in key markets and a rapid turnaround in China, while Executive Chairman Patrick Doyle emphasized the unique strength of the Popeyes international business.
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Sara Harkavy Senatore (Bank of America): inquired about franchisee appetite for full remodels and structural challenges at Popeyes. CFO Siddiqui confirmed rising franchisee engagement in high-quality remodels, and Doyle acknowledged operational improvements are needed at Popeyes U.S., learning from international success.
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Christine Cho (Goldman Sachs): asked about the decision to accelerate Carrols refranchising and franchisee interest. Siddiqui cited strong demand from internal and external candidates, emphasizing the importance of transitioning ownership to high-performing operators.
Catalysts in Upcoming Quarters
Going forward, the StockStory team is closely monitoring (1) the pace and profitability of Carrols refranchising and Burger King remodels, (2) the ability to offset commodity cost inflation through operational improvements and pricing discipline, and (3) the execution of international expansion strategies, particularly in China and Brazil. Progress on digital transformation and guest experience metrics will also be key indicators of sustained momentum.
Restaurant Brands currently trades at $65.50, down from $68.60 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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