Speaker 1: We welcome in Josh Cobbs at the CEO of Restaurant
Speaker 1: Brands International, to talk a little bit about what's going
Speaker 1: on under the hood. And you look across the brands
Speaker 1: here and there are some very striking moments here, for example,
Speaker 1: with Burger King coming in less than expected at same
Speaker 1: source sales comps. What do you think here, Josh, this
Speaker 1: really means is this a matter of price pressures that
Speaker 1: consumers are still feeling, or is this a matter of
Speaker 1: some change in consumer preference that's layered on top of
Speaker 1: this as well?
Speaker 2: Hi Sinelli, Matt, thanks so much for having me. Good morning,
Speaker 2: and it's a pleasure to be on the show. So
Speaker 2: we are seeing some softness in the consumer, especially in
Speaker 2: some of our home markets, and you see that play
Speaker 2: through in some of the data across the industry. That said,
Speaker 2: we're really focused on having amazing value offerings for our
Speaker 2: guests in each of the businesses, and I think we're
Speaker 2: doing a pretty good job at that. At Burger Think King.
Speaker 2: For the quarter, we had some incredible value offerings. We
Speaker 2: had our five dollars year away meal, and we did
Speaker 2: manage to outperform some of the largest players and the sector.
Speaker 2: So I think we've got the right value for the customer,
Speaker 2: and clearly they're looking for it. We're seeing a great
Speaker 2: response to what we have out there, and one of
Speaker 2: the things that we just shared this morning is we're
Speaker 2: going to extend some of those value offerings, specifically our five.
Speaker 3: Dollars year away meal now into October.
Speaker 2: So we have the right value offerings, we think they're
Speaker 2: working for the consumer, and we're going to keep those
Speaker 2: going through later in the year.
Speaker 4: But the key here, Josh, is that the consumer needs
Speaker 4: cheaper products. Right. I've seen five dollars value offerings pop
Speaker 4: up at a number of competing chains. Is this consumer
Speaker 4: really under pressure? Can you see that in your sales?
Speaker 2: So I think what the consumer wants is they want
Speaker 2: all the basics of the industry. They want the quality products,
Speaker 2: great service, and convenient modern locations.
Speaker 3: Add a good value.
Speaker 2: And what we always have to keep our eyes on
Speaker 2: is doing all those things together. So we're focusing on
Speaker 2: having the fundamentals right and in this environment, making sure
Speaker 2: that we have the right value offerings, and we are
Speaker 2: seeing a reaction to those value offerings. So some of
Speaker 2: the things we've had out there, like the five dollars
Speaker 2: walk Virginior duos or our five dollars year wave meal.
Speaker 2: They're getting a lot of traction for caper customers. So
Speaker 2: we do see that guests are looking for things that
Speaker 2: they can do to get great.
Speaker 3: Value out of our sector.
Speaker 2: They're reacting to what we have out there, and we
Speaker 2: feel like we have the right offerings out there for
Speaker 2: that right.
Speaker 4: I understand you know that you are doing a good
Speaker 4: job of giving the consumer what he or he wants.
Speaker 4: But what I'm asking you is, from your vantage point
Speaker 4: as the CEO of these brands that are so widely
Speaker 4: accessed by the consumer, how does the consumer's financial health
Speaker 4: look to you?
Speaker 2: So we do see some pressure on the consumers. On
Speaker 2: consumers overall financials, I think there are some things that
Speaker 2: are putting pressure. So there are some things that are
Speaker 2: going up in their budget, things like rents or insurance
Speaker 2: payments are putting some pressure and that's causing consumers to
Speaker 2: be more choiceful. And so how we see that is
Speaker 2: we see consumers are choosing some of those value offerings
Speaker 2: and in some cases they're attaching less sides. So those
Speaker 2: are the behaviors that we see. We think that environment
Speaker 2: is likely to continue through the rest of the year
Speaker 2: and across each of our businesses, we're trying to make
Speaker 2: sure that we have the right value offerings that cater
Speaker 2: to the customer in that environmentetitive.
Speaker 1: How competitive is it out there now, particularly in this
Speaker 1: kind of value sector of food right now? If you
Speaker 1: think about it, five dollars seems to be the sticking point.
Speaker 1: You know, Taco Bell also had a five dollars deal
Speaker 1: as well. Wendy's had a three dollar breakfast deal. When
Speaker 1: you think about this five dollars BurgerKing deal that you
Speaker 1: now are extending as you announced this morning, how important
Speaker 1: is that price point right now and how competitive is
Speaker 1: it among other brands.
Speaker 2: So I do think that five dollars price point is
Speaker 2: relevant to the consumers, and we see that in the
Speaker 2: reaction that we're getting to it. And now you're seeing
Speaker 2: more of our competitors bring that price point as well.
Speaker 2: In fact, we've had great offerings at the five dollar
Speaker 2: price point for a long time.
Speaker 3: Now you've seen more of our competitors getting into the game.
Speaker 2: Some of the other big competitors launched five dollars meals recently.
Speaker 2: What's really interesting that we're seeing is that we think
Speaker 2: that might actually be helpful to the sector overall as
Speaker 2: you have more players bringing great value back to the consumers.
Speaker 2: I think as a sector overall, we're starting to improve
Speaker 2: the value impression of the restaurant sector with consumers.
Speaker 3: And it's been really interesting.
Speaker 2: Even as we've gone through the last month or two
Speaker 2: and you've seen more of our competitors start to bring
Speaker 2: into market and promote some of some more five dollars offerings,
Speaker 2: we actually haven't seen any impact to our business. So
Speaker 2: we've actually seen increasing adoption of those meals in our
Speaker 2: business doing pretty well with them. So I think there
Speaker 2: are some positive aspects of the amount of competition and
Speaker 2: the amount of value that the sectors bring to the guests,
Speaker 2: which they really seem to like you have.
Speaker 3: A great vantage point.
Speaker 4: Also to comment on the labor market, Josh, how do
Speaker 4: you see the labor market right now in terms of supply.
Speaker 4: We've seen the unemployment rate rise and economists are telling
Speaker 4: us that's because there are more people in the labor
Speaker 4: market at least that's part of the reason. Do you
Speaker 4: see that or do your franchise e see that as well?
Speaker 2: So I would say we've seen labor market condistionions be
Speaker 2: a little bit warm benign today versus where we were
Speaker 2: two years ago, and when we were in the height
Speaker 2: of COVID, things were a little bit more challenging, and
Speaker 2: that's eased a bit. So we've had more interest in
Speaker 2: jobs in our sector, so that's made life a little
Speaker 2: bit easier for our franchise ease. It's allowing us to
Speaker 2: staff the restaurants better and to provide better service to
Speaker 2: our guests, and I think those are all things that
Speaker 2: help us a lot.
Speaker 3: And that's mostly in the US.
Speaker 2: Up in Canada, there has been a little bit more
Speaker 2: pressure on unemployment, so the unemployment rates ticked up in
Speaker 2: a little bit bigger way up up here in Canada.
Speaker 2: But our business up here has been doing great. I'm
Speaker 2: here in Toronto today in our Tim Horton's test kitchen,
Speaker 2: and we just reported almost five percent same store sales
Speaker 2: in our Tim Wharton's business, which is tremendous even in
Speaker 2: a challenging environment.
Speaker 3: So Canada's a little bit different.
Speaker 2: But in the US, less change and unemployment recently, Josh.
Speaker 1: You know, my colleague here, Matt Miller, really wants to
Speaker 1: start using wagabi or ozambag and he talks about it daily. Actually,
Speaker 1: these days. You know, when you look at these weight
Speaker 1: loss drugs that are entering the market at more and
Speaker 1: more scale, how do you think that's going to impact
Speaker 1: your brands moving forward?
Speaker 2: Yeah, we haven't seen any impact so far. I know
Speaker 2: there's been a lot of talk about it in the
Speaker 2: press and the investor world, but we really haven't seen
Speaker 2: any impact from any.
Speaker 3: Of the weight lift laws drugs so far.
Speaker 2: I'd say we're much more focused on getting the basics
Speaker 2: right and bringing the right value to our customers, even
Speaker 2: in terms of the offerings.
Speaker 4: Because we had a great big take story today on
Speaker 4: you know, the weight loss drug use in Bowling Green,
Speaker 4: and one of the protagonists in the story was saying,
Speaker 4: I just want more chicken because you need to get
Speaker 4: more protein. Right. So do you not see people choosing
Speaker 4: the higher protein items on your menu as a result
Speaker 4: of using these drugs.
Speaker 2: I think just because of where the adoption rates are,
Speaker 2: and I think there's still low in the overall population
Speaker 2: so far, we don't see it playing out in our
Speaker 2: aggregate data in the way that we.
Speaker 3: Can see yet.
Speaker 4: All Right, Josh, thanks so much for joining us. Josh
Speaker 4: cobbsa there of Restaurant Brands International,