On the desk today · Restaurant Brands International
Four brands. 33,000 restaurants. 120 countries. They don't flip a single burger. They collect the royalty on every one that's sold.
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The Royalty on
Every Sandwich Sold
In 2010, three Brazilian billionaires — Jorge Paulo Lemann, Marcel Herrmann Telles, and Carlos Alberto Sicupira — did something that made Wall Street raise an eyebrow. Through their investment firm 3G Capital, they acquired Burger King for $4 billion. The company was underperforming. The brand was tired. The stock had gone nowhere. The Brazilians didn’t care. They applied their signature approach — zero-based budgeting, cost discipline, and a relentless focus on the franchise model — and started turning the business around.
Four years later, they made the call that changed everything. They rang Warren Buffett. Berkshire Hathaway put up $3 billion in preferred financing to help 3G Capital acquire Tim Hortons — the Canadian coffee chain — for $11.4 billion. The two brands merged into a new company: Restaurant Brands International.
I ordered a chicken sandwich from Popeyes last week. I ate it in my car. It cost $7.49. I didn’t think about who collected what from that transaction. But here is how it works. The franchisee — the person who owns that specific Popeyes location — paid for the chicken, the bread, the oil, the labor, the rent, and the electricity. RBI didn’t pay for any of it. What RBI collected was a royalty — a percentage of every dollar that crossed the register. Plus an advertising contribution. Plus a technology fee. The franchisee cooked the food. RBI collected the toll.
That is the business model. And it runs across four brands, 33,000 restaurants, and more than 120 countries.
Restaurant Brands International owns Burger King, Tim Hortons, Popeyes Louisiana Kitchen, and Firehouse Subs. As of December 31, 2025, over 95% of the system’s 33,041 restaurants were franchised — meaning owned and operated by independent franchisees who pay RBI for the right to use the brand. RBI acquired Popeyes in 2017 for $1.8 billion and Firehouse Subs in 2021 for $1 billion. Each acquisition added another royalty stream to the platform.
In fiscal 2025, system-wide sales across all four brands reached nearly $47 billion. Franchise and property revenues — the royalties and rent RBI collects from franchisees — totaled $2.96 billion. Comparable sales grew 2.4%. Net restaurant growth was 2.9% — meaning franchisees opened roughly 900 new locations during the year. Organic adjusted operating income grew 8.3%. And adjusted earnings per share grew 10.7%. Josh Kobza, who became CEO in 2022, said it plainly in the Q3 2025 results: “Our teams delivered a strong quarter, driven by momentum from Tim Hortons and our International business, which together generate roughly 70% of our earnings.”
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That 95% franchise rate is the number that defines the economics. When a restaurant is company-owned, RBI bears the food cost, the labor cost, the rent, and the utilities — and keeps whatever is left after those expenses. When a restaurant is franchised, someone else bears all of those costs. RBI just collects the royalty. The franchise model converts a restaurant business — which is messy, labor-intensive, and low-margin — into a royalty business, which is lean, predictable, and high-margin. Franchise and property revenues of $2.96 billion flow in with almost no variable cost attached.
The stickiness is the brand. A Burger King franchisee who has invested $1 million to $2 million building a restaurant doesn’t switch brands. The signage, the menu, the supply chain, the marketing — everything is tied to the franchisor. And the franchise agreement locks the relationship in for 10 to 20 years. If the franchisee wants to sell, the new owner typically stays in the system. The brand outlasts the operator. RBI collects from whoever holds the franchise.
The pricing power works through a lever most consumers never see. When RBI raises menu prices across the system — even by a few percentage points — the royalty it collects rises proportionally, because the fee is a percentage of sales. In 2025, comparable sales grew 2.4% across the system. That 2.4% translated directly into higher royalty revenue for RBI — without RBI spending an additional dollar. The franchisee adjusts the menu board. The customer pays the new price. And RBI’s royalty check grows.
The flywheel runs on international expansion. The International segment — primarily Burger King outside the United States — generated $20.2 billion in system-wide sales in 2025, growing 10.7%. It added nearly 800 net new restaurants during the year. Tim Hortons is expanding aggressively in China, India, and the Middle East. Firehouse Subs is growing in Canada. Each new restaurant in each new country adds another franchisee paying another royalty. RBI doesn’t build the restaurant. The local franchisee does. RBI provides the brand, the playbook, and the supply chain. And it collects — from Lagos to London to Lima — on every sandwich sold.
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WHY THIS WORKS
95% franchised means RBI doesn’t operate. Franchisees bear the food, labor, rent, and utility costs. RBI collects royalties, advertising fees, and technology fees. The model converts a restaurant into a royalty stream.
$47 billion in system-wide sales generates $3 billion in franchise revenue. The royalty is a percentage of every dollar that crosses the register — across 33,000 restaurants in 120 countries. When prices rise, the royalty rises.
Four brands diversify the risk. Tim Hortons dominates Canadian coffee. Burger King International grows double digits. Firehouse Subs expands in new markets. If one brand slows, the others carry the system.
International expansion is the growth engine. 10.7% system-wide sales growth outside the US. Nearly 800 net new restaurants in 2025. Each one adds a franchisee, a royalty agreement, and a revenue stream — funded by someone else’s capital.
In 2010, three Brazilian billionaires walked into Burger King and bought the whole thing. In 2014, they called Warren Buffett and bought Tim Hortons. In 2017, they bought Popeyes. In 2021, they bought Firehouse Subs. They never cooked a hamburger. They never poured a cup of coffee. They never fried a piece of chicken. They built a company that collects a royalty on every one of those acts — performed millions of times a day, across 33,000 restaurants, in 120 countries, by franchisees who invested their own money to use someone else’s brand. The sandwich is the product. The franchise fee is the business.
