00:00Yeah, they've reestablished themselves as the value leader in QSR, which makes sense, right?
00:06They have 14,000 stores in the U.S., more scale than anybody, you know, and they've done a phenomenal
00:11job with the marketing.
00:13I mean, I think they sold 55 million pairs of Grinch socks, right?
00:17The Grinch Happy Meal, one of their most successful promotions ever, right?
00:23So, yeah, they're firing on all cylinders.
00:27They also benefited from lapping E. coli a year ago, and that's how they ended up with such a strong
00:33comp,
00:34which was a pretty tough quarter for most of the industry because of the cold weather and the flu that
00:39we saw in December.
00:40Right, and we also are hearing that McDonald's is not going to rest on its laurels.
00:45It's looking to innovate.
00:46It's going to introduce some new beverages under the McCafe.
00:50McCafe?
00:51McCafe.
00:52McCafe.
00:52McCafe.
00:53That's hard to say.
00:55The McCafe brand.
00:56McCafe.
00:57It's not French.
00:58Anyway, indulgent coffees.
00:59That sounds kind of fancy.
01:01Is that to appeal to the consumer who might be trading down to McDonald's?
01:08No, you know what?
01:09It's beverages are hot.
01:11I mean, Cosmix, you know, although that chain isn't, you know, has been kind of dissolved,
01:18they've learned a lot about the beverage industry through that test, right?
01:26Dirty sodas.
01:28You know, there's a chain out west called Swig that absolutely crushes it with dirty sodas.
01:33Think, you know, Coca-Cola with added syrups and whipped cream on top and things of that nature, right?
01:40That's a lot of sugar.
01:41Energy drinks.
01:42These are, like, really, a really hot segment of the QSR industry.
01:47It has been for years, right?
01:49As some of these bigger, slower-moving chains like McDonald's are starting to kind of jump on this bandwagon a
01:55little bit later.
01:56But, you know, we think this could be meaningful for them in the second half, you know, and it's no
02:04longer public.
02:05But, you know, this could take a chunk out of Sonic's business, you know, because they've long been a beneficiary
02:13of the beverage market, you know.
02:16And what's nice about that business is a lot of those drinks are sold during that snack period, you know,
02:21when these restaurants have a low around, you know, 2, 3, 4 o'clock in the afternoon.
02:28Restaurant Brands, they also reported some numbers here.
02:31Mike, remind us who Restaurant Brands is and what they're doing these days.
02:34How are their results?
02:36Yeah, so, you know, it was kind of mixed results versus what the street was looking for.
02:41You know, I look at the underlying trends, and I think they're still strong.
02:44So the reason why it's down right now is, you know, Burger King showed an acceleration in the U.S.,
02:50which is pretty promising.
02:53You know, they showed strong results out of International.
02:57And International is a pretty well-oiled machine for this company.
03:00But there was some deceleration in the Tim Hortons numbers, which makes up 60% of adjusted EBITDA.
03:08And, you know, Popeye's remains kind of weak, right?
03:12So I'd say the biggest concern in this report is really about the slowdown in Tim Hortons, but it's lapping
03:17tougher comps.
03:19And when we look at, you know, same-store sales trends going back, you know, a handful of years, the
03:24trends are actually accelerating, even though it deceled on a one-year and a two-year basis.
03:29And so, you know, Tim Hortons is a monster in Canada.
03:32I wouldn't be too concerned about it.
03:35Like I said, a big part of this story is the international unit growth that they're putting up.
03:43And we think they can get back up to mid-single digits here in another year or so.
03:48So, you know, Popeye's and Burger King are absolutely crushing it around the globe.
03:54And, you know, we expect pretty solid growth here.
03:58And we think they can outperform a lot of their quick service peers here in 2026.
04:03Michael, how are the McDonald's and the restaurant brands of the world using AI?
04:08We've seen them embrace automation with, you know, you have to go order yourself at the kiosk and then someone
04:14calls your number.
04:15So they've removed, they've made things more automated in that regard.
04:19But how will AI change the whole experience?
04:24Yeah, well, you know, AI is going to change the experience, the restaurant experience in different ways.
04:32Like different chains are going to look to different solutions.
04:35Something that works for one type of chain, like a Chipotle, isn't going to work for McDonald's and vice versa.
04:41So, you know, I think when you're looking at AI, first and foremost, it's going to be continued progress on
04:47that one-to-one marketing.
04:49Getting people into your loyalty program and eventually getting those very directed offers to them at the right times, right?
04:57This has been kind of a long time coming.
04:59AI should really kind of help with that piece.
05:03And I think for these quick service chains, the thing that's going to be probably most useful is like an
05:10AI assistant.
05:11You know, Taco Bell is rolling this out, testing it, and then eventually going to roll out to all its
05:16stores where they have basically an AI assistant for their GM.
05:19It tells them how much food they need to prep, if they need more labor on the line, helps them
05:26have more accurate sales projections so they know how much labor they're going to need on any given day, how
05:31much food prep they need to do, whatever it might be, right?
05:34So I think those are going to be the two most ubiquitous use cases and probably the ones that we'll
05:42see most of the progress on in the near term.
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