Restaurant Brands International Inc. (QSR) Earnings Call Transcript & Summary

I'd like to welcome you back to the Morgan Stanley Global Consumer Conference and our next presenting company, Restaurant Brands International, otherwise known as RBI. Joining me today from RBI is its Chief Executive, Jose Cil. On the off chance, maybe those listening who are not familiar with RBI, is the parent of some of the most iconic restaurant brands in the world from Burger King to Tim Hortons and Popeyes and soon to be, Firehouse Subs, which we'll discuss in the course of the next few minutes with Jose. Before kicking off, I did want to make just 1 quick disclosure disclaimer. For important disclosures, please see the Morgan Stanley research website at morganstanley.com/researchdisclosures. And of course, if you have questions, you can always reach out to your Morgan Stanley sales representative. With that out of the way, welcome, Jose, from corporate headquarters in Miami. It's good to see you.

Great to see you, John. Thanks for having me.

Well, let's jump right in, Jose, I thought it would be maybe most constructive if we start with the state of your 3 brands and talk -- and then talk about your newest and your fourth brand soon to be added. And I wanted to start with Tim Hortons. Obviously, the importance of that business in your overall portfolio makes this a key topic. I guess I'd frame it this way, and I'd love to hear your perspective. If we compare the state of Tims today versus maybe pre-COVID, how would you say or what would you say are the key differences in the brand? Understanding COVID has impacted the business, but if you were to look at Tims historically from, let's say, 2017 to '19, same-store sales were sort of flattish, up or down 1%, what do you think changed or can change that makes the business fundamentally stronger in '22 and '23, where you think you can start growing sales at a more accelerated rate?

John, look, I think the starting point with Tims is that we have great assets in Canada, right? We have the most restaurants in Canada, a very strong network of owners. The most drive-thrus in Canada by a pretty significant margin, we have over 2,700 throughout the country. We have the things that made the brand famous: convenience, not just in terms of locations, but really fast speed of service, especially in the morning daypart value, quality and a really strong brand love. I think the other thing to remember is, especially as we were heading into COVID, the business, it's a very high frequency, low-check morning daypart-driven business, that's the biggest part of the business. It's the part of the business that's been most impacted by the last couple of years of events globally and in Canada. We under-index at lunch and the dinner dayparts, and this is something that we've seen have stronger growth in Canada in the second half of 2021 as things started to open up a bit, and this is where our peers in the market have the largest part of their business. And pre-COVID, we kind of -- we recognized these issues. We knew that we needed to do some work here. We -- this is what led to the back-to-basics plan, which I think everyone's familiar with, but there were the 3 components there. One was to drive quality of our core offering for the morning daypart breakfast, food and beverage. Second was to modernize the brand and really put some emphasis on the digital experience, both with the rewards program, our loyalty program as well as the drive-thru experience, modernizing that and making it a much more digital one. And then third, to start driving growth through innovation, kind of around the core, but looking at the opportunities where we under-index, which is cold beverages, lunch and dinner. And that was the plan all along. So Phase 1, we did a lot of work in 2020 around strengthening the foundation, the core, namely the morning daypart and our beverage. And we talked about this in the past, but we had fresh brewers launched, water filtration, the dark roast. And the proof point that, that's working is that year-to-date through the third quarter, our market share for coffee is ahead of where we were in 2019. On the breakfast food side, we launched fresh cracked eggs. We improved the bread carriers. We've done a bunch of things in that side of the business, proteins as well. And the proof point that it's working is that we've reached our highest market share in the breakfast sandwich category since 2019, and we've continued -- we see continued progress in our brand metrics around food quality which we think is encouraging and gives us a path to move forward. And even with mobility down 30% in the morning daypart, especially versus 2019, we've seen growth in that part of the business versus 2019. We're really close to those levels. So we're confident that we're making progress there. On the modernization front, we've made changes to the digital business. We improved the platform. We've built a team, both tech and digital. And we've transitioned Tims from an awareness -- the rewards program from an awareness and adoption program to one that's focused on registration and starting to personalize the experience for our guests. And now as we've kind of rolled in, in 2021 into our second phase of the plan, we've started building on that foundation, establishing credentials around beverage and food, and started to move into lunch. We hired a chef to lead development of great-tasting food in the business, something we've never had at Tim Hortons. Developed and launched Craveables and we've launched artisan sandwiches, and we're building credibility on the food side in the lunch daypart. And we've seen -- as a proof point, we've seen year-to-date through the third quarter, our best sales performance in the sandwich category in the past 5 years. We've launched cold beverages, cold brew in May as an example. It's become the #1 cold brew product in the country in terms of market share. It happened in 1 month, maybe not fair since it's a relatively small category and early days in that category, but we've really expanded our cold beverage capabilities, and it's beginning to drive new customers into it. We relaunched espresso this past month, actually, and we saw some really good initial feedback there. And from a digital standpoint, we're seeing really good progress. The app is #1 food app in the country, actually #1 food app. And then if you include some of the aggregators as well, we're way up there. Most downloaded app in Canada in October when we relaunched the second edition of Roll Up [ the Rim ] to Win, and we're seeing really good progress in terms of monthly active users and our known diners and digital sales are now north of 30%. What's next for us is to continue to build on those credentials and really start winning in food and food-led occasions. I think that's the key for us. The winners -- and we think, in that category, we have an opportunity to grow. We're probably about 35% today, roughly 35% of our business is coming from lunch and dinner where QSR, in average, in Canada is about 60%. So we intend to capture our fair share of the p.m. business, and we think that's going to help us drive growth in the business long term. We've got the credibility now. We're seeing some progress with product satisfaction scores. As I said, we're building out our capabilities with a chef and a culinary team. and we're excited about that. And I think the 1 final proof point I'd share about the progress we're making in Tims in Canada is the one that matters the most, which is our recent trends at Tims in Canada. This month, just close, so we don't have the official numbers to share, but November sales improved sequentially on a 1- and 2-year basis versus October and versus Q3. And it's driven by strong core performance and innovation in lunch as well as the relaunch of espresso-based beverages, all dayparts improving, all our urbanities, the rural, suburban restaurants, urban as well improving. And we're seeing breakfast and breakfast -- and beverages grow as well. So we're excited with the progress. We know there's a lot of work to do, but we think the proof points are there that the plan is working, and we're on the right path.

Thank you for all that, Jose. First of all, just to clarify, you did just say sequential improvement in November versus October, so that's sort of somewhat newer information. Are we back to bright yet? I mean, I'm sorry, I don't have the model in front of me. How are you expressing this sequential improvement? Or how should we take that?

Yes. It's sequential improvement versus the October when we had earnings last month or in late October, we mentioned that October was basically in line with where we were in Q3. And so we're excited to see the progress in November, which is improvement versus those 2 periods, October and Q3. We're not sharing the details yet because as I said, we're still in the midst of closing the month, but stay tuned for our updates in January, February for Q4 earnings.

Great. I just wanted to finish off on Tim and a couple of other questions. One is, can breakfast comp, right, in other words, you've got a very -- it's not surprising, I mean, you've got a very successful and highly downloaded app since you're a dominant player in Canada, right? And you've got outsized market share at breakfast. Is the opportunity, therefore, mostly in those other dayparts within food and the p.m. dayparts, can you still comp at breakfast? Or is that a pretty well, I'll call it, saturated or utilized daypart already?

Yes. Actually, I think we can. And our plan was kind of -- the early stages of the plan was really focused on rebuilding our capabilities for the morning daypart. We did a lot of research back in '19, early '20. And what we learned on our -- about the morning daypart business is that we tend to be the number -- by a long shot, the #1 consideration for a morning visit when it's a beverage-led visit. But we weren't #1, actually, we weren't #2 in most cases when it was a food-led occasion, right? So if the consumer is waking up and saying, "Hey, I want to have a hot breakfast sandwich this morning," we weren't the top of the consideration set, which didn't make sense and is unacceptable. So we think there's growth through food-led. And actually, if you look at the performance, and we've mentioned this, we've seen our Q3 morning daypart business get to near 2019 levels with a significant impact in traffic, which means the food is driving additional visitations and we're excited about that opportunity. So yes, the short version is, yes, we think morning daypart can be a growth category -- daypart as well for the business in addition to the opportunity that exist in lunch and dinner.

And food attachment rate is an often-cited industry statistic, and Starbucks has talked about it as an example, Dunkin' has talked about it historically. Do you talk about what the food attachment rate is in the morning business? Or are you willing to do that? Just to help us understand what that opportunity might look like.

Yes. We've looked at it. We haven't talked about it, but the big opportunity here for us is to drive growth and visitation for food-led occasions, which is going to be -- we'll have a look at that internally, and we have metrics that we look at to see how we're performing in terms of attachment.

Got it. And then just 1 last question on Tims. I understand your comments about taking share in a number of categories. How do we observe that externally? Because we don't really have comparisons to look at the way we might observe with Burger King. Are you suggesting that you think your same-store sales in the breakfast daypart or in the categories you compete are best-in-class in Canada? Or how do you measure your sales success? Or how should we think about those sales numbers you report, understanding we're in this COVID period, and we also don't have direct peers to compare you to?

Yes. Look, I think the ultimate measure is same-store sales, John. And so that's what we're measured against, and that's the KPIs that we're incentivized against as a team. So I think the outside world should look at our performance on a relative basis from a comp standpoint. And we know that we have a category or a daypart, which is the morning daypart, which has been significantly impacted. We know we have categories in dayparts that were -- we under-index historically relative to peers. We're investing, we're building our capabilities there. And we think, overall, the business will grow as we make progress on the dayparts we're strong in, and the dayparts that we under-index in. So I think same-store sales ultimately is the measure that matters. So you should be looking out for that as we make progress in our business at Tims in Canada.

I'm going to turn now to Burger King if that's okay. In an update on the plan for the U.S. business, and I think it's well understood now that there's a gap in Burger King sales versus peers in the U.S. And I think you've listed a number of reasons last quarter why that's the case. Happy to have you sort of describe those if you want. But really, what I'm interested in is, what is the road map and the opportunity here, right? What happens -- think you said the first piece of the plan gets activated in the fourth quarter. Maybe what is that plan right now that's being activated? And more importantly, how do we think about what the plan is in 2022, please, as we understand what Burger King needs to do to recover?

Yes. Look, as I mentioned in the past, the -- probably last quarter, I spent some time talking about it. I think our gap to peers, we're clearly not pleased by it. And we think it came down to execution in the last couple of years. We have a strong brand awareness, strong -- visitation has been strong in the past, and we think there's a tremendous amount of brand love out there that we can tap into, just doing a better job across the board in many areas. I think the key for us and what I shared most recently in Q3 is just having the right people in position. And we made a lot of intentional changes in the business over the last 90 days, bringing some strong leadership to the business at BK in the U.S., building a plan with industry experience in certain key areas and top talents that we brought from other parts of the business as well. We're leveraging the franchisees' insights and perspectives on the business. We're getting a ton of insights as well from guests in doing research on that front and data and analytics to be able to really drive better decisions for the business. We've already, through Tom Curtis' leadership, established a much stronger position vis-a-vis the franchisees and building trust there that's important for long-term success. These things -- the plan that's being evolved from there takes time to do so. We're going to be with franchisees, the broader system, next week in Las Vegas for our first live in-person convention in quite some time. So we're excited to share with them our plans around operations, digital menu innovations and -- as well as the reimaging. I think near-term opportunities, one of them is a smarter transition from paper coupons, a bit more effective use of our media firepower. There's a lot of work being done now on simplification on the product side, on process side and the promotional side. Because one of the things we saw from our deep dive into the business is that our drive-thru speed of service declined significantly, so our throughput was impacted over the last 9 to 12 months. And we're working on eliminating SKUs that -- we're simplifying processes that have become a bit too complicated in terms of sandwich builds, and doing a better job in terms of the menu design to make it easier for the customer, at the drive-thru in particular, to make quicker decisions. We brought in a new technology for the backhouse in the sandwich prep area to improve order accuracy. All of this is aimed at addressing operational improvements and addressing drive-thru capacity, which, given the volume increases in drive-thru, is a really easy win in terms of driving additional volume in our business. We got too slow, and we need to address that to have higher throughput in the business. We're making loyalty enhancements for the program, putting media behind it, creating a little more awareness and attention to that program, which is helping us in this transition from paper coupons. And we continue to roll out our digital menu boards, which are helping us with efficiency in the drive-thru, but also with check. I think for '22, the focus is on menu. We have a bunch of work to do on bringing a lot more attention to the Whopper, which is an iconic product and a key brand for Burger King, and one of our key products we haven't paid a lot of attention -- or enough attention to it from a brand and marketing standpoint. So there's some work to be done there. Value has always been an important part of the equation for Burger King, I think, for everyone in our space, and we're bringing some more balance to it as well as some more disruptive value messages, kind of on a appointed basis throughout the year. And investing media behind fewer but more impactful messages, making sure that, especially when it comes to pricing and menu architecture that we're being thoughtful about and working closely with the franchisees given where commodities are these days. And then breakfast we'll have a multi-phased approach to it initially. Now we're going to expand the daypart through some food innovation in 2022, and then we'll evolve with beverages as well. The other piece that I think is really important -- 2 additional pieces. One is what is on the operations or guest experience front. We've been putting a bit more emphasis on ramping up our team capabilities and infrastructure in the field, both in terms of field operations as well as in terms of training. We've been working on this since 2020. It's one of the reasons we reached out to Tom to kind of bolster our capabilities from an operations standpoint. This ties into some of the G&A increases we made -- we talked about throughout this year. We're having -- we have more people in field operations and training and we're reducing spans of control. We have more eyes and more support on the franchise business in the field. Folks with relevant QSR or restaurant experience, we're giving them better tools. We're investing in that from a technology standpoint. We're being more transparent in terms of results for our teams as well as for the franchisees, so that everyone knows where we stand in terms of overall performance, and we can drive important improvements in terms of guest experience in the restaurants. And these investments that we're making in the business will take time to drive results. But we believe in the near term, we will start seeing some improvements in operations, which are critical to throughput in our success. And then the second piece is image. We've talked about this quite a bit. We're finding ways to move faster in high-value areas of the image program. Outdoor digital menu boards are rolling out across Burger King and actually across Tims and Popeyes as well here in North America. These are relatively low investment with good impact on sales, especially on the check front. We've been working on our Burger King of Tomorrow modernization efforts since 2018, which are more comprehensive. And we're about -- by the end of the year, we'll be about 25% of the system with Burger King of Tomorrow and our plan is to continue working on that, but being a bit more targeted, having a portfolio approach with the franchisees and making sure we have a clear plan franchisee by franchisee and site -- or store by store.

Can you -- there's a lot in there, Jose, and unfortunately, we're not going to have time to dig into all of those, but I think there's a lot of sub topics in there. But you ended by talking about modernization. I just want to, first of all, be clear, you said 25% is in that new image. How new is that image? And is that in the last several years? Or the last -- your competitors have gone through a pretty significant amount of asset upgrades, right? And I just want to make sure I understand what that 25% refers to. And maybe in answering that, what's the role of the company in accelerating this modernization? My personal view is I think it's necessary now, particularly given where the competitive set's gone. Your competitors have put some of their own corporate capital or incentives behind it to expedite it. Is that the right solution for RBI? Or how are you thinking about your role in expediting this asset transformation, if that is the goal?

Yes. I think, look, it's important to recognize that we went through a reimaging program as well back in '11, '12, between '11 and '14, where we made some modernization efforts to the brand here in the U.S. In 2018, we came in with a much more comprehensive program, which we referred to as BK of Tomorrow, which had enhancements in the drive-thru. Double drive-thrus where available, outdoor digital menu boards, a lot of the technology innovations that are so critical to the business long term. When I talk about 25%, it's those efforts and those remodels since 2018 that I'm referring to. It's not going back before that. So these are truly new image, new technology, new drive-thru digital experiences. And our -- my belief as well is that -- and by the way, this is what we've been doing for a while, we've been investing alongside franchisees in those restaurants where we have an interest in the real estate. And we've also provided incentives for franchisees to accelerate some of these remodels over the years. And we're now in the process of assessing and determining what else we can do to be able to drive what we believe is an important part of the game plan long term. We're going to be careful and thoughtful here. But we've always made investments in the brands in the business. We think it's the right thing to do. If it's going to have an impact in terms of the guest experience and ultimately, in terms of driving sales and a good return for the franchisee as well as for us. So we have -- we've been doing it through tenant inducements, through technology, investments in the business, through G&A as well. So the right investments, we believe, are -- that are going to drive the business forward are things we believe are important for us long term, and we'll do as we've done in the past, and that's part of the exciting part of our business. We generate a lot of cash flow, and we have the ability to invest that in different areas to be able to drive accretive growth for our business and for our shareholders.

But just -- I guess, just before I move on, just to be clear, in some brands, there's been buy-and-flips, right? The corporation buys assets of a franchisee that may be not as engaged, repositions the brand, resells them as a way to catalyze either new development or reimaging. That kind of capital deployment is not necessarily what you're talking about in terms of the RBI contribution of Burger King?

We've seen, in our business, quite a few restaurants change hands with -- amongst franchisees. We brought in -- we have a franchising team that's developing a pipeline of franchisees to come into the system as well that want to be part of the Burger King system long term. And that's been -- that's how we've seen restaurants change hands. And then as part of those transitions, we've seen investments in remodels as well as in some cases, in new store development. So we haven't done a company acquisition in a long time. But our focus is to see restaurants continue to evolve and have the modern image and have the right level of technology, especially in the drive-thrus. And we'll do that through investments as we've done in the past with our capital for restaurants -- or for properties that we own or we have a real estate interest in.

I'm going to move on to Popeyes, if we could, because we've got still some stuff to cover. I think it's -- Popeyes, I think, is -- the question is simply, this brand has had an enormous amount of success against its highly successful chicken sandwich launch a couple of years ago. How do you defend that position now, right? I think you cited last quarter some incremental competition coming into the market, makes it more dilutive, if you will, for brands that have already had that position. Where do you see the incremental opportunity? You've had some nuggets and some premium beverages. So how do you defend that positioning you have clearly carved out at Popeyes? And what are some of the incremental opportunities for Popeyes for sales growth?

Yes. Look, I look at Popeyes brand as a brand that has massive and super exciting growth opportunities, and that's how we view it. We -- the key to that is having a great team. And I think it's important to remember, each of our brands is run independently. We have -- each brand, Tims, BK and Popeyes, they have a brand President or CEO. They have their own head of operations in digital, restaurant, technology, marketing, development, all the different areas of the business. We see huge potential to unlock Popeyes growth here in the U.S. and internationally and obviously, some of that has come from the expansion of the menu. Before 2019, Popeyes was essentially a bone-in chicken business with some really awesome and tasty ancillaries, but that was the essence of the business. And we've evolved it to be a bit more balanced in terms of having a really strong foundation, which is bone-in but also moving into the boneless category with sandwich now, with nuggets and tenders as well. We're in the early days there, and driving improvements in growth through those categories is all about continuing to make investments in those categories. I think we have -- we're in the early days of creating awareness and consideration and trial. We know that when people try Popeyes, especially actually on both sides of the fence, bone-in and boneless, we see growth in preference and our preference ratings jump up significantly versus other chicken QSRs. So our goal is to continue to invest in marketing and highlight these platforms and understand insights from the consumers to bring folks in for different occasions and try these products. The other piece that we have -- that we're focusing on is really improving the overall experience. I touched on that a bit in Q3. We've got -- we're building the same sort of capabilities, as I mentioned, for BK U.S., investing in field teams and training, reducing spans of control and helping -- putting more eyes on the business and helping our franchisees really understand the areas of opportunity in their respective organizations. And then moving forward, we're making investments in order accuracy improvements, which is the #1 guest complaint with Popeyes. We have a packaging with care program, which is helping with printers and updating our station layouts. So there's a lot of operational work that's happening. And that's where I think the Popeyes business has the focus that's needed to be -- needs to focus in order to drive growth, focus on continuing to drive platform awareness and trial with chicken sandwich, with nuggets and with our bone-in chicken and then really focusing on overall guest experience. And then the digital business has grown quite a bit. We've seen delivery be a strong driver of growth for Popeyes in 2020 and 2021. And we're -- we just named a Chief Digital Officer for Popeyes. And so we're now improving our capabilities from an e-commerce standpoint and see that as a massive opportunity for growth long term. And over time, there may be other daypart opportunities. But in the near term, we're focused on executing well what we have in front of us. And then internationally, we see a lot of growth potential. We've announced and started to open -- at the beginning of the year, we announced India, Mexico, U.K. and other Popeyes partnerships, and those are beginning to open now towards the end of the year, and we see that there's a really big road ahead of us in international to grow the Popeyes brand as well. So it's all about growth, and we're excited about the opportunity, but we're taking the steps to do it the right way so that we can keep sustaining this growth long term.

Let's talk about Firehouse Subs, Jose, for a moment, if we could. Recently announced the acquisition of Firehouse Subs, 1,200-unit franchise business, competes in that sandwich category. It's also the first time you made an acquisition in a few years since Popeyes, so I think there's some symbolism in that as well. It's not large today from a contribution standpoint, so maybe I don't want to spend over an undue amount of time on it. But what is the strategic rationale in your mind for Firehouse? What is the big opportunity here? I assume it's global. I assume it's the sharing of franchisees, but maybe strategic rationale, why it was the right use of your capital and what the big opportunities are, please?

Yes. Look, we're always looking for unique accretive opportunities for the business and Firehouse fit that bill. Sometimes the timing of these things isn't driven entirely by us. The founders wanted to -- went through a process and wanted to sell the business and the time was now. So we had a chance and honored that they chose us to be the buyers and ultimately, help the brand on its next phase of growth. So we think it's a special brand. It's purpose-driven with a really, really strong connection locally through its investments and through its kind of integration with their public safety foundation. It's a key piece of the story of Firehouse and we've seen their performance. We've looked at a lot of the consumer data, and they do really well in, both in terms of food quality as well as in terms of engagement in their communities. They have a really strong management team. I think different from prior acquisitions, we're not -- this is not a cost synergy story, this is a growth story. And our view and one of the key requirements here was making sure that management stayed, that the team stayed. And so we've got a CEO who's been around the business for a long time. He was a former BK guy for 20-plus years, a CFO that's been around for a long time and a management team that's been there through a really, really impressive growth trajectory. We think we can help in 2 areas in development, both domestically as well as internationally and in technology. And so our focus is to provide as much room as they need to be able to continue their impressive performance and then help where we can to drive some incremental growth, especially on the international and the U.S. front.

Got it. And do you think this is a concept that travels internationally? I'm not sure if they currently have many, or if any, but obviously, it's a very U.S.-centric type of brand, but you're confident that that's the real opportunity or a big opportunity for this brand?

We think there's a big opportunity. They've started -- they opened for the first time internationally about 5 years ago in Canada and in Puerto Rico. AUVs in Canada are higher than in the U.S.. It's a smaller business, it's 48 restaurants so far. But the performance is really strong. We've looked at the #1 player in sandwich outside, just looking at the consumer data and the sales data, and they have big, big businesses in Canada and the U.K. and in Australia, in Brazil as well. So there's a number of international markets where sandwiches -- limited service sandwich businesses play really well. And we have a great international presence, and we have great franchisees that are talented and have really strong development capabilities. So we think the combination of that is going to allow us to grow internationally. It wasn't part of our underwriting internally. We think it's upside internally. In the U.S., we have tremendous upside. In Canada, we have upside. And if we can do something in international, then it's the icing on the cake.

Perfect. In the last few minutes, Jose, I wanted to hit 2 other important topics. First is on G&A and corporate investment. Matt has talked about, in the last quarter or 2, sort of an inching up of G&A spend. I think you highlighted that as well in terms of infrastructure you need, whether that's at the field level for Burger King and maybe there's just technology spend. How do you assess -- you are a low spender of G&A on a percentage of system sales versus your peers. Maybe that's a result of having master franchisees and a different organizational structure. Are we at a point now where the kind of run rate we're seeing as a percentage of sales, percentage of system sales in '22 is the right level? Or do you think we're in a period of time where incremental investments may need to grow over multiple years, just given what we just talked about across these brands and technology?

Yes. Look, I think it's accurate that we have a different structure versus our peers, so maybe apples and oranges comparing our system-wide sales percentage of G&A to others. We're nearly 100% franchised. We have less than 100 company restaurants. Internationally, we have a pretty extensive master franchise network and framework. And these folks have their own teams, their own infrastructure, their own CEOs, CMOs, COOs and others, and they have G&A for tech and digital and marketing and operations in other parts of the business. So they -- that's something that's not really contemplated in our structure. We feel confident we have the right level of G&A spend in the business. We've ramped up our G&A spend, investing in people and technology and in-field operations and marketing as well. And we've seen the increases somewhere in the neighborhood of 25% since 2019, which we think are the right investments. There are investments that we think will help us drive same-store sales and unit growth long term in the business. And we'll continue to invest in that. But our -- I think our levels of increases are, and I think Matt touched on this at the end of the call in Q3, we see -- we will see a little bit of an increase in the -- in Q4, but we think, over '22 and beyond, we're going to be -- these are normalized levels of G&A, and we feel confident we're going to be in a good place long term. But we'll keep making investments in the business, John, where we think it's important and where we think there's an opportunity to drive growth long term. And we'll do so using the same rationale that we've used in the past to help drive the business and help drive shareholder returns.

I know our time is short, but I just want to ask you on development. One, it's obviously -- you saw some acceleration in development and expect to get back to kind of your historical rates inside of, I think, this year, is, I think, a very back-end loaded year, so just make sure you're comfortable getting to where you think you're going to -- should get to or investors think you should get to this year. And if you could just -- when you think about '22, and maybe thinking about the Burger King brand specifically, since that's still the leader of development, where are most of those units coming from, right? Is it China? France? Russia? Some of the markets you've highlighted? Or we -- or is there a broader complexion of kind of the unit growth, particularly at Burger King in 2022?

Yes. We're -- on the development front, we're excited about the progress we made in 2021. And these development pipelines are 12-, 18-month pipelines, so some things will continue -- we'll see continued evolution of those pipelines, but we're very confident in where we are. We're excited about the progress in '21. And heading into '22 and beyond, we believe we can accelerate. We believe that Burger King can get back to its levels of growth that we saw prepandemic. And at that time, Popeyes and Tims had no real development internationally and only a handful or kind of a smaller contribution from the domestic markets. And so as I mentioned earlier, we've got -- we've seen a lot of progress with Popeyes and some of the new partnerships that we've entered into, and they're beginning to get going in -- at the end of 2021. Tims, obviously, with the China business, and we've seen some progress in U.K. and Mexico, Middle East as well. They're beginning to get going internationally as well. So we'll -- I think we'll see, over time, a bigger contribution from Tims and from Popeyes internationally. Popeyes U.S. continues to accelerate, and we'll have really strong growth in the U.S. this year. And heading into next year, we think we can even accelerate versus our 2021 performance. And Canada, for BK and Popeyes, continues to be an exciting opportunity. And with Tims in Canada, we'll continue to optimize and improve the business and really focus on developing more drive-thrus and having a more dominant position there as it relates to our off-premise business. So we're excited and looking forward to updating you on our progress and -- as of the end of the fourth quarter and then accelerating as we head into 2022.

Jose, thank you so much for your time and we are out of time. I appreciate it. I thank you all for tuning in on the webcast. I wish you all a happy, safe and prosperous holiday and New Year. And look forward to talking to you, Jose, in the new year about your fourth quarter and '22 outlook. Thank you all.

Thank you.