Parent Company of Burger King Has Appointed a New CEO to Turn the Chain Around

The new CEO at RBI will be Joshua Kobza, as the chain continues to trail Wendy's in terms of profitability

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Owner of Burger King Restaurant Brands International Inc., the company is a majority-owner of the QSR industry, with a -2.85% decline in sales and profits. The company appointed a new chief executive on Tuesday, saying it was more important than ever to assist its restaurant owners to increase profits. 

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On March 1, Joshua Kobza, the company's chief operating officer, will take over the company's position as CEO of the Toronto-based fast-food chain operating company. Over the course of his 11 years with Restaurant Brands, Mr. Kobza served as the company's chief financial officer and chief technology officer. 

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On the call held by Restaurant Brands' executive chairman on Tuesday, Patrick Doyle claimed that Mr. Kobza had a wide range of experience that would enable him to assist the company in further improving its chains and leading a new era of growth. RBI has announced that Jose Cil has been hired as its CEO since 2019. He will remain with the company for a year as an adviser. 

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Mr. Doyle said that, despite the succession being part of a preplanned process, RBI's board did not see an issue with Mr. Cil's leadership, since it was part of a preplanned process. “I think the trick now is to figure out how to accelerate the growth, how can we move faster on the priorities that we have? ” Mr. Doyle said in an interview Tuesday.

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Tuesday's share price for Restaurant Brands was down by 3.1% in Toronto.

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In addition to Burger King, the company also owns Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs, as well as the iconic Canadian coffee shop, Tim Hortons. Since last year, the company has been working hard to turn around its cornerstone burger brand. As a result of the new leadership being installed at the chain, $400 million has been allocated for boosting advertising and updating the restaurant design and operations at the chain. 

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By sales, Burger King has long been the second-largest U.S. burger chain behind McDonald's Corp. however, as of last year, it has dropped to third behind Wendy's Co. WEN increases by 0.18%; the green triangle is rising upward in 2020. As per management, Burger King's standing with investors and diners has been tarnished by overly complex menus, slow operations, and outdated restaurants that are not up to date with today's standards.  

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It is also becoming increasingly difficult for Burger King to make profits from its franchise owners. One of the largest Burger King franchisees in the U.S., Toms King Holdings LLC, with 90 restaurants in Illinois, Ohio, Pennsylvania, and Virginia, declared bankruptcy in early January of this year, citing declining revenue and rising costs for shipping and food. There was also a decrease in the availability of workers, which resulted in a number of the company's restaurants no longer being able to make money, according to the Illinois-based franchisee's bankruptcy filing.

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In response to a request for comment, Toms King's lawyer did not respond to a request for comment immediately.

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As Restaurant Brands announced on Tuesday, franchise owners have seen a decline in profits in their home markets since its 2019 update to investors, as domestic owners are struggling to regain sales and pay for rising food and ingredient costs set to continue. Mr. Doyle reiterated that the company shouldn't consider those challenges as excuses, and executives have made a commitment to do more in order to assist its restaurant owners in the future.

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“During the course of my career, I have witnessed the sweeping changes that can take place within a corporate culture when we put the profitability of franchisees at the center of everything we do,” Mr. Doyle said during Tuesday’s investor conference call.

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As part of the process of improving the company's operations, Restaurant Brands appointed Mr. Doyle-the former chief executive of Domino's Pizza Inc.-to the position of the company's executive chairman last November. He said at that time that his top priority was to help Restaurant Brands' franchisees and its operations, which are the two pillars of its business, having been an executive partner at investment firm Carlyle Group Inc.

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The Restaurant Brands Corporation announced on Tuesday that it would speed up the process of assisting Burger King franchisees in remodeling their Burger King restaurants. A number of the company's executives said the company was also focused on helping U.S. hamburger restaurant owners increase sales and lower their costs, and that the company would tie some of its executive compensation to the improvement of profitability at the restaurant level. It has been reported that the company has been getting good results so far with its new chicken sandwich which is simpler to prepare than the previous one, for example. There was an improvement in profits at the franchisee level during the fourth quarter, according to Restaurant Brands.

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Mr. Kobza said that he intends to speak with franchisees about how they can boost their profits in the future. In an interview, he said: "We are aware that there is a lot of work that needs to be done there." He hopes to lower supply costs and increase the company's growth outside the United States as a result.

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The company's executives believe Burger King's Whopper is better than competitors' burgers, and Burger King will regain market share in the U.S. from its competitors as a result.

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“Our main objective is to bring the brand back to prominence and to win in the market, and that's what we are striving to do,” Mr. Kobza said.

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It has been reported that Restaurant Brands' net income for the period ending Dec. 31 was $336 million, or 74 cents a share, up from $262 million, or 57 cents a share, for the same period a year earlier. A FactSet poll of analysts predicted 74 cents a share in income per share, which is below the 72 cents that the company reported on an adjusted basis.

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Analysts were expecting the company's total revenue to rise from $1.55 billion to $1.69 billion in the fourth quarter, in line with their expectations. It is important to note that systemwide sales, which represent total sales across both franchised restaurants and company-owned restaurants, rose from $9.32 billion to $10.2 billion.

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A year ago, the company's brands had generally lower comparable sales. In terms of its two largest brands, Tim Hortons saw sales rise at a 9.4% rate, down from 10.3% a year earlier, while Burger King grew by 8.4%. As for Popeyes, sales increased by 3.8%, compared with a 0.4% decline.