Earnings Call Transcript - QSR Q2 2021

Operator, Operator

Good morning. And welcome to the Restaurant Brands International Second Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Stephen Lichtner, RBI's Head of Investor Relations. Please go ahead.

Stephen Lichtner, Head of Investor Relations

Thank you, operator. Good morning, everyone. And welcome to Restaurant Brands International's earnings call for the second quarter ended June 30, 2021. As a reminder, a live broadcast of this call may be accessed through the Investor Relations webpage at investor.rbi.com and a recording will be available for replay.

José Cil, CEO

Good morning, everyone. Thank you for joining us on today's call. I hope everyone is doing well. We are pleased with the results this quarter and the progress we have made on several key initiatives, including driving development, improving system-wide sales growth, and enhancing our digital platforms. Our franchisees, teams, and our restaurant team members continue to amaze us with the incredible work they are doing and their dedication to our brands and our guests. We remain confident in the strength of our long-term value proposition anchored by our guest-centric focus, three iconic brands, scalable franchise model, growing digital channels, commitment to innovation, and relentless pursuit of maximizing value for all stakeholders. We have a strong track record of driving growth, and our prospects looking forward are bright as we advance in our path to 40,000 digitally integrated restaurants. Our scale, our growing digital business, and our agility expand our capabilities, deepen the strength of our brands, and position us well for exciting compounding growth in the years to come. Even with investments in digital and across the business, we remain highly cash flow generative, a testament to the strength of our business model, which has enabled us to consistently return significant capital to shareholders over the past years. In connection with this and given our increased confidence in the outlook of the business, we announced that our board of directors authorized a new significantly expanded share buyback program of our common stock for up to $1 billion over the next two years. We also paid a $0.53 quarterly dividend on July 7, resulting in one of the highest dividend yields in our industry, and our board of directors declared a dividend for the third quarter of $0.53 to be paid in October.

Josh Kobza, COO

Thanks, José, and good morning, everyone. During the second quarter, we continued to invest in technology that is core to modernizing and improving our guest experience, as well as contributing to incremental sales and traffic for our brands. We benefit from our significant global scale, which allows us to build industry-leading technology platforms at a competitive cost profile and helps us attract and retain top talent. Our tech stack, consisting mostly of in-house development that is supplemented by third-party vendors, facilitates great guest experiences while generating rich data that provides us with insights to drive decision making across our brands and geographies. Developing these in-house capabilities in areas like e-commerce, for example, will significantly improve our operational execution, removing friction when new enhancements are developed while allowing us to remain efficient by outsourcing elements that are not core or unique to our brands. We learned a lot over the past few years about the importance of digital and crafting a superior experience, and the importance and loyalty of our digital guests, who are generally more engaged, come more often, and spend more on our products. We continue to see evidence of many of these dynamics as we grow the digital channels across all three of our brands. This quarter, we reached new records of digital sales in our home markets, despite wide consumer migration back towards in-store dining in select regions. In the aggregate, our home market digital sales increased nearly 60% from this time last year, with Tim's nearly doubling and both Burger King and Popeye's growing roughly 20%. We see a significant opportunity to grow these channels over time, and a few key initiatives, including our loyalty programs, in-app engagement opportunities like roll up to win, and outdoor digital menu boards, as important avenues for growth. We are excited to now have loyalty programs at all three of our brands in their home markets. We follow a three-step approach in our roadmap for these programs: First, build awareness and enrollment; second, focus on active user engagement; and third, drive frequency check and profitable sales. In our view, it is critical to succeed with steps one and two in order to successfully execute step three and drive long-term growth across the business. We've seen the early impacts of this roadmap at Tim's, where our program is in the third chapter of its story. Tim's rewards in Canada represent the majority of the brand's digital sales and have seen growth in users and engagement over the past 16 months. During the second quarter, the Tim's app in Canada surpassed all competitors, capturing and holding the number one position in monthly active users for food and beverage. A few months ago, we discussed the powerful impact that our all-digital roll up to win contest had on engagement. With the contest now in the rearview mirror, we are encouraged to see that it created a strong halo effect with the Tim's Canada business sustaining its new baseline of digital sales of over 30%, with registered users representing over 75% of digital sales. We continue to see Tim's rewards driving check and traffic, and most importantly, contributing positively to comparable sales. As we continue to learn more about our guests, we're able to create more personalized offers and encourage incremental visitation and spending, fueling the digital flywheel. For example, if a member visits a store three times a week in the morning for a double-double, we can offer them a buy one, get one if they return that same day in the afternoon for one of our quenchers. At Burger King and Popeye's, we are still on the first chapter of our loyalty story and remain focused on ramping up each brand's program in the coming months. With the next step coming up, BK as real perks expands from mobile order only to in-store service modes in the second half. Enrollment for each program has been encouraging thus far, and overall customer satisfaction is strong. We're excited about the incremental possibilities of our loyalty programs, allowing us to connect with our guests and drive sales to our restaurants. Across all three brands, our outdoor digital menu boards are another great example of a technology investment that drives results and touches our key focus areas within digital. We remain committed to modernizing the drive-thru experience with these menu boards at 10,000+ North American restaurants by mid-2022, including nearly all Tim Hortons Canada drive-thrus by year-end 2021. They are more efficient for the restaurants, create a better and more streamlined guest experience, and allow us to better utilize data which will enable us to improve the effectiveness of our suggestive selling as our learnings build over time. We've already observed an uplift in comparable sales from outdoor digital menu boards compared to static outdoor menu boards. In addition, we're seeing encouraging early results on our suggestive sell models, which will improve with usage and scale and our focus on enhancing our algorithms. One such enhancement was a recent improvement in the way we utilize weather data in the model, which, for example, has benefited our beverage sales by furthering our ability to dynamically recommend a cold beverage on a hotter than expected morning or a hot beverage on a cooler afternoon. Our model also proactively recommends one of the top five most popular items rather than just the top item, giving our guests a new item to try when they visit. In conclusion, our technology focus continues to be centered around knowing our guests and owning the relationship with them, which in turn allows us to provide better service through a personalized enhanced experience. We believe these efforts will drive increased traffic check and brand loyalty over time. I'll now pass the call over to Matt.

Matt Dunnigan, CFO

Thanks, Josh. And thanks everyone for joining us this morning. Our global system-wide sales for the quarter increased roughly 32% to $8.9 billion, and our adjusted EBITDA grew about 52% organically year-over-year to $577 million. Beyond the growth in system-wide sales, there are a few factors contributing to our growth and adjusted EBITDA year-over-year. This includes benefits related to a sizeable shift in sales mix, driven by our recovery in sales and volumes. In addition to franchise royalties, we also generate EBITDA from property and supply chain activities. Also, as you may recall, last year we increased our bad debt provision to reflect the increased risk environment around receivables, and similar to last quarter, we've continued to release some of those remaining cautionary provisions as the business continues to strengthen around the world. Finally, our year-over-year growth this quarter reflected the fact that we had a smaller differential between ad fund revenues and expenses during the quarter as compared to Q2, 2020, driven by continued improvements in our business as we lap the trough of the pandemic last year. It's worth noting that this year's ad fund expense included deploying a portion of the 80 million CAD support behind the Tim Hortons ad fund in Canada. As José mentioned, looking forward to the second half of the year, we have retained a majority of this investment to fully support our back-to-basics initiatives as the Canadian market continues to reopen. These benefits to our organic adjusted EBITDA growth rate were partially offset by higher G&A. As we have discussed during our last few calls, we're proactively investing in digital and technology, as well as hiring across a number of key areas like marketing and operations. These investments are leading to a sizeable year-over-year increase in segment G&A, which will continue over the balance of this year as we invest behind our capabilities for the future. Now, turning to EPS. Our second quarter adjusted earnings per share of $0.77 grew at a higher rate than our consolidated adjusted EBITDA at over 130% year-over-year, including an FX benefit of about 15%. The higher growth was primarily driven by a lower adjusted effective tax rate, reduced share count, interest savings, and lower equity-based compensation. Our adjusted effective tax rate of about 11% this quarter included discrete non-cash benefits such as net reserve releases for certain prior tax years, which reduced our adjusted effective tax rate by approximately 6%, as well as excess tax benefits from equity-based compensation that we realized during the quarter, which reduced it further by approximately 1%. It is also worth noting that equity-based compensation decreased quarter-over-quarter to $20 million from $26 million last quarter, primarily related to forfeitures of long-term incentives specific to the quarter. For the balance of the year, we currently expect equity-based compensation to ramp up to slightly above first quarter levels related to our commitment behind investing in our people for the long run. Now turning to our capital structure. While the impact of COVID last year did result in a step-up in our leverage levels, we've seen that trend reversing with our business largely back on track. As José mentioned, we have an incredible cash flow profile and during the quarter we generated nearly $450 million in free cash flow. The strong free cash flow coupled with a roughly $220 million sequential increase in LTM adjusted EBITDA contributed to a sizeable decrease in our net leverage ratio to 5.3x from about 6x in Q1. We also took advantage of favorable market conditions to refinance the $775 million of outstanding principal on our 4.25% first lien notes due 2024 with an add-on to our existing three and seven-eighths first lien notes due 2028 effective in July. Over the past three years, we have opportunistically refinanced our entire capital structure, meaningfully reducing our interest expense by roughly $100 million annually and extending maturities such that a vast majority now fall beyond 2026. In terms of liquidity, we ended the quarter with about $2.8 billion available, including nearly $1.8 billion in cash and about $1 billion of undrawn revolver. Between our current liquidity and the robust free cash flow conversion of our business, we're in a good spot to continue driving our long-term capital allocation strategy which since 2015 has included returning nearly $6.5 billion to shareholders through approximately $4.9 billion of dividends and $1.6 billion in share repurchases. With all our decisions, including capital allocation, we take a balanced approach with the goal of maximizing value for our shareholders over the long run. We prioritize reinvesting in our business in a thoughtful way, enhancing shareholder returns through significant returns of capital, and evaluating strategic opportunities that can drive step function value creation. Heading into the second half, as our visibility on leverage and performance continues to improve, we will be considering alternatives for the excess cash flow that we build beyond the targeted investments we're making back into the business. On this front, as José mentioned, we announced this morning a continuation of our dividend into Q3 with another $0.53 per common share and partnership unit, keeping us on track for our full-year target of $2.12 per share in 2021 and maintaining our industry-leading dividend yield. We also announced this morning that our board of directors approved an increase to our open market buyback authorization from $300 million to $1 billion over the next two years. Buybacks have been a valuable tool for us historically, with nearly $30 million units repurchased since 2015 through partnership exchanges. Going forward, we expect they'll continue to be a meaningful lever given the strength of our cash flow generation and intend to use this increased authorization to buy back shares in the open market. Having said that, our primary focus for the second half and beyond remains on driving the core business and delivering on the exciting organic growth potential we see globally for all three of our iconic brands. With that, I'd like to thank everyone again for your support, and we'll now open the line for questions.

Operator, Operator

Thank you. We will now begin the question and answer session. Our first question comes from Patricia Baker with Deutsche Bank. Please go ahead.

Patricia Baker, Analyst

Thank you and good morning, everyone. José, I really appreciate your discussion or identification, rather of what you believe the issue is with Burger King in the U.S. and the five focus areas that you've identified with respect to one of those, which is the image transformation and the upgrade of the network in the U.S. Can you tell us where you are on that journey and what the pace of that network upgrade will be over the course of the coming years?

José Cil, CEO

Hi, Patricia, thanks so much for the question. The image transformation has always been an important part of the business, obviously in QSR, with a brand as well known and penetrated, and with the legacy and heritage that BK has. It's very, very important. And it's an ongoing process. We launched our Burger King of tomorrow image and transformation initiative several years ago, and we've made good progress against that. We're seeing investments from our franchisees as well as from the company for transformation of restaurants and drive-thrus in particular, integrating digital into all the restaurants and then upgrading the image of the restaurants in the interior as well as in the exterior, which is critical for curbside appeal. And we're moving at a good pace. I think we've made some good progress on that, but I think we can go faster. It’s one of the things that our teams are considering and contemplating, and working with franchisees, focusing on higher return on investment remodels, especially focused on drive-thru and double drive-thrus where we think there's an opportunity to drive increased capacity and throughput in our drive-thrus. Integrating technology there is key. We've started that process with outdoor digital menu boards, that's going well with Burger King, and we continue to review and see if there are opportunities to go faster. As we do that analysis and assessment, we'll keep you all posted on how and when and what we'll do to accelerate that. So thanks so much for the question.

Operator, Operator

Our next question comes from Dennis Geiger with UBS. Please go ahead.

Dennis Geiger, Analyst

Great. Thanks for the question. And José, for Tim Hortons down mid-single in July across Canada is certainly an encouraging recovery trajectory. It seems to suggest that your strategies are resonating particularly as mobility increases. I just first wanted to clarify the comment you made about down single digits in over 19 in July, was that specific to all provinces individually or both within that range? More importantly, the question is just kind of curious if there's anything else that you can break down on the Tim's performance as it relates to how the system is directly impacted by pandemic factors as we try to assess the strength of the brand isolating that impact. So if there's anything sort of on central businesses or locations, how to think about that drag anything on that front if you're able to kind of give some color. Thank you.

José Cil, CEO

Right, thanks for the question, Dennis. As I mentioned, we're really excited about the progress we're seeing with Tim's. We're making progress on brand perception and guest experience. Food quality ratings are improving as well year-over-year. We're focused on executing the back-to-basics plan with quality improvements, fresh food, and some of the new launches like cold brew and beverages are really important. One of the things that was really encouraging about the quarter, moving through June and continuing in July, is that as things reopened, we're moving in the right direction. We see positive indicators in the business, sequential. We saw sequential improvement on a two-year basis for same store sales of three points. Transit scores improved steadily towards the end of the second quarter. Ontario, which has nearly half of our restaurants, was the last to begin exiting the stay-at-home orders. I think there's a lot of folks on the call who don't quite understand the nuances between what's happening in Canada and in Ontario in particular versus what's happening here in the U.S. Ontario exited stay-at-home orders on June 2, and outdoor dining and retail stores opened on June 11; indoor dining with social distancing followed after that. So all indicators as we look today in July show that provinces are now across the country in negative single digits compared to 2019. We're also focused entirely on our plan. We still have a lot of work to do and a lot of firepower in our marketing ad fund, as Matt mentioned, for the back half of the year. So we're very excited to continue to drive the plan and work with our owners to prepare for this reopening in Canada, in particular Ontario, in the coming months and quarters. Thanks for the question.

Operator, Operator

Our next question comes from John Glass with Morgan Stanley. Please go ahead.

John Glass, Analyst

Thanks very much. I wonder if I could just follow up on Tim's. José, you said you're taking share in the current quarter. It's hard for us to benchmark Tim's versus peers. Do you think you are outperforming the morning daypart just generally in the markets? If you could talk about it market by market, or overall, and if you think back whatever it is five years, where does your share at breakfast stand today versus that if it was a peak? Are you at new peaks? Are you below but you're now improving? How do we sort of frame where your share has gone over time and where it is today?

José Cil, CEO

Yes. Thanks so much, John, for the question. As I mentioned, we have seen solid movement in share in cold beverages, iced coffee, and breakfast as well. A lot of that we believe, based on consumer feedback and brand perception ratings that we track regularly, is tied into the progress we're making on the quality improvement of the food and beverages as well as how we're communicating them and the reconnection we're making with our communities across the country. So we think it's very much an output of the work that we're doing. In some cases, particularly with breakfast, I think we've had a sizable share of the breakfast business given our penetration and the frequency we have, especially due to coffee. However, the research we've conducted shows that decisions to come to Tim's were driven mostly by beverage, while if someone was deciding to go somewhere for breakfast for food, we weren't really at the top of the consideration list. Our share on food, particularly for breakfast, wasn't as strong as it should or could be as compared to our share for beverages. We've seen progress against that. Obviously, COVID did impact share, especially during the height of it through 2020 and into early 2021. What's giving us confidence now is that we're chip away at that and making great progress versus where we've been. We’re excited about these share improvements, which are leading indicators for our ability to grow in this important market. Thanks so much for the question.

Operator, Operator

Our next question comes from David Palmer with Evercore ISI. Please go ahead.

David Palmer, Analyst

Thanks. So just a quick one on Tim's loyalty, and then just follow up on Burger King. The loyalty program at Tim's was launched back in 2019, and I know that was a tough start where it was not the digital one that is today. You mentioned doubling the loyalty mix there. Could you give an update as to what that mix is running out today? How much of a step up is that? As you're lapping, as we think about two-year trends, or even into 2022, we’ll be thinking three-year trends versus 2019. I'm wondering how much loyalty can be a lift particularly versus that rough start to the loyalty program when it was more of a punch card situation. Following up on Burger King U.S., it sounds like you're moving towards a premiumization strategy, reemerging renovation products and assets. I’m wondering if that feels longer-term in nature but I’m curious how you’re thinking about maybe shorter and medium-term type jolts you can give to sales. Thank you.

José Cil, CEO

Great, thanks so much for the questions, David. I'll have Josh touch on the Tim's loyalty program and then I'll take the BK U.S. question.

Josh Kobza, COO

Yes, thanks. Good morning, David. Thanks for the question on loyalty. I would say first of all, we're really pleased with the progress that we've made on loyalty in Canada with Tim's rewards. I think the team has done a fantastic job evolving the program over time and making it really engaging and compelling to our guests there. We had big success with the roll up to win contest in the first half of this year, and we succeeded in getting many more guests engaged in the program and also in terms of driving behavior and engagement on our app with our existing Tim's rewards members. Specifically to your question on where the program is, I think we mentioned in our earlier remarks that our digital sales are over 30% of sales now at Tim's, and our loyalty sales are the majority of that. It's a very large chunk, and it's grown significantly year-over-year. With respect to your last question on where we go in 2022, our goal is to continue to grow the program and particularly to make it even more engaging to expand and have all the excitement that we can bring with the program and what we can offer to our guests to make them even more excited about engaging with the Tim's brand more often.

Unidentified Company Representative, Unidentified

Great. Thanks Josh. David, on the second question on BK U.S. I wouldn't say it’s a premiumization plan. I think it’s a plan that's emphasizing focus and pace. I think the challenge we've talked about quite a bit concerning the BK business is that we're at our best when we have a balanced approach with a strong focus on core with premium products that drive check while maintaining a balanced approach on value. Where I've seen the opportunity in the near term as I spend time with the team and speak with franchisees is to get a better handle on what opportunities there are for acceleration. We can drive acceleration with a lot more work on the brand image and further improve return on remodels and new builds. There’s an opportunity across many platforms with focus on breakfast, premium and value. There is a bunch of work to do in partnership with our franchisees on operational consistency. We also have a tremendous opportunity especially as we grow our digital business and integrate that into the restaurant experience both in-store as well as off-premise, including drive-thru and delivery. Digital is a huge focus for us. Finally, I think we need to enhance our communication. We have been a bit mixed in our execution on our brand communications. We spent a lot of time on price-driven communication and we have more work to do on cut-through brand and high-quality messaging around the quality of our products. So that's the focus; it is all about balance. Most importantly, it’s about focus and pace, moving quickly on the things that we think are fundamental to driving growth in the QSR industry in the U.S., which we know we're very capable of doing. Thanks so much for the question.

Operator, Operator

Our next question comes from Jeffrey Bernstein with Barclays. Please go ahead.

Jeffrey Bernstein, Analyst

Great, thank you very much. Two questions for you. One José on the growth side of things, just as we think about the 5% plus worldwide unit growth seems like you're confident you can hit that in ‘21. My guess is there's some help from what was a pause for the most part in 2020 helping the backlog in the pipeline. So I'm just wondering beyond 21 whether you think you're now at a steady state where you can resume that north of 5%. Just wondering whether there are any issues with supply or construction delays or labor perhaps that might pose a challenge. Then my follow up with just for Matt on the cash usage. You mentioned in your prepared remarks, you'd consider alternative uses of excess cash. I wasn’t sure whether that was exemplified by the dividends and the share repurchases solely, or whether it has potential to co-invest with franchisees. I know you mentioned trying to accelerate remodels or digital menu boards or any other uses for excess cash that you might consider due to your strength in terms of balance sheet. Thank you.

José Cil, CEO

Hey, Jeffrey, thanks so much for the question. I'll take the one on unit growth and then I'll pass it over to Matt. As I've mentioned several times, we feel really good about the progress we're making with the pipeline and our prospects for development. We have focused. We've said two things in the past. One is that we felt confident we can get back to pre-pandemic levels of growth in 2021, and I think the first half so far has validated that view. We've got good partners, healthy pipelines, and a lot of interest and excitement about growth, especially after the impact of the pandemic. People believe much more in the power of the business even in the most difficult moments. It's resilient and generates positive cash flow, especially given our off-premise and digital capabilities. So our partners are really excited about and we see the momentum building in our pipelines; obviously, the results for the last two quarters speak for themselves. We have a lot of excitement with all three brands. I think what's also exciting long-term is that we're beginning to see the U.S., Canada, and international pipelines get going on the BK side. We're also seeing a strong movement with Popeye's and Tim Hortons internationally, which we hadn't seen before. In terms of our unit growth, particularly Tim's and Popeye's, those are early days earlier than Burger King. We're seeing strong momentum there with excitement from new operators and partners to invest in the brands and accelerate investments and growth in their markets. So we feel confident about the long-term and are very focused on the short-term. There are challenges in supply chain, especially in equipment, but we have good relationships and we're working closely with them to ensure we can continue to deliver what we have in front of us. I'll pass it over to Matt.

Matt Dunnigan, CFO

Hey, Jeff, it's Matt here. Thanks for the question. As it relates to capital allocation, we've been pleased with the performance and recovery of the business. We have an incredibly healthy cash flow profile and we've seen the balance sheet improve, as we've mentioned your leverage coming down quite a bit this quarter. We feel well-positioned in terms of our balance sheet, cash flow generation, and liquidity in terms of our shareholder return potential and the capital that we can return to shareholders over time. Our significant allocation is toward our industry-leading dividend, and with business improvement, that's what gave us confidence to reset our authorization and upsize that from $300 million to $1 billion. This reflects a level that we think makes sense for our business and a great launching point to actively repurchase shares in the open market while adding repurchases to our toolset. We're very balanced in our investments behind the brands already. If you look back historically, we’ve been investing in the BK business as well as Tim’s, in terms of remodels and investments internally and in people to help support the plans. So any additional investments will be evaluated through our capital allocation approach and we will share them in due course if they could drive strong returns for both us and our franchisees.

Operator, Operator

Our next question comes from Jon Tower with Wells Fargo. Please go ahead.

Jon Tower, Analyst

Great. Just coming back to the Burger King U.S. conversation. I'm just curious; thanks José for kind of going through some of the pace, conversation and focus earlier. But I am curious from your perspective, how much of the kind of sales underperformance or slow return to pre-pandemic levels relative to the competition do you think is controllable versus non-controllable? That is in terms of controllable, I would view staffing levels at your stores, product marketing, operational execution versus non-controllable, which is competitors just getting more aggressive with marketing, new product news and promotions. If you could just kind of comment on that, that'd be great.

Josh Kobza, COO

Yes, Jon, thanks for the question. Look, the industry has been competitive for a long time. We feel that the opportunity for acceleration is all within our control, and I think our franchisees believe the same thing. Staffing and retention are also challenges that everyone is dealing with. We’re working hard with the franchise partners to ensure they have the ability to meet these challenges. The bigger work in front of us is executing at the highest levels, and we're very capable of that. We’re excited about where we are and look forward to sharing our progress in the coming quarters. Thanks so much.

Operator, Operator

The next comes from Gregory Francfort with Guggenheim Securities. Please go ahead.

Gregory Francfort, Analyst

Hey, thanks for the question. José, I think a couple of questions ago you were talking about the acceleration in Tim's international on the unit side. Can you talk maybe specifically about China? I think you have a couple of hundred stores in the ground there now and what either the returns are looking like or what the markets look like. Is there a pace of development in China specifically that you think makes sense to balance taking advantage of the opportunity long-term with operational complexities? I'm just trying to get out where that might accelerate you on a pace of development. Thanks.

José Cil, CEO

Hey, Greg, thanks for the question. Yes, we went from zero in February 2019 to 200 this first quarter of '21 with a commitment from the team to double the size of the business from 200 to 400 in full year 2021. My view on this is that the business is super exciting, the brand is resonating well there. Our product, particularly our beverage lineup which has expanded and is high quality at a great value with tremendous digital focus is striking a chord with the Chinese consumer. So we feel confident about the pace at which the team has communicated. I feel very confident long-term. Coffee consumption is on the rise, double-digit growth, and as a former tea market, it's becoming a high consumption coffee market. We're well-positioned to do great things. I tell our franchise partners to go faster, but we want to do it the right way, with the right image, technology focus, quality, and execution. The short-term pace has been exciting. We have a great team there led by Yong Chen, who's been a partner of ours for quite some time. We're excited about opportunities in China, and we continue to work closely with the team there. We look forward to sharing progress as we keep growing the brand in 2021 and beyond.

Operator, Operator

This concludes our question and answer session. I would like to turn the conference back over to José Cil for any closing remarks.

José Cil, CEO

Great, thanks to everyone for joining us this morning. We're pleased with the progress we've made this quarter, including driving strong growth and development keeping us on track to reach our long-term target of 40,000 restaurants globally. We remain committed to delivering high quality, delicious food and improving the experience for each and every one of our guests through our digital initiatives and commitment to operational execution. We know we have the right pieces in place to drive long-term sustainable growth at all three of our brands and build the most loved restaurant brands in the world. Have a great rest of the day, and stay safe. Thank you.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.