VOTE NO???
So far shareholder like what they are seeing from Patrick Doyle joining RBI. Since joining RBI in November 2022 QSR is up 9.1% with the S&P up 1.6% for a total outperformance 740bps adding nearly $2.5 billion in market value. With the annual meeting approaching two proxy advisory firms have recommended shareholders of Restaurant Brands International vote against the company’s US$116.7 million compensation plan for executive chairman Patrick Doyle.
Institutional Shareholder Services Inc. (ISS) and Glass Lewis released reports this month highlighting concerns about the compensation package for Doyle ahead of RBI’s annual meeting on May 23. Mr. Doyle will not receive a salary or participate in the company’s annual bonus program, but his sign-on compensation package, which includes performance-based and time-vested stock options, is to total US$116.7 million over a period of five years. If RBI’s stock reaches the maximum stock performance targets outlined in the company’s proxy report, the total value of the sign-on package would be approximately $165 million, Glass Lewis said in its report.
ISS and Glass Lewis have each recommended that shareholders vote against the compensation plan for Doyle. “There are significant concerns raised by the size of the new executive chairman Doyle’s equity awards, which the company values at $116.7 million, nearly 8 times the median total CEO pay at ISS-selected peers,” ISS wrote, adding that Doyle will receive $30 million “earned merely by the passage of time” and another $35.5 million in time-vesting stock options. “While the remainder of the grant consists of [performance share units] with stock price goals, this structure may reward for temporary peaks in performance… in light of these factors, support for this proposal is not warranted.”
QSR Black Book
We are hosting a RBI Black book call on May 23rd at 12:30. RBI (QSR) joins MCD as our two BEST IDEA LONGS. We will also detail some of the changes taking place at TAST (LONG BIAS) and how that influences changes in the system and investor perception.
EVENT DETAILS:
|
Burger King is the 3rd largest burger chain (by U.S. system sales) built upon an iconic “home of the Whopper” brand equity, which emphasizes flame grilling (over an open flame) that represents a clear difference from griddling - consistent with its tagline "Your way, way better." TAST is the largest Burger King franchisee in the system. Ironically, the ultimate success of Burger King will come as MCD trends slow, but there are no signs of that currently happening, and it’s not needed right now.
THE CALL WILL COVER A BROAD RANGE OF TOPICS ON THE BURGER KINGS SYSTEM, AMONG OTHERS:
- Franchisee Economics, including Burger Kings Unit Economics.
- Operating strategy, including corporate oversight.
- Menu trends strategy and innovation
- Marketing Strategy
- Current trends for Carrols Corp (TAST) and what that means for the BK system
As we learned this quarter, the new management is getting serious about fixing profitability. The Burger King brand’s struggles with franchisee profitability have prompted RBI management to change and cleanse the system. Every major QSR chain has done this over time, why did it take BK this long? The new executive chairman is have a big impact! For years, 3G has followed a certain playbook by trying to add value by restructuring companies after buying them and imposing a model that’s based on extreme efficiency. Implementing zero-based budgeting at BUD, QSR, and KHC has led to significant underperformance. That story of restructuring, efficiency, cutting costs, and not investing in brands led QSR (BUD & KHC) to underperform all its QSR peers except PZZA and the S&P 500 over the past 10 years.
Online Grocery - April 2023
Year-over-year performance varied widely across the three key segments as Delivery sales jumped 20%, Pickup dipped 3%, and Ship-to-Home plunged 19%.
DELIVERY
The strength in for Delivery in April 2023 was driven by a rebound in MAUs and a higher average order value (AOV). Delivery’s MAU grew 11% versus the prior year but finished up only 1% on a two-year stacked basis versus 2021, as the segment’s customer base fell 9% last year. In addition, Delivery’s AOV rose +5% YoY while the other two segments experienced a pullback in spending per order versus 2022.
PICKUP
April’s decline in Pickup sales was largely the result of lower order frequency and a reduced AOV; this was offset somewhat by moderate growth in its MAU base (in the mid-single digit range).
SHIP-TO-HOME
The decline in Ship-to-Home sales, on the other hand, was the result of deterioration across all key shopping metrics, including continued contraction of its MAU base along with double-digit drops in both AOV and order frequency among active users.
Share of total spending
Online’s share of total grocery spending increased in April, up 20bps to 11.2% versus last year. Excluding Ship-to-Home, since most conventional supermarkets don’t offer it, the adjusted contribution from Pickup and Delivery finished at 10.0%, up 40 basis points compared to a year ago, due to Delivery’s strong performance for the month.
