Could Burger King Parent Company Be Worth Investment as It Hires Ex-Domino’s CEO?

Fort Wayne - Circa April 2017: Burger King Retail Fast Food Location.
jetcityimage / Getty Images

Americans eat approximately 50 billion burgers a year, according to Work + Money. That equals about 3 burgers per week, or 153 burgers per year, for every person in the U.S. The multi-billion dollar hamburger industry is highly competitive, but there are a few leaders that stand out from the crowd.

Of course, the biggest and most popular burger chain is McDonald’s, which sells 75 burgers every second. For decades, Burger King operated as Mickey D’s main rival, taking swipes and bits of business from the top dog when it could. But as The Street reports, Wendy’s has overtaken Burger King as the number two burger brand. Lately, it hasn’t been good to be the King.

Burger King has struggled since it announced it was closing 200-250 franchise locations during the pandemic. The burger joint’s Toronto-based parent company, Restaurant Brands International (RBI; ticker symbol QSR-TO/NYSE: QSR) is looking to turn things around by hiring former chief executive of Domino’s Pizza Patrick Doyle as its new executive chairman.

According to the press release, RBI’s Board of Directors is looking to Doyle to do what he did at Domino’s — improve franchise, corporate and digital operations, and boost its share price and brands (which include Burger King, Tim Horton’s, Popeyes Louisiana Kitchen and Firehouse Subs).

“As the former CEO of Domino’s Pizza from 2010 to 2018, Mr. Doyle led one of the restaurant industry’s most successful transformations by focusing on putting the guest experience first and being the best at digital ordering and food quality,” claims the statement.

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“During his tenure, he delivered 29 consecutive quarters of same-store sale increases, system-wide sales growth of $5.6B to $13B, an over 2x increase in home market franchisee profitability while creating approximately $11B of shareholder value and increasing the share price over 23x from nearly $12 in March 2010 to $271 in June 2018.”

According to the Wall Street Journal (WSJ), Doyle will receive equity awards in lieu of a paid salary and will be purchasing 500,000 RBI shares at an approximate value of $30 million. “My investment in this is the best indication I can give you that there’s a lot of value that can be created here,” he stated confidently.

Doyle will receive performance-based shares if RBI stock hits $81.32 in five years and will earn a maximum award if Restaurant Brands’ stock increases to more than $122, reports WSJ.

According to the Globe & Mail, RBI Inc. opened yesterday at $83.00 Canadian (CDN; $62.07 USD) and closed at $84.96 CDN ($63.53 USD), a 7.03% share increase from Tuesday’s closing of $79.38 CDN. Shares for QSR.TO were trading as low as $60.37 CDN ($46.25 USD) in June 2022 but have risen 11.02% year-to-date.

As Simply Wall St. notes, RBI third-quarter revenue and earnings per share exceeded analyst estimates by 3.7% and 54% respectively. In October, the site said it expected profit growth of 81% over the next “couple of years” and touted a bright future for the company. “Restaurant Brands International maintained stable EBIT (earnings before interest and taxes) margins over the last year, all while growing revenue 15% to US$6.4b. That’s a real positive,” it stated.

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Independent stock research site Zacks lists QSR’s current price at $64.87 USD and has the company stock as a comfortable “Hold” (or a moderate buy, according to the Globe & Mail). However, with 3Q results beating expectations, with Doyle now firmly on board and invested, and with a recently announced $400 million commitment to advertising and restaurant renovations from HQ, it might be smart to put RBI and Burger King on your radar. If it’s already there, it might be time to take a bite.

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