Analysts have said fried chicken sandwich pioneer Popeyes, owned by RBI, has been hurt by McDonald’s and KFC launching similar items, while RBI-owned Burger King has underperformed in recent months on weak demand for its lower-priced menu items.

U.S. comparable sales at Burger King declined 1.6 per cent, and slipped 4.5 per cent at Popeyes in the third quarter ended Sept. 30.

Firehouse Subs, in comparison, reported U.S. same-store sales growth of 20 per cent from pre-pandemic levels between January and October, Restaurant Brands said.

RBI’s U.S.-listed shares rose marginally after it said the deal would immediately add to its earnings once it closes in the coming months. It also said it will fund the acquisition through cash on hand and debt.

“(We) have kept an eye on it (Firehouse Subs) from a distance over the years,” RBI CEO Jose Cil told Reuters.

Jacksonville-based Firehouse’s franchisees own and operate 97 per cent of its 1,200 restaurants across 46 U.S. states, Puerto Rico and, since 2015, Canada.

Firehouse so far has just 48 Canadian stores, all in Ontario, run by franchisee Onfire Restaurants. The chain’s online listing of regions available to new franchisees shows all 10 provinces and three territories as having “no current availability.”

RBI, meanwhile, has about 27,000 stores in over 100 countries.

“There’s a tonne of room for growth here in the U.S. and Canada, and all around the world,” Cil said about Firehouse Subs, which is popular for its “Hook + Ladder” sub.

Firehouse Subs’ loyalty program has 3.5 million subscribers, and is adding around 50,000 more customers per month, said RBI, which earlier this year saw Burger King and Popeyes launch similar programs.

Firehouse Subs CEO Don Fox and finance head Vincent Burchianti will manage its day-to-day operations.

— Reporting for Reuters by Praveen Paramasivam in Bangalore. Includes files from Glacier FarmMedia Network staff.

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Big fast food chains, including McDonald’s and KFC owner Yum Brands, have been aggressively expanding their international operations to counter slowing growth in the U.S.

Toronto-based Restaurant Brands, the owner of Burger King, Tim Hortons and Popeyes Louisiana Kitchen, has been looking to boost its businesses by deploying various initiatives that range from app-based ordering to loyalty programs for its customers.

The company, which held its first-ever investor day on Wednesday, did not immediately respond to a request for investment details of its expansion program.

Restaurant Brands, which has been hit by a slowdown at its three iconic brands, hopes to grow its coffee, burger and chicken markets by five to six per cent annually over the next five years.

Last month, the company reported a 0.6 per cent drop in comparable sales at Tim Hortons for the quarter ended March 31, while same-store sales at Burger King grew 2.2 per cent, down from 3.8 per cent a year earlier.

The announcement of the ambitious expansion plan comes just months after Jose Cil took the helm at the company, after having headed its Burger King unit.

Rival Yum Brands opened 372 new KFC outlets in 46 countries in the first quarter ended March, while McDonald’s plans on opening roughly 1,200 restaurants worldwide this year.

Tim Hortons, Restaurant Brands’ coffee and doughnut chain, also said it would introduce three new sandwiches using the vegan burger maker Beyond Meat’s plant-based sausages as demand for vegan alternatives grows in the country.

Shares of Restaurant Brands, which have risen nearly 26 per cent this year, were up marginally at $89.67 on the TSX late Friday afternoon.

— Reporting for Reuters by Shradha Singh in Bangalore.

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Restaurant Brands International, one of the world’s largest fast-food restaurant operators, has been criticized by activists for buying soy and beef from newly deforested land in Brazil and other South American countries.

It its first sustainability report, the firm, which also owns Tim Hortons and Popeyes, committed to making sure its suppliers stopped clearing primary forests or disturbing lands with a high conservation value by 2030.

“It is our intention to report regularly on our progress towards eliminating deforestation,” RBI said in its report released on Thursday.

The company also pledged to respect the land rights of communities who live in areas where its suppliers cultivate soy, cattle and other farm products to make sure local people grant informed consent concerning development on their land.

“As a company with global operations and a complex supply chain, we know we have a key role to play in promoting sustainable business practices,” company spokesman Patrick McGrade said in a statement.

Campaigners, however, say the promised changes are too slow and do not go far enough.

The Union of Concerned Scientists, a U.S.-based advocacy group, said the company’s environmental pledges are “embarrassingly weak.”

The firm should commit to ending deforestation in its supply chain by 2020 in line with other large restaurant chains rather than 2030, Sharan Smith, the group’s spokeswoman said.

“When it comes to protecting forests, Burger King means fast food and slow action,” Glenn Hurowitz from the U.S.-based campaign group Mighty Earth said in a statement.

Over the past 13 years, 271 million acres of rainforest has been destroyed around the world to make room for products like Burger King’s Whopper sandwiches, Hurowitz said.

“Burger King is sending a message that it’s OK… to keep revving up the bulldozers.”

RBI did not respond to interview requests from the Thomson Reuters Foundation.

Deforestation accounts for about 10 per cent of global greenhouse gas emissions which contribute to climate change, the Union of Concerned Scientists said.

— Chris Arsenault reports for the Thomson Reuters Foundation, the charitable arm of Thomson Reuters for coverage of humanitarian news, women’s rights, trafficking, property rights, climate change and resilience.

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Restaurant Brands International on Thursday released its first “Sustainability Report,” outlining its work during 2016 in support of “sustainable practices that promote positive change.”

Back in late December, Oakville, Ont.-based RBI announced its two chains would “eliminate the use of antibiotics deemed by the World Health Organization (WHO) as ‘critically important’ to human medicine” from its chicken supply lines.

At that time, it also said it would “work with our supply chain partners to support and implement these changes” in the U.S. in 2017, and in Canada in 2018.

In Thursday’s report, the company reiterated it’s “committed to using chicken that is raised without the use of antibiotics important to human medicine as defined by the (WHO)” but instead said “we intend to meet this commitment in U.S. and Canada by the end of 2018.”

However, the company on Thursday also made clear it will follow the WHO’s fifth revision to its document, Critically Important Antimicrobials for Human Medicine, which was released early this year.

To make that list, an antimicrobial must be both “the sole, or one of limited available therapies, to treat serious bacterial infections in people,” and used to treat infections in people caused either by bacteria humans can get from non-human sources, or by bacteria that can develop resistance genes from non-human sources.

In the document’s fourth revision last year, certain fluoroquinolones, third- and fourth-generation cephalosporins, macrolides and glycopeptides were recategorized to the “highest priority.”

In the fifth revision, polymyxins such as colistin are also moved to the “highest priority” classification, due to the “increasing usage of colistin to treat serious infections in humans in many parts of the world, the discovery of the mcr1 and mcr2 genes that confer transmissible resistance to colistin and the spread of colistin-resistant bacteria via the food chain,” the WHO said.

In Canada, the federal health department’s Veterinary Drugs Directorate places polymyxins in Category I (“very high importance”), the highest category in its list of antimicrobials based on their importance in human medicine.

RBI, in Thursday’s report, reiterated it “recognize(s) that antibiotics play an important and delicate role in animal well-being and human health. Antibiotics are sometimes required to control and treat disease to maintain animal health and welfare.”

The company said it “require(s) our vendors to purchase products only from farmers that administer antibiotics in a judicious and responsible manner when treatment is necessary, in keeping with veterinary and regulatory requirements.”

RBI made its 2016 pledge on antibiotics for chickens shortly before the company announced a deal to buy the Atlanta-based Popeyes Louisiana Kitchen chain, which includes over 2,600 restaurants, among them over 100 Canadian stores in Ontario and Alberta.

In an article Thursday on the sustainability report, Reuters’ Lisa Baertlein quoted RBI as saying the company intends to apply the new policy to all its brands over time. — AGCanada.com Network

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The deal is a bet by Oakville, Ont.-based Restaurant Brands that it can use its international reach to introduce Popeyes’ Louisiana-style fried chicken and buttermilk biscuits to more diners globally.

Popeyes shareholders will get $79 for each share they hold, a 19.5 per cent premium to the NASDAQ-traded stock’s Friday close (all figures US$).

Atlanta-based Popeyes, whose fans include pop singer Beyonce, began 45 years ago as a Southern-fried “Chicken on the Run” restaurant in a New Orleans suburb. As of last October, the chain includes more than 2,600 restaurants, of which over 1,900 are in the U.S.

Popeyes expanded into Canada starting in 1984 and now operates over 100 Canadian outlets, nearly all in Ontario. The company set up restaurants in Edmonton and Calgary late last year and is seeking other franchisees elsewhere in Canada.

Restaurant Brands was formed in 2014, when 3G Capital-backed Burger King acquired Canadian coffee and doughnut chain Tim Hortons for $11 billion.

Reuters reported Monday that Restaurant Brands was nearing a deal to buy Popeyes, citing people familiar with the matter.

Restaurant Brands said Tuesday it would finance the deal with cash on hand and a financing commitment from J.P. Morgan and Wells Fargo.

Popeyes CEO Cheryl Bachelder on Tuesday described the deal, which is expected to close in early April, as “a transaction that delivers immediate and certain value to the Popeyes shareholders.”

Restaurant Brands CEO Daniel Schwartz said the company “look(s) forward to taking an already very strong brand and accelerating its pace of growth and opening new restaurants in the U.S. and around the world.”

— Reporting for Reuters by John Benny in Bangalore. Includes files from AGCanada.com Network staff.

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The deal, which will likely value Popeyes at more than US$1.7 billion, is a bet by Oakville, Ont.-based Restaurant Brands that it can use its international reach to introduce Popeyes’ Louisiana-style fried chicken and buttermilk biscuits to more diners globally.

It also represents a small consolation prize for Restaurant Brands shareholder 3G Capital, which lost a US$143 billion bid this week to merge its biggest holding, food conglomerate Kraft Heinz, with consumer products firm Unilever.

A deal could be announced as early as this week, the people said, asking not to be identified because the negotiations are confidential. Restaurant Brands did not respond immediately to a request for comment, while Popeyes decline to comment.

Popeyes, whose fans include pop singer Beyonce, began 45 years ago as a Southern-fried “Chicken on the Run” restaurant in a New Orleans suburb. It has since expanded to more than 2,000 restaurants, of which 1,600 are in the U.S.

In Canada, Popeyes operates about 100 outlets, nearly all in Ontario, and began expanding last fall into the Edmonton and Calgary markets.

The company has benefited from strong customer loyalty, as well as from a restaurant refurbishment program.

Chicken accounts for about 10 per cent of the fast-food industry, according to data service IBISWorld, and Popeyes’ market share is growing. The largest brands in the sector include privately held Chick-fil-A and Yum! Brands’ KFC.

Private equity firm 3G Capital, which is controlled by Brazilian billionaire Jorge Paulo Lemann, owns about 43 per cent of the voting shares in Restaurant Brands. 3G Capital has made a name by acquiring major U.S. consumer companies including Kraft Heinz.

Restaurant Brands was formed in 2014, when 3G Capital-backed Burger King acquired Canadian coffee and doughnut chain Tim Hortons Inc for US$11 billion.

3G Capital’s long-time partner, Warren Buffett’s Berkshire Hathaway, committed US$3 billion of preferred equity to finance that deal.

— Reporting for Reuters by Lauren Hirsch and Greg Roumeliotis.

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Atlanta-based chain Popeyes Louisiana Kitchen announced Tuesday it plans to open a new store in November in the Tamarack area of Edmonton, followed by a store in Calgary’s Forest Lawn area, then “subsequent locations” through this fall and into next spring.

The NASDAQ-traded company, as of July 10, has 2,594 locations worldwide, of which about 1,900 are in the U.S. and 100 in Canada, all in Ontario.

The company said its Alberta franchisees plan to open locations “across Edmonton and Calgary” by the end of 2017.

“The growth of our brand amongst our Canadian neighbours is especially exciting as it indicates a blossoming appreciation for our Louisiana culinary heritage,” Andrew Skehan, Popeyes’ president for international operations, said in a release.

Popeyes has been on an aggressive expansion track in recent years, having reported opening over 1,200 new restaurants since 2008 and 219 stores in fiscal 2015 alone, with average global same-store sales growth of 4.1 per cent over the past seven years.

The company, which booked US$45.1 million in net income in 2015 on total revenues of US$259 million, said in its annual report it aims to boost its worldwide restaurant count to about 4,000 over the next seven to 10 years.

The Popeyes business, founded in New Orleans in 1972, describes its “Louisiana heritage” as “a platform for ongoing culinary innovation, creating distinctive building design, exuding warm Louisiana hospitality, and giving back to the communities where we serve.”

The company said the name “Popeyes,” picked by restaurant founder Alvin Copeland, was lifted from “Popeye” Doyle, best known as Gene Hackman’s character in the 1971 film The French Connection.

The spinach-chugging U.S. cartoon character more often linked to the name is already the licensed mascot for Edmonton-based Popeye’s, a retail chain specializing in nutritional supplements for athletes, with about 125 outlets across Canada.

The retailer’s trademark in Canada covers the brand’s use in operating “retail stores selling nutritional supplements.”

The Popeyes dining chain, meanwhile, has held its separate trademark for use of the “Popeyes” brand in “restaurant services” in Canada since 1988. It had set up its first restaurant outside the U.S. in Toronto in 1984. — AGCanada.com Network

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