Restaurant Brands International

Uh, you're also seeing Burger King that's, uh...

Well, not Burger King, but Restaurant Brands International, so the holding co. or the, the publicly traded stocks, so QSR, owns Burger King, Popeyes, Tim Hortons.

And for them it's been a bit more of mixed result.

Burger King has actually done better because they've been investing a whole lot in the brand starting about four years ago, which is what-

I mean, restaurants broadly, you've seen actually restaurant spending growth improve from a challenged level at the beginning of the year, but it's one of those sectors which, where we can talk about as a group, but you get these big winners and losers almost regardless.

And so one great example over the past year would just be comparing Restaurant Brands, who's the owner of Burger King and Tim Hortons, to McDonald's.

So, I mean, let's-- I'll take you back a year ago.

I mean, if we're sitting here a year ago on consensus numbers, McDonald's was trading at twenty-three, twenty-four times forward earnings, and Restaurant Brands was trading at sixteen or seventeen times forward earnings.

And so what's happened over the past year? I mean, McDonald's has really struggled with value and execution.

They've seen their US same-store sales trends go negative.

And despite all this macro concern, the multiple has held in.

It's been flat.

Most of the money was invested in a concentrated basket of public companies.

Chipotle Mexican Grill, Restaurant Brands International, Hilton Hotels, and Lowe's made up the majority of his portfolio.

The success of his fund in 2020 was going to rely almost entirely on the performance of just four stocks, and that wasn't even the worst part.

This is the concentration of Ackman's exposure to industries at the end of 2019: 40% invested in restaurants, 16% in hospitality, and 14% in retail.

The answer came just a week later.

On the 25th of March, Ackman published another letter to his shareholders stating, "On March 23rd, we completed the exit of our hedges, generating proceeds of $2.6 billion for the Pershing Square funds," and the price of the bet being just $27 million.

Not only that, he'd also taken most of the 2.6 billion and bought shares in companies like Berkshire Hathaway, Hilton, Lowe's, and Restaurant Brands.

So around the time of his CNBC interview, Ackman would have greatly benefited from increased fear in the markets.

So essentially what they're saying is saying, "You know what? If we wanna gain market share, we have to rein in costs by using things like loyalty programs, while we have to rein in costs if we wanna make sure our franchisees remain profitable," but we also have to use things like loyalty programs, personalization, redesigning restaurants, AI for automation, and increased productivity.

They're focusing on fixing the menu and the customer experience over a short-term promotion that might result in a temporary spike of sales, but isn't sustainable, and that's something that the Restaurant Brands International also mentioned.

And they see that there's a lot of opportunity in chicken and beverages specifically.

They own about 40% of the beef market for restaurant, I didn't know that, and it's in the low double digits for chicken and then single digits for beverages.

So system-wide is 46,000, franchises 44.

So right around that 95% number that I was mentioning earlier.

And there's some interesting things that are pretty consistent here between Restaurant Brands International as well and McDonald's.

So Restaurant Brands International, like I mentioned, they own the, like, the two big franchises are Burger King and Tim Hortons, and of course they have Popeyes and Firehouse Subs.

So they're going to say that Chipotle would be a splashy acquisition for Nickel.

More than that, it could create a new restaurant conglomerate following in the footsteps of Yum Brands, Restaurant Brands International, and Rourke's capital-backed Inspire Brands.

Multi-brand restaurant companies are more diverse, which can be more attractive to investors.

While Starbucks is still a much larger chain than Chipotle, the difference in their categories means that one's poor performance could be offset by growth of the other.

It doesn't even go.

But if you look at the share prices of restaurant brands, they have bought a lot of brands.

Um, you look at Popeyes, Burger King, Tim Horton's.

Things like that have not worked.

I'm putting, uh, big news today, Brian Niccol, on my new, uh, Wall of Titans.

He will be, uh, joining Dr. Lisa Su at AMD.

Um, but, you know, I look at Restaurant Brands.

You know, that stock has never really, I don't know, for, for lack of better terms, sizzled.

I, I guess there is, there is a semi-historical precedent.

You look at, you look at, um, QSR, Restaurant Brands International.

That's Burger King.

That's Popeyes.