Restaurant Brands International (TSX:QSR)(NYSE:QSR) evaluates opportunities to accelerate international development of all the company’s brands, including through the establishment of master franchises with exclusive development rights and joint ventures with new and existing franchisees. In general, franchisees fund substantially all of the company’s marketing programs for each of the company’s brands by making contributions ranging from 2.0% to 5.0% of gross sales to advertising funds managed by it or by the franchisees.
Incredible business model
Restaurant Brands has an capital-light business model. Advertising contributions are used to pay for expenses relating to marketing, advertising and promotion, including market research, production, advertising costs, sales promotions, social media campaigns, technology initiatives and other support functions for the respective brands. Restaurant Brands manages the advertising funds for each of the company’s brands in the United States (U.S.) and Canada.
Further, the company expects to enter into similar arrangements in 2021 and beyond. In Canada, Restaurant Brands has not granted exclusive or protected areas to Burger King (BK) or Tim Hortons (TH) franchisees, with limited exceptions. However, in many international markets, including the markets managed by master franchisees, franchisees make contributions into franchisee-managed advertising funds.
Powerful global marketing strategy
As part of the Restaurant Brands’ global marketing strategy, the company provide franchisees with advertising support and guidance in order to deliver a consistent global brand message. New product development is a key driver of the long-term success of the company’s brands. Based on guest feedback, Restaurant Brands’ drives product innovation in order to satisfy the needs of the company’s guests around the world.
In addition, Restaurant Brands’ operations strategy is designed to deliver best-in-class restaurant operations by the company’s franchisees and to improve friendliness, cleanliness, speed of service and overall guest satisfaction. In addition, the company’s restaurants are required to be operated in accordance with quality assurance and health standards that each brand has established, as well as standards set by applicable governmental laws and regulations, including new local, provincial and state laws regarding COVID-19 and Center for Disease.
Robust operating standards
Each franchisee typically participates in initial and ongoing training programs to learn all aspects of operating a restaurant in accordance with each brand’s operating standards. In general, Restaurant Brands approves the manufacturers of the food, packaging, equipment and other products used in restaurants for each of the company’s brands.
Furthermore, the company has a comprehensive supplier approval process, which requires all food and packaging products to pass Restaurant Brands’ quality standards and the suppliers’ facilities to pass on-site food safety inspections. Restaurant Brands’ franchisees are required to purchase substantially all food and other products from approved suppliers and distributors.
Enhancing shareholder value
TH’s products are sourced from a combination of third-party suppliers and Restaurant Brands’ own manufacturing facilities. To protect Restaurant Brands’ proprietary blends, the company operates two coffee roasting facilities in Ancaster, Ontario and Rochester, New York, where it blend all of the coffee for TH restaurants and for the company’s take home, packaged coffee. This approach is likely to enhance shareholder value over the long-term.
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The Motley Fool recommends Restaurant Brands International Inc. Fool contributor Nikhil Kumar has no position in any of the stocks mentioned.