Restaurant Brands International’s Q1 Earnings: Navigating Near-Term Headwinds Amid Long-Term Growth Ambitions

Restaurant Brands International (QSR) delivered a mixed Q1 2025 earnings report, underscoring the challenges of sustaining growth amid macroeconomic pressures and shifting consumer preferences. While the company reaffirmed its long-term targets, the results highlighted near-term hurdles that could test investor patience.

Key Financials: A Miss Against Expectations

Adjusted EPS of 75 cents and revenue of $2.11 billion fell short of Wall Street’s forecasts, driving a 2% premarket decline in shares. Net income dropped 30% year-over-year to $159 million, with system-wide sales growth slowing to 2.8%—a stark contrast to the 8.1% surge in Q1 2024. Same-store sales for the consolidated portfolio dipped to 0.1%, adjusting for a Leap Day impact, compared to 4.6% growth a year earlier. These figures signal a tough operating environment, particularly as currency fluctuations and supply chain costs added pressure.

Brand-Specific Struggles and Silver Linings

Tim Hortons (TH): The Canadian icon faced a 0.1% decline in system-wide sales in its home market, down from 7.5% growth in 2024. FX headwinds and rising commodity costs dented profitability, though its global expansion into rural Canada and Western markets remains a strategic priority.

Burger King (BK): U.S. comparable sales slumped 1.1%, with system-wide sales falling 1.7% to $2.7 billion. The brand’s $143 million investment in its “Reclaim the Flame” initiative—aimed at modernizing restaurants and marketing—suggests management is doubling down on turnaround efforts.

Popeyes (PLK): A 4% drop in U.S. same-store sales and 2.4% system-wide sales decline underscored the brand’s struggle to retain momentum. However, adjusted operating income rose $2 million due to company-owned restaurant acquisitions.

Firehouse Subs (FHS): The smallest segment shined, with 7.3% system-wide sales growth, driven by 5.9% net restaurant expansion. This contrasted sharply with peers, offering a glimmer of hope in an otherwise bleak quarter.

Strategic Shifts and Risks Ahead

RBI is pivoting toward refranchising, aiming to transfer most Carrols Burger King locations to franchisees and explore new investors for Firehouse Subs Brazil. Meanwhile, the sale of Burger King China—acquired in February 2025—remains a critical test of management’s ability to offload non-core assets.

Financial guidance for 2025 includes $400–$450 million in capital expenditures and a $0.62 dividend, signaling confidence in cash flow despite near-term challenges. However, risks loom large: 8%+ adjusted operating income growth for 2025 hinges on resolving FX volatility, stabilizing commodity prices, and reigniting same-store sales.

Conclusion: A Glimmer of Hope Amid Stumbles

While Q1 2025 was a setback for Restaurant Brands, the company’s long-term algorithm—3%+ comparable sales growth and 8%+ AOI growth by 2028—remains intact. Key metrics like 5%+ net restaurant growth through Tim Hortons’ rural expansion and Firehouse Subs’ steady growth offer pathways to recovery.

Investors should weigh the 21% year-over-year EPS decline against the $700 million brand revitalization plan and strategic refranchising moves. With a $0.62 dividend and a focus on cost discipline, RBI is positioning itself for a rebound. However, the road to consistent growth will require overcoming FX headwinds, stabilizing same-store sales, and executing high-stakes asset sales. For now, patience—and a close eye on Q2 results—seems prudent.