Restaurant Brands International (QSR) Q3 2026 earnings review
Burger King sales jump 8%, but Popeyes keeps shrinking
Burger King's US rebound and steady international expansion carried Restaurant Brands International while Popeyes kept shrinking. Comparable sales rose 3.8%, led by an 8% gain at US Burger King stores, and chief executive Josh Kobza kept the full-year plan for 8% underlying operating profit growth. By our math, hitting that target after 6.7% growth this quarter requires profit growth to speed up to nearly 9% in the fourth quarter.
| Operating profit, excluding one-offs and currency | +6.7% $737M; +7.8% over nine months |
|---|---|
| Comparable sales | +3.8% Burger King US +8.4%, Popeyes US -2.2% |
| Net restaurant growth | +3.0% +2.9% last quarter; 5%+ long-term goal |
| Full-year operating profit outlook | Unchanged on track for ~8% underlying growth |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because a recovery at Tim Hortons in Canada balanced another setback at Popeyes. Tim Hortons Canada comparable sales picked up from near zero last quarter to almost 2%, easing fears of a prolonged stall in the company's biggest profit source, though one-off tariff refunds helped its profit. The bad news: Popeyes US comparable sales fell for a sixth straight quarter despite management's earlier promise of a positive second half, and net store openings stayed stuck at 3%.
The question now is whether US Burger King can keep growing fast in 2027 when comparisons get tougher and franchisees have barely received any new remodel funding. Bulls see lasting operational gains from menu and service upgrades, while skeptics see a marketing bounce that will fade while high beef costs delay store remodels. Fourth-quarter franchisee profit figures and the 2027 remodel pace will settle it.
🐂 Bull Case
Burger King US Sales Keep Growing Fast
Restaurant Brands International (RBI), the parent of Burger King and Tim Hortons, is running a multi-year turnaround at Burger King in the US. Chief executive Josh Kobza pointed to "over 3% global comparable sales led by outperformance at Burger King and steady growth at International and Tim Hortons". Sales at US Burger King stores open at least a year rose 8.4%, matching last quarter's 8.5% pace.
The company-operated Burger King stores inside Restaurant Holdings, the division housing restaurants RBI plans to sell back to franchisees, also grew comparable sales 7.8%. Because franchisees pay royalties as a percentage of their revenue, higher store sales lifted Burger King's segment operating profit, excluding one-offs and currency swings, by 10.7% to $136 million, even as the restaurant count shrank 0.9%.
What to watch: full-year profit per US Burger King franchisee restaurant, which RBI discloses with fourth-quarter results. A rebound from last year's $185,000 level would show that strong sales are overcoming high beef costs on franchisee income statements.
International and Tim Hortons Carry the Quarter
Tim Hortons, the Canadian coffee and bake-shop chain, and the International segment generate over two-thirds of RBI's segment operating profit. After Tim Hortons Canada comparable sales nearly stalled at 0.1% last quarter, they rebounded to 1.8% in the third quarter, even against last year's tough 4.2% comparison. Meanwhile, International comparable sales rose 3.9% and constant-currency system-wide sales grew 9.0%.
International operating profit rose 9.9% on an underlying basis to $205 million, helped by the "resumption of royalty revenues from BK China" after RBI placed those stores into a joint venture in January. Tim Hortons underlying operating profit grew 5.8% to $317 million, though RBI noted the gain was driven by "tariff refunds and increased System-wide Sales" rather than store sales alone.
What to watch: fourth-quarter comparable sales at Tim Hortons Canada against a softer 2.8% prior-year comparison. A reading above 2% would show the coffee chain's rebound does not depend on one-off tariff refunds to grow profit.
🐻 Bear Case
Popeyes US Shrinks for a Sixth Quarter
Popeyes, RBI's fried-chicken chain, has been losing sales at existing US restaurants for a year and a half. Management previously said it expected US comparable sales to turn positive in the second half of 2026. Instead, third-quarter US comparable sales fell 2.2%, marking a sixth straight quarterly decline even against a weak 2.0% drop a year ago.
- Popeyes US comparable sales: down 2.2%, after falling 5.2% in the second quarter
- Popeyes net restaurant growth: 0.0%, down from 2.2% a year ago
- Popeyes segment overhead: 9.3% of revenue, up 0.9 percentage points from a year ago by our math
- Popeyes operating profit, excluding one-offs: $58 million, down 8.0%
Because existing stores sold less and franchisee openings stopped altogether, total system-wide sales at Popeyes shrank 1.0% in constant currency. At the same time, RBI spent more on employee pay, which pushed Popeyes overhead up by $2 million and cut the chain's operating profit by $5 million.
What to watch: fourth-quarter Popeyes US comparable sales, which compare against a 4.9% drop a year ago. Another decline against the easiest comparison of the year would confirm that the chicken chain's turnaround is not working.
Store Openings Stall While Remodels Crawl
RBI's long-term plan through 2028 calls for net restaurant growth — store openings minus closures over twelve months — to reach 5% or more. It also includes Royal Reset, a plan to invest up to $550 million in Burger King US store remodels and kitchen equipment through 2028. Both programs barely moved this quarter, while high costs squeezed the company-run stores.
- Consolidated net restaurant growth: 3.0%, up 0.1 percentage points from last quarter
- Royal Reset funding in the third quarter: $4 million by our math ($198 million total vs $194 million in June)
- Restaurant Holdings operating profit: $5 million, down from $10 million a year ago
- Restaurant Holdings food and packaging costs: 30.4% of segment revenue, up 0.8 percentage points by our math
Restaurant count growth has stayed between 2.6% and 3.0% for six quarters because North American closures at Burger King (-0.9%) and flat unit counts at Popeyes offset 5.6% international expansion. Meanwhile, RBI cut its company-run US Burger King count by 44 stores to 950, and higher food costs plus "expenses related to scaling our international start-up businesses" halved Restaurant Holdings profit.
What to watch: fourth-quarter net restaurant growth, when seasonal store openings peak. A reading still near 3% entering 2027 would leave the 5% target out of reach.
Buybacks Outrun Cash Flow and Lift Debt
RBI resumed buying back its own stock in March alongside a goal to lower its debt burden. Supporters point out that net debt fell to 4.0 times annual cash profit (Adjusted EBITDA) from 4.4 times a year ago, and third-quarter repurchases reached $275 million across common shares and partnership units. However, those payouts are exceeding the cash the business generates.
Over the first nine months of 2026, RBI paid $875 million in dividends and $444 million for buybacks, returning $192 million more than its $1,127 million of free cash flow by our math. As a result, net debt rose by $108 million since December to $12,614 million, and diluted share count stayed unchanged at 457 million.
What to watch: fourth-quarter share repurchases after RBI spent another $17 million in October. Continued buying above free cash flow would mean leverage improvements rely entirely on profit growth rather than debt paydown.
👓 Other Themes
A Stronger US Dollar Trimmed Reported Growth
Because Tim Hortons operates mainly in Canada and the International segment spans over 120 countries, a stronger US dollar reduces their results when translated into dollars. Currency moves cut third-quarter revenue by $18 million ($16 million at Tim Hortons and $2 million at International) and reduced operating profit excluding one-offs by $6 million, creating a 1.7 percentage point gap between 5.0% reported and 6.7% underlying profit growth.
💲 Other KPIs
Free cash flow — operating cash flow minus property and equipment purchases — was $479 million in the third quarter by our math, down 9.8% from $531 million a year ago as capital spending rose. For the first nine months, free cash flow grew 13.2% to $1,127 million, converting 81% of profit excluding one-offs into cash.
Diluted profit per share excluding one-offs rose 6.9% from $1.03 a year ago, or 8.6% on an underlying basis, slowing from 12.9% reported growth in the second quarter. Reported GAAP profit per share jumped 60.4% to $1.54 because internal tax reorganizations created a $133 million tax benefit this quarter versus a $94 million tax expense a year ago.
The global store network added 978 net restaurants over the past twelve months and 245 since June, lifting the total count by 3.0%. International added 885 net stores (+5.6%) and Firehouse Subs added 109 (+7.8%), while Burger King North America shrank by 64 stores (-0.9%) and Popeyes added just one net restaurant.
🔮 Guidance
Unchanged. The company reiterated that "RBI remains on track for 8% organic Adjusted Operating Income growth in 2026", matching its 2024–2028 average target. With nine-month underlying operating profit up 7.8% (after 6.7% in both the second and third quarters), the full-year plan leaves about 8.6% underlying profit growth for the fourth quarter by our math, aided by Tim Hortons and Burger King hosting franchisee conventions in Q4.
Unchanged. The plan keeps overhead across the five franchisor segments at $610 million at the middle of the range. By our math, the five segments spent $149 million in the third quarter and $445 million over the first nine months, which leaves $155–175 million ($165 million at the middle of the range) for the fourth quarter.
Unchanged. The outlook for the company-operated restaurant division remains $15 million at the middle of the range as RBI works to "refranchise the vast majority of the Carrols Burger King restaurants and to find new investors for PLK China and FHS Brazil and sunset the RH segment". Because nine-month profit is already $21 million, the range implies a fourth-quarter operating loss of $1–11 million by our math.
Unchanged. Net interest expense excluding non-cash swap and financing adjustments is still planned at $510 million at the middle of the range. By our math, nine-month adjusted net interest expense was $375 million ($126 million in the third quarter), which leaves $125–145 million ($135 million at the middle of the range) for the fourth quarter.
Unchanged. The forecast for consolidated capital spending and franchisee cash incentives remains around $400 million. RBI spent $105 million in the third quarter and $219 million across the first nine months, which by our math leaves about $181 million for the fourth quarter — above the $140 million spent in the fourth quarter of 2025.
❓ Key Questions
How much did tariff refunds lift Tim Hortons profit?
RBI credited "tariff refunds and increased System-wide Sales" for Tim Hortons' $17 million constant-currency operating profit increase, but did not give the dollar size of the refunds. Without that figure, investors cannot tell what underlying Canadian coffee margins did.
Why did Royal Reset remodel spending stay at $4 million?
Cumulative Royal Reset funding rose from $194 million in June to $198 million in September — just $4 million after $5 million in the second quarter. With $352 million left to spend by year-end 2028, when will remodel funding speed up?
Can Popeyes US still reach positive H2 comparable sales?
Management previously pointed to positive US comparable sales at Popeyes in the second half of 2026. After a 2.2% drop in the third quarter,fourth-quarter comparable sales must exceed 2.2% just to make the second half flat.
What are the sales and royalties for International brands?
International system-wide sales grew 9.0% to $5.89 billion, and Burger King China resumed paying royalties, but the release only breaks out Burger King International comparable sales (+3.8%). What did Popeyes International and Tim Hortons International contribute?