Restaurant Brands International Inc. (QSR) Q1 2026 Earnings Call Transcript – Image for illustrative purposes only (Image credits: Pexels)
Miami-based Restaurant Brands International Inc. kicked off 2026 with first-quarter results that showcased resilience across its portfolio of quick-service brands. System-wide sales climbed 6.2% in constant currency, driven by strong performances at Burger King in the U.S. and robust international expansion.[1][2] Franchise operators benefited from accelerated comparable sales, while shareholders received signals of sustained capital returns through resumed buybacks and a steady dividend. These outcomes reflect years of investment in guest experience and operational upgrades.
Robust Consolidated Financials Signal Operational Strength
Total revenues reached $2.264 billion, marking a 7.4% increase from the prior year.[1] Income from operations surged 39.3% to $606 million, contributing to diluted earnings per share from continuing operations of $0.97, more than double the $0.49 reported in the year-ago period. Adjusted earnings per share came in at $0.86, reflecting 14.6% nominal growth and 11.0% on an organic basis.
Adjusted operating income grew 13.0% to $610 million, with adjusted EBITDA at $706 million. Net leverage improved to 4.2 times from 4.7 times, providing greater financial flexibility. Free cash flow also strengthened to $169 million, up significantly from $54 million.
Burger King and International Segments Drive Topline Gains
Burger King posted system-wide sales growth of 5.5%, with U.S. comparable sales jumping 5.8% – a stark turnaround from negative figures a year earlier.[1] This progress stems from the “Reclaim the Flame” initiative, under which the company invested $189 million toward a $550 million commitment through 2028 for remodels, technology, and menu enhancements. Adjusted operating income for the segment rose 11.9% to $115 million.
International operations shone brightly, delivering 11.1% system-wide sales growth in constant currency and 5.7% comparable sales. Burger King international comparable sales reached 5.4%. The segment’s adjusted operating income climbed 41.4% to $196 million. Tim Hortons contributed steadily with 1.6% comparable sales and 2.4% system-wide growth, marking its 20th straight quarter of positive comps; adjusted operating income increased 3.8% to $229 million.[2]
Popeyes Faces Headwinds Amid Broader Portfolio Shifts
| Brand | System Sales Growth | Comparable Sales | Net Restaurant Growth | Adjusted Operating Income (Growth) |
|---|---|---|---|---|
| Burger King | +5.5% | +5.8% | -0.9% | $115M (+11.9%) |
| Tim Hortons | +2.4% | +1.6% | +1.0% | $229M (+3.8%) |
| Popeyes | -3.9% | -6.5% | +1.2% | $57M (-5.1%) |
| Firehouse Subs | +7.2% | -0.5% | +8.1% | $14M (+26.3%) |
| International | +11.1% (CC) | +5.7% | +4.5% | $196M (+41.4%) |
Popeyes experienced a downturn, with comparable sales declining 6.5% in the U.S. and system-wide sales falling 3.9%; adjusted operating income dipped 5.1% to $57 million.[1] Firehouse Subs showed expansion momentum, achieving 7.2% system-wide sales growth and 8.1% net restaurant growth, though comparable sales edged down 0.5%. Overall net restaurant growth stood at 2.6%, bringing the system count to 32,985 locations.
Strategic moves included deconsolidating Burger King China into a joint venture, where RBI retains a 17% stake and recognizes franchise royalties. Efforts continue to refranchise Carrols Burger King restaurants and partner for Popeyes China and Firehouse Subs Brazil, aiming to phase out the Restaurant Holdings segment.
Guidance Reaffirmed with Focus on Capital Allocation
Executives reaffirmed expectations for at least 8% organic adjusted operating income growth for the full year, aligning with the long-term algorithm of 3%+ comparable sales, 8%+ AOI growth, and 5%+ net unit growth by 2028.[2] Segment G&A expenses, excluding Restaurant Holdings, are projected at $600-620 million, with total capital expenditures and inducements around $400 million.
Capital returns ramped up with the resumption of share repurchases in March – $34 million bought back in the quarter, targeting $500 million for 2026 under a $1 billion program. A quarterly dividend of $0.65 per share was declared for Q2, payable July 7. CEO Josh Kobza stated, “We delivered a strong start to the year, converting solid topline results into double-digit earnings growth while returning capital to shareholders through the resumption of share repurchases and our growing dividend.”[1]
For franchisees, these results translate to higher royalties from growing system sales, particularly in high-performing regions. Investors gain from improving leverage and consistent payouts, though Popeyes’ softness warrants monitoring. As refranchising progresses, the focus shifts to execution in core markets, leaving room for further upside if turnarounds hold.Company press release