Restaurant Brands International QSR is a Miami-based holding company that does not, for the most part, run restaurants. It collects a fee on other people’s restaurants. Across four brands, Tim Hortons, Burger King, Popeyes, and Firehouse Subs, the company sits on top of more than 33,000 restaurants in over 120 countries that generated close to $47 billion in system-wide sales in fiscal year 2025. More than 95% of those restaurants are owned and operated by franchisees. RBI’s job is to own the brands, set the standards, run the marketing, and take a slice of every sale.
That structure produced $9.4 billion of reported revenue and $2,584 million of Adjusted Operating Income in 2025, on a business that requires very little of its own capital to grow. The central question for an investor is not whether this is a good business. A royalty on $47 billion of consumer spending is a good business. The question is how much of that royalty stream is durable, how fast it can grow, and what a rational buyer should pay for it given the debt stacked underneath it and the roughly 456 million fully diluted units that share in the profits.
This post works through the model brand by brand, separates the high-margin franchising engine from the low-margin pieces bolted onto it, and then values the cash stream from first principles without reference to the current share price or anyone’s rating.
What the company does
RBI operates through six reporting segments. Four are the core brands run as franchisors. One, International, is those same brands operated outside their home markets. The sixth, Restaurant Holdings, is a collection of company-operated restaurants that management intends to sell back to franchisees over time.
The brands themselves are familiar:
- Tim Hortons is the coffee and baked-goods chain that dominates Canadian quick service. It is the largest single profit pool in the company.
- Burger King is the global burger chain, mature in the United States and Canada and still expanding internationally.
- Popeyes is the fried chicken brand that spent the last several years as RBI’s growth story before stumbling in 2025.
- Firehouse Subs is the smallest brand, a sandwich chain RBI acquired in late 2021, and the fastest grower by unit count.
The reporting structure separates home-market performance from international performance. Tim Hortons, Burger King, Popeyes, and Firehouse Subs are each reported on their US and Canada operations. Everything those brands do in the rest of the world rolls up into the International segment. That matters because International is where the growth is, and the segment structure makes it visible.
How RBI actually makes money
Understanding RBI means understanding that most of what looks like a restaurant company is really four separate income streams layered on top of franchisee sales.
Royalties. The core stream. Franchisees pay RBI a percentage of their gross sales for the right to operate under the brand. In the United States and Canada, royalty rates run from 3.0% to 6.0% of sales depending on the brand. International rates vary by market and master franchise agreement. This income scales directly with system-wide sales, carries very high incremental margins, and rises automatically as franchisees raise menu prices. When inflation pushes the price of a Whopper up, RBI’s royalty on that Whopper goes up with it, at no additional cost to RBI.
Advertising fund contributions. Franchisees also pay into brand advertising funds, typically 2.0% to 5.0% of sales. RBI collects this money and spends it on marketing. It is close to a pass-through, so it adds revenue without adding much profit, but it gives RBI control over how each brand is marketed.
Property income. RBI owns or leases roughly 4,700 properties, concentrated in Tim Hortons and Burger King, that it leases or subleases to franchisees. Rents are often structured as the greater of a fixed amount or a percentage of sales, commonly in the 8.5% to 10.0% range. This is a landlord business sitting on top of the royalty business. It adds a second claim on franchisee sales and, in the case of properties RBI controls long-term, some real estate value.
Tim Hortons supply chain. This is the one large piece of RBI that behaves like an operating business rather than a royalty. RBI roasts coffee, manufactures products such as fondants and fills, and distributes food and supplies to Tim Hortons restaurants. In 2025 this generated $2,909 million of supply chain sales. The catch is margin. Distribution and manufacturing carry a gross margin around 19%, far below the near-pure-profit economics of a royalty. The supply chain drives revenue and gives RBI control over Tim Hortons ingredients, but it is a volume business, not a profit engine.
The financial model that results is straightforward to describe. System-wide sales of $46.8 billion flow through the royalty, advertising, and property structures to produce franchise and property revenue. Add the Tim Hortons supply chain and the company-operated restaurants, and you get $9.4 billion of consolidated revenue. Strip out the pass-through and low-margin pieces, and the profit is dominated by royalties and property income. Grow the system, take a slice, spend little capital.
The pieces that are not asset-light
Two parts of RBI break the clean franchisor picture, and both deserve attention because they dilute the quality of the earnings.
The first is the Tim Hortons supply chain described above. At 19% gross margin on nearly $3 billion of sales, it is a meaningful revenue line that contributes far less to profit than its size suggests. It is stable and strategic, but it is not the reason to own RBI.
The second is Restaurant Holdings, the company-operated segment. In May 2024 RBI acquired Carrols Restaurant Group, its largest Burger King franchisee, which brought roughly 1,000 company-operated Burger Kings onto RBI’s own books. Popeyes China and Firehouse Subs Brazil operations sit in the same segment. In 2025 this segment produced only $44 million of Adjusted Operating Income on well over a billion dollars of restaurant sales, a margin in the low single digits.
That thin margin is the entire argument for RBI’s franchise model in one number. Running restaurants directly earns a few cents on the dollar. Collecting a royalty on those same restaurants earns most of what it takes in. Management has said it intends to refranchise the Carrols restaurants, selling them back to operators and returning to the high-margin royalty structure. Until that happens, Restaurant Holdings drags down the consolidated margin and adds operating complexity. An investor should treat this segment as a temporary feature that will shrink, not as a permanent part of the earnings base.
Financial profile
The 2025 results show a business growing at a mid-single-digit to high-single-digit rate on the metrics that matter, with reported figures muddied by non-cash items.
| Metric | FY2025 | Notes |
|---|---|---|
| System-wide sales | ~$46.8B | The number royalties are charged on |
| Total revenue | $9,434M | Includes supply chain and company restaurants |
| Operating income (GAAP) | $2,202M | Depressed by non-cash items |
| Adjusted Operating Income | $2,584M | Up $182M, or 7.6% |
| Net income (continuing ops) | $1,201M | |
| Net income (reported) | $1,075M | After a $126M Burger King China discontinued-operations loss |
| Operating cash flow | $1,714M |
The gap between GAAP operating income of $2,202 million and Adjusted Operating Income of $2,584 million is worth understanding rather than waving away. The largest single item is a $209 million non-cash foreign exchange loss on intercompany debt, which moves with currency rates and does not reflect the cash economics of the business. The prior year also included a one-time gain on the Carrols acquisition that did not repeat, which makes the year-over-year GAAP comparison look worse than the underlying trend. Adjusted Operating Income growing 7.6% with all five franchisor segments contributing is the cleaner read on how the business performed.
Free cash flow is the number that ultimately matters for a franchisor. Operating cash flow was $1,714 million. Management has guided capital expenditures to around $400 million for 2026. That points to free cash flow in the range of $1.3 to $1.4 billion, which is the cash actually available to service debt, pay the dividend, and buy back units.
Segment detail
The consolidated numbers hide meaningful differences in health across the brands. Adjusted Operating Income by segment, with comparable sales growth, tells the real story.
| Segment | Adj. Operating Income | Comparable Sales | Comment |
|---|---|---|---|
| Tim Hortons | $1,077M | +2.7% | Largest profit pool, mature in Canada |
| International | $690M | +4.9% | The growth engine, 10.7% system-sales growth |
| Burger King US & Canada | $468M | +1.5% | Mature, multi-year turnaround underway |
| Popeyes US & Canada | $250M | -3.2% | The weak spot, negative comps |
| Firehouse Subs | $56M | +1.1% | Small, fastest unit growth at 7.7% |
| Restaurant Holdings | $44M | +2.3% | Low margin, to be refranchised |
| Total | $2,584M | +2.4% | Up 7.6% year over year |
Three observations follow from this table.
Tim Hortons remains the anchor. At more than a billion dollars of segment profit, it is the single most important asset in the company. Its Canadian business is mature and grows in the low single digits, so it functions as a large, stable cash generator rather than a growth driver.
International is where the value is compounding. With 4.9% comparable sales growth, 10.7% system-sales growth, and around 16,400 restaurants, this segment is adding units and sales faster than anything else RBI owns. Because it is almost entirely a royalty stream from master franchisees and local operators, its growth flows through at high margin. An investor paying for RBI is, in large part, paying for the international expansion of Burger King and Popeyes.
Popeyes is the current problem child. Comparable sales in the United States and Canada fell 3.2% in 2025. Popeyes was RBI’s celebrated growth brand after the viral chicken sandwich launch several years ago, and negative comps mark a clear cooling. The brand is still profitable and still growing units internationally, but domestic demand softened, and reversing that trend is one of the more important operational tasks in front of management.
The balance sheet and the unit count
RBI carries real leverage, a legacy of its history as a private-equity-style rollup built by 3G Capital. The debt is manageable given the stability of the cash flows, but it is large enough to matter.
| Item | Amount | Detail |
|---|---|---|
| Cash | $1,163M | |
| Revolver availability | $1,248M | Undrawn |
| Term loans | $5,722M | Weighted rate 5.30% |
| Senior notes | $7,650M | Coupons 3.5% to 6.125% |
| Gross debt | ~$13.4B | Excludes finance leases |
| Weighted average interest rate | 4.4% |
There are no significant maturities before 2028, which removes near-term refinancing pressure. Net debt sits around $12.2 billion. Against Adjusted EBITDA in the high $2 billion range, that is leverage of roughly 4.3 to 4.5 times. For a cyclical industrial that would be aggressive. For a franchisor collecting royalties on staple food purchases across 120 countries, it is high but defensible. The 4.4% weighted average rate is also favorable and locked in, so rising interest rates do not immediately flow through to the income statement.
The most important balance sheet detail for valuation is not the debt. It is the share count, and it is a genuine trap for anyone who pulls the common share number and stops there. RBI has 346.5 million common shares outstanding. It also has 109.4 million Partnership exchangeable units that convert one-for-one into common shares and participate in the same economics. The fully diluted unit count is therefore about 455.9 million, not 346.5 million. Any per-share figure calculated on the common count alone overstates value by roughly 30%. This analysis uses 456 million units throughout.
RBI has set a dividend target of $2.60 per share for 2026. Against estimated free cash flow per unit of around $3.00, that is a payout ratio near 85%. That is high, and it is typical for asset-light franchisors that need little reinvestment capital, but it leaves limited room for both debt reduction and buybacks after the dividend is paid.
The Carrols impairment flag
One item in the filing deserves specific attention because it is the kind of detail that does not show up in headline numbers. In its goodwill testing, RBI disclosed that the fair value of the Burger King reporting unit associated with the Carrols acquisition exceeds its carrying value by only about 7%. That is a thin cushion. It means that if the acquired Burger King restaurants underperform, or if the assumptions behind the acquisition prove optimistic, RBI could face a non-cash goodwill impairment charge on that unit. An impairment would not affect cash flow or the royalty economics, but it would be a visible signal that the Carrols deal is not performing to plan, and it would reinforce the case for refranchising those restaurants sooner rather than later.
Valuation
The instruction here is to value the business on its own economics, without reference to the current share price or to anyone’s price target. The approach is to estimate normalized earning power, then triangulate across three independent methods, all on the fully diluted base of 456 million units and net debt of $12.2 billion.
Normalized earning power. Start with Adjusted Operating Income of $2,584 million. Subtract net interest expense of roughly $516 million to get about $2,068 million of pretax income. Apply a normalized tax rate of 25%, which gives roughly $1,550 million of adjusted net income, or about $3.40 per fully diluted unit. Free cash flow of $1.3 to $1.4 billion works out to roughly $3.00 per unit. These two figures anchor the earnings-based and cash-based valuations.
Method one: EV/EBITDA
Using Adjusted EBITDA of approximately $2.8 billion, applying a range of multiples appropriate for a stable, moderately growing global franchisor, and subtracting net debt of $12.2 billion:
| Scenario | Multiple | Enterprise Value | Equity Value | Per Unit |
|---|---|---|---|---|
| Bear | 12x | $33.6B | $21.4B | ~$47 |
| Base | 14x | $39.2B | $27.0B | ~$59 |
| Bull | 16x | $44.8B | $32.6B | ~$72 |
Method two: Free cash flow yield
Free cash flow of $1.35 billion is already a levered, after-interest number, so dividing by a required yield gives equity value directly:
| Scenario | Required FCF Yield | Equity Value | Per Unit |
|---|---|---|---|
| Bear | 5.5% | $24.5B | ~$54 |
| Base | 5.0% | $27.0B | ~$59 |
| Bull | 4.5% | $30.0B | ~$66 |
Method three: Price to earnings
Applying a franchisor earnings multiple to normalized adjusted earnings of $3.40 per unit:
| Scenario | P/E | Per Unit |
|---|---|---|
| Bear | 15x | ~$51 |
| Base | 18x | ~$61 |
| Bull | 21x | ~$71 |
Bringing the methods together
The three methods converge tightly, which increases confidence in the range.
| Scenario | EV/EBITDA | FCF Yield | P/E | Blended |
|---|---|---|---|---|
| Bear | $47 | $54 | $51 | ~$50 |
| Base | $59 | $59 | $61 | ~$60 |
| Bull | $72 | $66 | $71 | ~$70 |
The base case fair value lands around $60 per unit, with a reasonable range of roughly $50 to $70.
The multiples used here sit below the levels the market has historically awarded the very best franchisors, and that discount is deliberate. RBI earns a premium-quality classification for its capital-light royalty model, its global diversification, and the double-digit growth of its International segment. It does not earn a top-tier multiple, for four specific reasons. Tim Hortons in Canada and Burger King in the United States are mature and grow slowly. Popeyes has negative domestic comparable sales. Leverage at 4.3 to 4.5 times EBITDA is higher than peers that carry less debt. And the Carrols restaurants remain on the books at low margin with a thin goodwill cushion. The base case reflects a high-quality royalty stream priced for those specific frictions.
What would make this wrong
The valuation depends on a few assumptions that an investor should stress. If International growth slows from double digits toward mid-single digits, the primary reason to pay up disappears and the multiple should compress toward the bear case. If Popeyes cannot arrest its comparable-sales decline, one of the four brands moves from asset to question mark. If the refranchising of the Carrols restaurants stalls, the consolidated margin stays diluted and a goodwill impairment becomes more likely. On the other side, faster-than-expected refranchising, a Popeyes recovery, and continued International momentum would push the business toward the bull case and justify a higher multiple. The 85% dividend payout also constrains flexibility, so a period of weaker cash flow would pressure either the buyback or the pace of debt reduction.
What to Watch
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| Catalyst | Why It Matters | Timeline |
|---|---|---|
| Popeyes US comparable sales | A return to positive comps would remove the single clearest blemish on the brand portfolio | Quarterly through 2026 |
| Carrols refranchising progress | Selling company restaurants back to operators restores margin and reduces impairment risk | Ongoing, 2026 to 2027 |
| International system-sales growth | The main engine of value creation; watch for any slowdown below high single digits | Quarterly |
| Burger King reporting unit goodwill | A cushion of only ~7% over carrying value means a possible non-cash impairment if Carrols underperforms | Annual test, Q4 2026 |
| Debt reduction versus buybacks | With an 85% dividend payout, capital allocation between deleveraging and repurchases will shape per-unit value | Ongoing |
| 2028 debt maturities | The first significant maturities arrive in 2028; refinancing terms will reflect rates at that time | 2027 to 2028 |
Sources
Research and analysis conducted with AI assistance using SEC EDGAR filings as primary sources.