Restaurant Brands International Inc

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Restaurant Brands International is a publicly-traded multinational fast-food, unlimited liability holding company, headquartered in Canada. It is majority-owned by Brazilian private equity firm 3G Capital Inc. RBI is the 5th largest operator of fast food restaurants in the world, with 25,000+ restaurants in 100+ countries.[1]

The business generates revenues from:

  • Franchise operations;
  • Properties leased to franchisees;
  • Sales at company-owned restaurants.

Additionally, the Tim Hortons business generates revenue from sales to franchisees related to supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers.

Brands

  • Burger King: American fast food hamburger restaurant chain. Burger King is the world’s 2nd-largest fast food hamburger restaurant chain as measured by total number of restaurants, with ~16,767 BK restaurants in 100+ countries (Dec.31.2017). Website
  • Tim Hortons: Canadian quick service coffee shop and restaurant chain, with ~4,748 restaurants (Dec.31.2017). Baked goods products are outsourced: remotely factory-fried, frozen, shipped, then microwaved on demand.[2] The company is selling reusable mugs and is (slowly) reintroducing china plates in an effort to deal with environmental litter.[3] Tim HortonsWikipedia-W.svg, Website.com, Website.uk
  • Popeyes Louisiana Kitchen: American fast food chicken and seafood chain. Popeyes is the world’s 2nd-largest quick service chicken restaurant chain as measured by total number of restaurants, with ~2,892 restaurants (Dec.31.2017). Website

Company

43.6%: Flag-Brazil.svg 3G Restaurant Brands Holdings LP combined voting power of RBI.[1]

(RBI common shares trade on NYSE as QSR. Class B LP shares trade under QSP.)

Shareholders

Restaurant Brands International LP
Total float: 79.7%
Source: MarketScreener.svg, Mar.2020

Restaurant Brands International Inc
Total float: 96.8%
Source: MarketScreener.svg, Mar.2020

Structure

  • Restaurant Brands International Inc, General Partner, OC, reg. Canada
    • † Restaurant Brands International LP, General Partnership, OC, reg. Canada.
† "RBI is our sole General Partner and owns all of our outstanding Class A common units." The partnership interests are held directly and indirectly by Restaurant Brands International Inc. RBI LP serves as the indirect parent of RBI's subsidiaries.ref

  • Burger King Worldwide Inc, B'berg, OC, reg. Delaware Flag-Delaware.svg
    • Burger King Capital Holdings LLC, holdco, B'berg, OC Flag-Delaware.svg
      • Burger Capital Finance Inc, ref, OC, reg. Delaware Flag-Delaware.svg
      • Burger King Holdings Inc, OC, reg. Delaware Flag-Delaware.svg
        • Burger King Corporation, OC, reg. Florida
    • Burger King (Luxembourg) Sarl, OC, reg. Luxembourg Flag-Luxembourg.svg
      • Burger King (United Kingdom) Ltd, franchise brand support and marketing services, CH
      • BK (UK) Company Ltd, non-trading, CH
    • BurgerKing Ltd, letting and subleasing properties to Burker King franchisees, CH
      • Huckleberry's Ltd, non-trading, CH
      • Burger King UK Pension Plan Trustee Company Ltd, dormant, CH

  • The TDL Group Corporation, was Tim Hortons Inc, B'berg, OC, reg. Canada
    • TH UK & Ireland Ltd, has a master franchise agreement, CH

To Suss

  • Good explanation here and here. Outcome = here.
  • Justice Holdings Ltd was Guernsey-reg. See OC.
  • Ackman founded Justice Holdings along with Martin Franklin and Nicolas Berggruen by raising around $1.4bn in the IPO in London.ref

As of 2018, Burger King has reclaimed the 2nd spot in the burger wars, with Wendy's in 3rd place. McDonald’s is still the leader.

Mr. Ackman, who runs the hedge fund Pershing Square, formed Justice last year with Martin Franklin, chairman of consumer products group Jarden, and Nicolas Berggruen, a French billionaire who has worked with Mr. Franklin on other acquisition vehicles.ref

Burger King will sell a 29% stake to Justice Holdings, a UK investment vehicle.

Last year Berggruen’s Justice Holdings, chaired by former Labour City minister Lord Myners, was said to be considering a £1bn bid for breakfast cereal firm Weetabix, which also owns Alpen, Ready Brek and Weetos. Justice Holdings was involved in the Burger King deal.ref

Bill Ackman, Pershing Square: We participated as a Founder in Justice Holdings Ltd. by investing approximately 30% of the $1.4bn of capital raised by this London Stock Exchange listed cash shell. On April 3rd, Justice Holdings announced that it would merge with Burger King. When the transaction closes, Justice shareholders will own approximately 29% of the new company with the Pershing Square funds owning approximately 11% of the pro forma company. I am personally an investor in the 3G private equity fund that owns Burger King. To avoid the potential for any actual or perceived conflict of interest, just prior to the Justice merger, the 3G private equity fund will (incomplete) ref

SPACs have in the past decade found the flexibility of BVI corporate law advantageous and this has allowed the vehicle to evolve. Following the successful listing of Justice Holdings Ltd on the London Stock Exchange, and its business combination with Burger King Worldwide Holdings Inc, in 2013 SPAC Atlas Mara Co Invest Ltd raised gross proceeds of US$325m, including the founders' investment of US$20m.ref

Timelines

ToDo: link, link, link
  • Dec.2017: The Class A voting preference shares held by Berkshire Hathaway were redeemed, thereby disinvesting BH of its stake.[2]
  • Nov.2017: Bridgepoint Capital Ltd announced an expansion of its investment in the food and casual dining sector with an agreement to take over the Burger King franchise in the UK. As part of the deal, a new UK entity "Burger King UK" was formed, with Bridgepoint as the majority stakeholder.ref,ref
  • Mar.2017: Expanded by the acquisition of Popeyes Louisiana Kitchen Inc.ref, ref
  • Dec.2014: Burger King and Tim Hortons merged, creating Restaurant Brands International Inc, in which 3G held a 51% majority stake, Tim Hortons shareholders owning 22%, Burger King shareholders 27%. Berkshire Hathaway partially funded the purchase by buying $3bn worth of preferred shares. (In Aug.2014, 3G held a 71% majority stake in Burger King).
  • Dec.2014: Burger King Worldwide Inc acquired Tim Hortons Inc.ref The merger focused primarily on expanding the international reach of the Tim Hortons brand, and providing financial efficiencies for both companies. two companies were required to agreed to maintain separate operations.ref
  • Aug.2014: Restaurant Brands International Ltd Partnership was formed as a General Partnership to serve as the indirect holding company for Tim Hortons and Burger King. The LP is a subsidiary of RBI, its sole general partner. Both entities operate under the laws of Canada.Restaurant Brands International Ltd Partnership - 2017 SEC Form 10-K & Annual Report, p.28, Feb.23.2018
  • Jun.2012: 3G took Burger King public again, by partnering with British venture capital firm Justice Holdings. (Formally known as a "special purpose acquisition vehicle", Justice Holdings is essentially a shell company with a stock listing that aims to find and merge with a privately held corporation.[4])ref, ref 3G Capital retained ~71% of the company, with Justice Holdings owning the rest.ref
  • 2011-2012: 3G Capital changed many aspects of Burger King's corporate operations. Like TPG, a new ad agency was brought in; a new manu and new products followed. Company-owned outlets were sold, to focus on becoming an exclusively franchised operation.
  • Sept.2010: 3G Capital, an American/Brazilian private equity firm, acquired a majority stake in Burger King from the consortium of TPG/Bain/Goldman. 3G delisted the company to repair its fundamental business issues without having to worry about pleasing shareholders.ref,ref
  • 2007-2010: The financial crisisWikipedia-W.svg hit the company very hard.
  • Feb.2006: A successful IPO was launched,ref with the consortium holding onto a 31% stake after the flotation.ref
  • Dec.2002: Burger King was acquired by a consortium of private equity firms, Texas Pacific Group (31%),[5] with Goldman Sachs Capital Partners and Bain Capital. TPG moved rapidly to revitalise the company, with a new advertising agency, new ad campaigns, revammped menu, and introduced the Whopper Bar concept.
  • 2000: Diageo decided to focus on beverages, and put Burger King up for sale.
  • 1997: Diageo plc was formed from the merger of Grand Metropolitan plc and brewing giant Guinness plc.ref,ref Diageo seemed to ignore Burger King in comparison to its alcoholic beverages, resulting in chronic institutional neglect to both the company and its franchisees.ref,ref,ref
  • 1992: Burger King partnered with the Walt Disney Company to tie in with Disney films, which was hugely successful. The contract ended in 1996, when Disney broke with Burger King to sign a deal with arch-rival McDonald’s. In 1996 Burger King signed a new Hollywood deal with DreamWorks SKG.ref
  • May.1990: Burger King moved its beverage contract back to Coca-Cola.ref,ref
  • Feb.1990: Wimpy: the remaining 216 restaurants, plus 140 franchises outside the UK, were purchased by a management buyout, financed by private equity firm 3i.ref
  • 1989: Grand Metropolitan plc acquired United Biscuits restaurant operations, including Wimpy with 381 UK outlets plus 148 in other countries.ref Grand Met started converting Wimpy to the Burger King format, which bolstered Burger King's global expansion.ref
  • Nov.1988: Pillsbury was unable to fight off a hostile takeover bid by Grand Metropolitan plc.ref,ref Grand Met changed Burger King's distribution methods, switched their soft-drink contract from PepsiCo to Coca-Cola,ref.
  • 1985-1989: Pillsbury tooks its eye off the ball, and Burger King declined again.
  • 1980-1984: Burger Wars: Norman Brinker, who had been brought into Pillsbury when they bought his Steak & AleWikipedia-W.svg chain, was charged with turning the company around. He started running commercials asserting that Burger King's burgers were bigger and better than McDonald's; these may be the first political-style "attack ads" in the food industry.
    As with Smith's efforts, Brinker's worked for a brief time before he left the company and and bought Chili's Grill & BarWikipedia-W.svg, (which would go on to become Brinker InternationalWikipedia-W.svg, one of the largest restaurant holding companies in the world, with 5 chains operating 1,900 restaurants in 25 countries).
  • 1978: Poor operating performance and ineffectual leadership was bogging the company down. Burger King hired McDonald's executive Donald N. Smith to reorganise and restructure the company. By 1980, company sales were up 15% – at which point Smith was poached again, this time by PepsiCo.ref After he left, sales began to decline.
  • 1972: Popeye was founded.
  • 1967: Pillsbury Company acquired Burger King Corporation and, with serious capital behind it, Burger King grew to become America's 2nd-largest burger chain by the late 1970s.
  • 1964: Tim Hortons was founded.
  • 1959: The Insta-Burger chain had grown, but had run into financial trouble. The two Miami franchisees bought out the entire company, and restructured and revitalised its operations.
  • 1954: Two Miami franchisees, James McLamore and David Edgerton, improved the Insta-Broiler; they came up with a gas "flame broiler", which eliminated the Insta-Broiler problems.
  • 1953: Insta-Burger King was founded, inspired by the original McDonald's restaurant in San Bernardino, California. The first stores used a cooking device called the "Insta-Broiler".
Sources: Short History of Burger King The Balance Small Business, Don Daszkowski. Dec.09.2018

References

  1. ^ Restaurant Brands International Inc. 2017 SEC Form 10-K & Annual Report, p.18. Restaurant Brands International Inc. Feb.23.2018
  2. ^ Restaurant Brands International Inc. 2017 SEC Form 10-K & Annual Report, page 84. Restaurant Brands International Inc. Feb.23.2018