Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 20, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36786 | |
Entity Registrant Name | RESTAURANT BRANDS INTERNATIONAL INC. | |
Entity Incorporation, State or Country Code | Z4 | |
Entity Tax Identification Number | 98-1202754 | |
Entity Address, Address Line One | 130 King Street West, Suite 300 | |
Entity Address, City or Town | Toronto, | |
Entity Address, State or Province | ON | |
Entity Address, Postal Zip Code | M5X 1E1 | |
City Area Code | 905 | |
Local Phone Number | 845-6511 | |
Title of 12(b) Security | Common Shares, without par value | |
Trading Symbol | QSR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 303,902,641 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001618756 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 1,919 | $ 1,533 |
Accounts and notes receivable, net of allowance of $37 and $13, respectively | 589 | 527 |
Inventories, net | 87 | 84 |
Prepaids and other current assets | 85 | 52 |
Total current assets | 2,680 | 2,196 |
Property and equipment, net of accumulated depreciation and amortization of $831 and $746, respectively | 1,975 | 2,007 |
Operating lease assets, net | 1,122 | 1,176 |
Intangible assets, net | 10,415 | 10,563 |
Goodwill | 5,571 | 5,651 |
Net investment in property leased to franchisees | 63 | 48 |
Other assets, net | 707 | 719 |
Total assets | 22,533 | 22,360 |
Current liabilities: | ||
Accounts and drafts payable | 523 | 644 |
Other accrued liabilities | 883 | 790 |
Gift card liability | 108 | 168 |
Current portion of long-term debt and finance leases | 107 | 101 |
Total current liabilities | 1,621 | 1,703 |
Long-term debt, net of current portion | 12,300 | 11,759 |
Finance leases, net of current portion | 304 | 288 |
Operating lease liabilities, net of current portion | 1,054 | 1,089 |
Other liabilities, net | 1,917 | 1,698 |
Deferred income taxes, net | 1,422 | 1,564 |
Total liabilities | 18,618 | 18,101 |
Shareholders’ equity: | ||
Common shares, no par value; Unlimited shares authorized at September 30, 2020 and December 31, 2019; 303,877,203 shares issued and outstanding at September 30, 2020; 298,281,081 shares issued and outstanding at December 31, 2019 | 2,648 | 2,478 |
Retained earnings | 692 | 775 |
Accumulated other comprehensive income (loss) | (997) | (763) |
Total Restaurant Brands International Inc. shareholders’ equity | 2,343 | 2,490 |
Noncontrolling interests | 1,572 | 1,769 |
Total shareholders’ equity | 3,915 | 4,259 |
Total liabilities and shareholders’ equity | $ 22,533 | $ 22,360 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Statement of Financial Position [Abstract] | ||
Financing receivable, allowance for credit loss, current | $ 37 | $ 13 |
Accumulated depreciation and amortization | $ 831 | $ 746 |
Common stock, par value (in usd per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | Unlimited | |
Common stock, shares issued (in shares) | 303,877,203 | 298,281,081 |
Common stock, shares outstanding (in shares) | 303,877,203 | 298,281,081 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 1,337 | $ 1,458 | $ 3,610 | $ 4,124 |
Operating costs and expenses: | ||||
Cost of sales | 418 | 475 | 1,156 | 1,334 |
Franchise and property expenses | 128 | 133 | 388 | 401 |
Selling, general and administrative expenses | 302 | 320 | 922 | 948 |
(Income) loss from equity method investments | 18 | (11) | 36 | (11) |
Other operating expenses (income), net | 54 | (30) | 59 | (44) |
Total operating costs and expenses | 920 | 887 | 2,561 | 2,628 |
Income from operations | 417 | 571 | 1,049 | 1,496 |
Interest expense, net | 129 | 137 | 376 | 406 |
Loss on early extinguishment of debt | 0 | 4 | 0 | 4 |
Income before income taxes | 288 | 430 | 673 | 1,086 |
Income tax expense | 65 | 79 | 62 | 232 |
Net income | 223 | 351 | 611 | 854 |
Net income attributable to noncontrolling interests | 78 | 150 | 216 | 376 |
Net income attributable to common shareholders | $ 145 | $ 201 | $ 395 | $ 478 |
Earnings per common share | ||||
Basic (in usd per share) | $ 0.48 | $ 0.76 | $ 1.31 | $ 1.85 |
Diluted (in usd per share) | $ 0.47 | $ 0.75 | $ 1.30 | $ 1.82 |
Weighted average shares outstanding | ||||
Basic (in shares) | 303 | 267 | 301 | 258 |
Diluted (in shares) | 470 | 470 | 469 | 469 |
Sales | ||||
Revenues: | ||||
Sales | $ 541 | $ 624 | $ 1,450 | $ 1,735 |
Franchise and property revenues | ||||
Revenues: | ||||
Total revenues | $ 796 | $ 834 | $ 2,160 | $ 2,389 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 223 | $ 351 | $ 611 | $ 854 |
Foreign currency translation adjustment | 239 | (173) | (170) | 185 |
Net change in fair value of net investment hedges, net of tax of $40, $(37), $(12) and $2 | (198) | 143 | 39 | 27 |
Net change in fair value of cash flow hedges, net of tax of $7, $9, $99 and $43 | (17) | (25) | (268) | (116) |
Amounts reclassified to earnings of cash flow hedges, net of tax of $(8), $(2), $(18) and $(3) | 22 | 5 | 51 | 7 |
Other comprehensive income (loss) | 46 | (50) | (348) | 103 |
Comprehensive income (loss) | 269 | 301 | 263 | 957 |
Comprehensive income (loss) attributable to noncontrolling interests | 94 | 129 | 91 | 424 |
Comprehensive income (loss) attributable to common shareholders | $ 175 | $ 172 | $ 172 | $ 533 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Derivatives used in net investment hedge, tax | $ 40 | $ (37) | $ (12) | $ 2 |
Other comprehensive income (loss), cash flow hedge, gain (loss), before reclassification, tax | 7 | 9 | 99 | 43 |
Other comprehensive income (loss), cash flow hedge, gain (loss), reclassification, tax | $ (8) | $ (2) | $ (18) | $ (3) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Issued Common Shares | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest | Noncontrolling InterestCumulative Effect, Period of Adoption, Adjustment |
Beginning balances (in shares) at Dec. 31, 2018 | 251,532,493 | |||||||
Beginning balances at Dec. 31, 2018 | $ 3,618 | $ 21 | $ 1,737 | $ 674 | $ 12 | $ (800) | $ 2,007 | $ 9 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock option exercises (in shares) | 2,019,620 | |||||||
Stock option exercises | 42 | $ 42 | ||||||
Share-based compensation | 22 | $ 22 | ||||||
Issuance of shares (in shares) | 134,809 | |||||||
Issuance of shares | 7 | $ 7 | ||||||
Dividends declared | (127) | (127) | ||||||
Dividend equivalents declared on restricted stock units | 0 | $ 2 | (2) | |||||
Distributions declared by Partnership on Partnership exchangeable units | (104) | (104) | ||||||
Exchange of partnership exchangeable units for RBI common shares (in shares) | 141,190 | |||||||
Exchange of Partnership exchangeable units for RBI common shares | 0 | $ 2 | (1) | (1) | ||||
Net income | 246 | 135 | 111 | |||||
Other comprehensive income (loss) | 48 | 26 | 22 | |||||
Ending balances (in shares) at Mar. 31, 2019 | 253,828,112 | |||||||
Ending balances at Mar. 31, 2019 | 3,773 | $ 1,812 | 692 | (775) | 2,044 | |||
Beginning balances (in shares) at Dec. 31, 2018 | 251,532,493 | |||||||
Beginning balances at Dec. 31, 2018 | 3,618 | $ 21 | $ 1,737 | 674 | $ 12 | (800) | 2,007 | $ 9 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 854 | |||||||
Other comprehensive income (loss) | 103 | |||||||
Ending balances (in shares) at Sep. 30, 2019 | 298,095,767 | |||||||
Ending balances at Sep. 30, 2019 | 4,063 | $ 2,460 | 762 | (864) | 1,705 | |||
Beginning balances (in shares) at Mar. 31, 2019 | 253,828,112 | |||||||
Beginning balances at Mar. 31, 2019 | 3,773 | $ 1,812 | 692 | (775) | 2,044 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock option exercises (in shares) | 1,697,488 | |||||||
Stock option exercises | 38 | $ 38 | ||||||
Share-based compensation | 17 | $ 17 | ||||||
Issuance of shares (in shares) | 59,970 | |||||||
Issuance of shares | 0 | $ 0 | ||||||
Dividends declared | (128) | (128) | ||||||
Dividend equivalents declared on restricted stock units | 0 | $ 2 | (2) | |||||
Distributions declared by Partnership on Partnership exchangeable units | (103) | (103) | ||||||
Exchange of partnership exchangeable units for RBI common shares (in shares) | 45,325 | |||||||
Exchange of Partnership exchangeable units for RBI common shares | 0 | $ 1 | (1) | |||||
Restaurant VIE contributions (distributions) | 1 | 1 | ||||||
Net income | 257 | 142 | 115 | |||||
Other comprehensive income (loss) | 105 | 58 | 47 | |||||
Ending balances (in shares) at Jun. 30, 2019 | 255,630,895 | |||||||
Ending balances at Jun. 30, 2019 | 3,960 | $ 1,870 | 704 | (717) | 2,103 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock option exercises (in shares) | 636,918 | |||||||
Stock option exercises | 19 | $ 19 | ||||||
Share-based compensation | 17 | $ 17 | ||||||
Issuance of shares (in shares) | 20,700 | |||||||
Issuance of shares | 0 | |||||||
Dividends declared | (141) | (141) | ||||||
Dividend equivalents declared on restricted stock units | 0 | $ 2 | (2) | |||||
Distributions declared by Partnership on Partnership exchangeable units | (92) | (92) | ||||||
Exchange of partnership exchangeable units for RBI common shares (in shares) | 41,807,254 | |||||||
Exchange of Partnership exchangeable units for RBI common shares | 0 | $ 552 | (118) | (434) | ||||
Restaurant VIE contributions (distributions) | (1) | (1) | ||||||
Net income | 351 | 201 | 150 | |||||
Other comprehensive income (loss) | (50) | (29) | (21) | |||||
Ending balances (in shares) at Sep. 30, 2019 | 298,095,767 | |||||||
Ending balances at Sep. 30, 2019 | $ 4,063 | $ 2,460 | 762 | (864) | 1,705 | |||
Beginning balances (in shares) at Dec. 31, 2019 | 298,281,081 | 298,281,081 | ||||||
Beginning balances at Dec. 31, 2019 | $ 4,259 | $ 2,478 | 775 | (763) | 1,769 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock option exercises (in shares) | 1,053,264 | |||||||
Stock option exercises | 30 | $ 30 | ||||||
Share-based compensation | 19 | $ 19 | ||||||
Issuance of shares (in shares) | 255,325 | |||||||
Issuance of shares | 6 | $ 6 | ||||||
Dividends declared | (156) | (156) | ||||||
Dividend equivalents declared on restricted stock units | 0 | $ 2 | (2) | |||||
Distributions declared by Partnership on Partnership exchangeable units | (86) | (86) | ||||||
Exchange of partnership exchangeable units for RBI common shares (in shares) | 178,046 | |||||||
Exchange of Partnership exchangeable units for RBI common shares | 0 | $ 2 | (2) | |||||
Restaurant VIE contributions (distributions) | (1) | (1) | ||||||
Net income | 224 | 144 | 80 | |||||
Other comprehensive income (loss) | (543) | (350) | (193) | |||||
Ending balances (in shares) at Mar. 31, 2020 | 299,767,716 | |||||||
Ending balances at Mar. 31, 2020 | $ 3,752 | $ 2,537 | 761 | (1,113) | 1,567 | |||
Beginning balances (in shares) at Dec. 31, 2019 | 298,281,081 | 298,281,081 | ||||||
Beginning balances at Dec. 31, 2019 | $ 4,259 | $ 2,478 | 775 | (763) | 1,769 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 611 | |||||||
Other comprehensive income (loss) | $ (348) | |||||||
Ending balances (in shares) at Sep. 30, 2020 | 303,877,203 | 303,877,203 | ||||||
Ending balances at Sep. 30, 2020 | $ 3,915 | $ 2,648 | 692 | (997) | 1,572 | |||
Beginning balances (in shares) at Mar. 31, 2020 | 299,767,716 | |||||||
Beginning balances at Mar. 31, 2020 | 3,752 | $ 2,537 | 761 | (1,113) | 1,567 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock option exercises (in shares) | 316,172 | |||||||
Stock option exercises | 11 | $ 11 | ||||||
Share-based compensation | 20 | $ 20 | ||||||
Issuance of shares (in shares) | 45,071 | |||||||
Issuance of shares | 0 | $ 0 | ||||||
Dividends declared | (158) | (158) | ||||||
Dividend equivalents declared on restricted stock units | 0 | $ 1 | (1) | |||||
Distributions declared by Partnership on Partnership exchangeable units | (85) | (85) | ||||||
Exchange of partnership exchangeable units for RBI common shares (in shares) | 2,494,854 | |||||||
Exchange of Partnership exchangeable units for RBI common shares | 0 | $ 33 | (9) | (24) | ||||
Restaurant VIE contributions (distributions) | (1) | (1) | ||||||
Net income | 164 | 106 | 58 | |||||
Other comprehensive income (loss) | 149 | 97 | 52 | |||||
Ending balances (in shares) at Jun. 30, 2020 | 302,623,813 | |||||||
Ending balances at Jun. 30, 2020 | 3,852 | $ 2,602 | 708 | (1,025) | 1,567 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock option exercises (in shares) | 567,636 | |||||||
Stock option exercises | 19 | $ 19 | ||||||
Share-based compensation | 16 | $ 16 | ||||||
Issuance of shares (in shares) | 63,686 | |||||||
Dividends declared | (158) | (158) | ||||||
Dividend equivalents declared on restricted stock units | $ 3 | (3) | ||||||
Distributions declared by Partnership on Partnership exchangeable units | (84) | (84) | ||||||
Exchange of partnership exchangeable units for RBI common shares (in shares) | 622,068 | |||||||
Exchange of Partnership exchangeable units for RBI common shares | $ 8 | (2) | (6) | |||||
Restaurant VIE contributions (distributions) | 1 | 1 | ||||||
Net income | 223 | 145 | 78 | |||||
Other comprehensive income (loss) | $ 46 | 30 | 16 | |||||
Ending balances (in shares) at Sep. 30, 2020 | 303,877,203 | 303,877,203 | ||||||
Ending balances at Sep. 30, 2020 | $ 3,915 | $ 2,648 | $ 692 | $ (997) | $ 1,572 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||||
Common stock, dividends declared (in usd per share) | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.50 | $ 0.50 | $ 0.50 |
Dividend distributions declared (in usd per share) | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.50 | $ 0.50 | $ 0.50 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 611 | $ 854 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 139 | 139 |
Premiums paid and non-cash loss on early extinguishment of debt | 0 | 4 |
Amortization of deferred financing costs and debt issuance discount | 19 | 22 |
(Income) loss from equity method investments | 36 | (11) |
(Gain) loss on remeasurement of foreign denominated transactions | 54 | (38) |
Net (gains) losses on derivatives | 14 | (43) |
Share-based compensation expense | 55 | 56 |
Deferred income taxes | (120) | (16) |
Other | 23 | 1 |
Changes in current assets and liabilities, excluding acquisitions and dispositions: | ||
Accounts and notes receivable | (83) | (7) |
Inventories and prepaids and other current assets | (21) | (34) |
Accounts and drafts payable | (110) | (15) |
Other accrued liabilities and gift card liability | (12) | (85) |
Tenant inducements paid to franchisees | (7) | (13) |
Other long-term assets and liabilities | 10 | 97 |
Net cash provided by operating activities | 608 | 911 |
Cash flows from investing activities: | ||
Payments for property and equipment | (71) | (32) |
Net proceeds from disposal of assets, restaurant closures, and refranchisings | 9 | 22 |
Settlement/sale of derivatives, net | 29 | 17 |
Net cash (used for) provided by investing activities | (33) | 7 |
Cash flows from financing activities: | ||
Proceeds from revolving line of credit and long-term debt | 1,585 | 750 |
Repayments of revolving line of credit, long-term debt and finance leases | (1,071) | (290) |
Payment of financing costs | (10) | (13) |
Payment of dividends on common shares and distributions on Partnership exchangeable units | (716) | (669) |
Proceeds from stock option exercises | 60 | 99 |
(Payments) proceeds from derivatives | 17 | |
(Payments) proceeds from derivatives | (29) | |
Other financing activities, net | (1) | 0 |
Net cash used for financing activities | (182) | (106) |
Effect of exchange rates on cash and cash equivalents | (7) | 7 |
Increase (decrease) in cash and cash equivalents | 386 | 819 |
Cash and cash equivalents at beginning of period | 1,533 | 913 |
Cash and cash equivalents at end of period | 1,919 | 1,732 |
Supplemental cash flow disclosures: | ||
Interest paid | 315 | 433 |
Income taxes paid | $ 163 | $ 171 |
Description of Business and Org
Description of Business and Organization | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Organization | Description of Business and Organization Restaurant Brands International Inc. (the “Company”, “RBI”, “we”, “us” or “our”) was formed on August 25, 2014 and continued under the laws of Canada. The Company serves as the sole general partner of Restaurant Brands International Limited Partnership (“Partnership”). We franchise and operate quick service restaurants serving premium coffee and other beverage and food products under the Tim Hortons ® brand (“Tim Hortons” or “TH”), fast food hamburgers principally under the Burger King ® brand (“Burger King” or “BK”), and chicken under the Popeyes ® brand (“Popeyes” or “PLK”). We are one of the world’s largest quick service restaurant, or QSR, companies as measured by total number of restaurants. As of September 30, 2020, we franchised or owned 4,934 Tim Hortons restaurants, 18,675 Burger King restaurants, and 3,418 Popeyes restaurants, for a total of 27,027 restaurants, and operate in more than 100 countries and U.S. territories. Approximately 100% of current system-wide restaurants are franchised. All references to “$” or “dollars” are to the currency of the United States unless otherwise indicated. All references to “Canadian dollars” or “C$” are to the currency of Canada unless otherwise indicated. COVID-19 The global crisis resulting from the spread of coronavirus ( “ COVID-19 ” ) has had a substantial impact on our global restaurant operations for the three and nine months ended September 30, 2020, which is expected to continue with the timing of recovery uncertain. During the three and nine months ended September 30, 2020, some TH, BK and PLK restaurants were temporarily closed in certain countries and many of the restaurants that remained open had limited operations, such as Drive-thru, Takeout and Delivery (where applicable). This has continued into the fourth quarter of 2020. Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The financial impact of COVID-19 has had, and is expected to continue for an uncertain period to have, an adverse effect on many of our franchisees’ liquidity and we have worked closely with our franchisees to monitor and assist them with access to appropriate sources of liquidity in order to sustain their businesses throughout this crisis, such as offering rent relief programs for eligible franchisees who lease property from us. See Note 4, Leases , for further information about the rent relief programs. Additionally, we provided cash flow support by extending loans to eligible BK franchisees in the U.S. during the second and third quarters of 2020, and by advancing certain cash payments to eligible TH franchisees in Canada during the second quarter of 2020. During the nine months ended September 30, 2020, we recorded bad debt expense of $27 million compared to $3 million during the nine months ended September 30, 2019. While these receivables remain contractually due and payable to us, the certainty of the amount and timing of payments has been impacted by the COVID-19 pandemic. Therefore, our bad debt expense during the nine months ended September 30, 2020 reflects an adjustment to our historical collections experience to incorporate an estimate of the impact of current economic conditions resulting from the COVID-19 pandemic. Actual collections may be materially higher or lower than this estimate reflects since it is reasonably possible the duration and future impact of the COVID-19 pandemic on our business or our franchisees may differ from our assumptions. Ongoing material adverse effects of the COVID-19 pandemic on our franchisees for an extended period could negatively affect our operating results, including reductions in revenue and cash flow and could impact our impairment assessments of accounts receivable, intangible assets, long-lived assets or goodwill. |
Basis of Presentation and Conso
Basis of Presentation and Consolidation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February 21, 2020. The Financial Statements include our accounts and the accounts of entities in which we have a controlling financial interest, the usual condition of which is ownership of a majority voting interest. All material intercompany balances and transactions have been eliminated in consolidation. Investments in other affiliates that are owned 50% or less where we have significant influence are accounted for by the equity method. We are the sole general partner of Partnership and, as such we have the exclusive right, power and authority to manage, control, administer and operate the business and affairs and to make decisions regarding the undertaking and business of Partnership, subject to the terms of the amended and restated limited partnership agreement of Partnership (the “partnership agreement”) and applicable laws. As a result, we consolidate the results of Partnership and record a noncontrolling interest in our consolidated balance sheets and statements of operations with respect to the remaining economic interest in Partnership we do not hold. We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. Our maximum exposure to loss resulting from involvement with VIEs is attributable to accounts and notes receivable balances, outstanding loan guarantees and future lease payments, where applicable. As our franchise and master franchise arrangements provide the franchise and master franchise entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE. Tim Hortons has historically entered into certain arrangements in which an operator acquires the right to operate a restaurant, but Tim Hortons owns the restaurant’s assets. We perform an analysis to determine if the legal entity in which operations are conducted is a VIE and consolidate a VIE entity if we also determine Tim Hortons is the entity’s primary beneficiary (“Restaurant VIEs”). As of September 30, 2020 and December 31, 2019, we determined that we are the primary beneficiary of 40 and 35 Restaurant VIEs, respectively, and accordingly, have consolidated the results of operations, assets and liabilities, and cash flows of these Restaurant VIEs in our Financial Statements. Material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The preparation of consolidated financial statements in conformity with U.S. GAAP and related rules and regulations of the SEC requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The carrying amounts for cash and cash equivalents, accounts and notes receivable and accounts and drafts payable approximate fair value based on the short-term nature of these amounts. Certain prior year amounts in the accompanying Financial Statements and notes to the Financial Statements have been reclassified in order to be comparable with the current year classifications. These reclassifications had no effect on previously reported net income. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Credit Losses – In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that requires companies to measure and recognize lifetime expected credit losses for certain financial instruments, including trade accounts receivable and net investments in direct financing and sales-type leases. Expected credit losses are estimated using relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This amendment was effective commencing in 2020, using a modified retrospective approach. The adoption of this new guidance did not have a material impact on our Financial Statements. Simplifying the Accounting for Income Taxes – In December 2019, the FASB issued guidance which simplifies the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance applicable to accounting for income taxes . The amendment is effective commencing in 2021 with early adoption permitted. While we are currently evaluating the impact that the adoption of this new guidance will have on our Financial Statements, we do not currently anticipate this adoption will have a material impact on our Financial Statements. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases During the nine months ended September 30, 2020, we offered a rent relief program for eligible TH franchisees in Canada who lease property from us (the “TH rent relief program”) and a rent relief program for eligible BK franchisees in the U.S. and Canada who lease property from us (the “BK rent relief program” and together with the TH rent relief program, the “rent relief programs”), a portion of which concluded during the three months ended September 30, 2020. Under the rent relief programs, we temporarily converted the rent structure from a combination of fixed plus variable rent to 100% variable rent. While in effect, these programs result in a reduction in our property revenues. In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Accounting Standards Codification Topic 842, Leases (“ASC 842”), as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity is not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected to apply this interpretive guidance to the rent relief programs while in effect and have assumed that enforceable rights and obligations for those concessions exist in the lease contract. As such, we recognize reductions in rents arising from the rent relief programs as reductions in variable lease payments, as the rent reductions did not result in a substantial increase in the rights of the lessor or the obligations of the lessee. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Lease income - operating leases Minimum lease payments $ 112 $ 112 $ 333 $ 335 Variable lease payments 82 100 191 281 Amortization of favorable and unfavorable income lease contracts, net 1 1 4 5 Subtotal - lease income from operating leases 195 213 528 621 Earned income on direct financing leases 1 2 4 7 Total property revenues $ 196 $ 215 $ 532 $ 628 |
Leases | Leases During the nine months ended September 30, 2020, we offered a rent relief program for eligible TH franchisees in Canada who lease property from us (the “TH rent relief program”) and a rent relief program for eligible BK franchisees in the U.S. and Canada who lease property from us (the “BK rent relief program” and together with the TH rent relief program, the “rent relief programs”), a portion of which concluded during the three months ended September 30, 2020. Under the rent relief programs, we temporarily converted the rent structure from a combination of fixed plus variable rent to 100% variable rent. While in effect, these programs result in a reduction in our property revenues. In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Accounting Standards Codification Topic 842, Leases (“ASC 842”), as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity is not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected to apply this interpretive guidance to the rent relief programs while in effect and have assumed that enforceable rights and obligations for those concessions exist in the lease contract. As such, we recognize reductions in rents arising from the rent relief programs as reductions in variable lease payments, as the rent reductions did not result in a substantial increase in the rights of the lessor or the obligations of the lessee. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Lease income - operating leases Minimum lease payments $ 112 $ 112 $ 333 $ 335 Variable lease payments 82 100 191 281 Amortization of favorable and unfavorable income lease contracts, net 1 1 4 5 Subtotal - lease income from operating leases 195 213 528 621 Earned income on direct financing leases 1 2 4 7 Total property revenues $ 196 $ 215 $ 532 $ 628 |
Leases | Leases During the nine months ended September 30, 2020, we offered a rent relief program for eligible TH franchisees in Canada who lease property from us (the “TH rent relief program”) and a rent relief program for eligible BK franchisees in the U.S. and Canada who lease property from us (the “BK rent relief program” and together with the TH rent relief program, the “rent relief programs”), a portion of which concluded during the three months ended September 30, 2020. Under the rent relief programs, we temporarily converted the rent structure from a combination of fixed plus variable rent to 100% variable rent. While in effect, these programs result in a reduction in our property revenues. In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Accounting Standards Codification Topic 842, Leases (“ASC 842”), as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity is not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected to apply this interpretive guidance to the rent relief programs while in effect and have assumed that enforceable rights and obligations for those concessions exist in the lease contract. As such, we recognize reductions in rents arising from the rent relief programs as reductions in variable lease payments, as the rent reductions did not result in a substantial increase in the rights of the lessor or the obligations of the lessee. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Lease income - operating leases Minimum lease payments $ 112 $ 112 $ 333 $ 335 Variable lease payments 82 100 191 281 Amortization of favorable and unfavorable income lease contracts, net 1 1 4 5 Subtotal - lease income from operating leases 195 213 528 621 Earned income on direct financing leases 1 2 4 7 Total property revenues $ 196 $ 215 $ 532 $ 628 |
Leases | Leases During the nine months ended September 30, 2020, we offered a rent relief program for eligible TH franchisees in Canada who lease property from us (the “TH rent relief program”) and a rent relief program for eligible BK franchisees in the U.S. and Canada who lease property from us (the “BK rent relief program” and together with the TH rent relief program, the “rent relief programs”), a portion of which concluded during the three months ended September 30, 2020. Under the rent relief programs, we temporarily converted the rent structure from a combination of fixed plus variable rent to 100% variable rent. While in effect, these programs result in a reduction in our property revenues. In April 2020, the FASB staff issued interpretive guidance that indicated it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Accounting Standards Codification Topic 842, Leases (“ASC 842”), as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity is not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and can elect to apply or not apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected to apply this interpretive guidance to the rent relief programs while in effect and have assumed that enforceable rights and obligations for those concessions exist in the lease contract. As such, we recognize reductions in rents arising from the rent relief programs as reductions in variable lease payments, as the rent reductions did not result in a substantial increase in the rights of the lessor or the obligations of the lessee. Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Lease income - operating leases Minimum lease payments $ 112 $ 112 $ 333 $ 335 Variable lease payments 82 100 191 281 Amortization of favorable and unfavorable income lease contracts, net 1 1 4 5 Subtotal - lease income from operating leases 195 213 528 621 Earned income on direct financing leases 1 2 4 7 Total property revenues $ 196 $ 215 $ 532 $ 628 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Contract Liabilities Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees paid by franchisees, as well as upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the underlying agreement. We may recognize unamortized upfront fees when a contract with a franchisee or master franchisee is modified and is accounted for as a termination of the existing contract. We classify these contract liabilities as Other liabilities, net in our condensed consolidated balance sheets. The following table reflects the change in contract liabilities between December 31, 2019 and September 30, 2020 (in millions): Contract Liabilities TH BK PLK Consolidated Balance at December 31, 2019 $ 64 $ 449 $ 28 $ 541 Recognized during period and included in the contract liability balance at the beginning of the year (7) (50) (2) (59) Increase, excluding amounts recognized as revenue during the period 5 15 9 29 Impact of foreign currency translation (1) 7 — 6 Balance at September 30, 2020 $ 61 $ 421 $ 35 $ 517 The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2020 (in millions): Contract liabilities expected to be recognized in TH BK PLK Consolidated Remainder of 2020 $ 2 $ 9 $ 1 $ 12 2021 8 34 2 44 2022 8 33 2 43 2023 7 32 2 41 2024 7 31 2 40 Thereafter 29 282 26 337 Total $ 61 $ 421 $ 35 $ 517 Disaggregation of Total Revenues Total revenues consist of the following (in millions): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Sales $ 541 $ 624 $ 1,450 $ 1,735 Royalties 581 602 1,576 1,706 Property revenues 196 215 532 628 Franchise fees and other revenue 19 17 52 55 Total revenues $ 1,337 $ 1,458 $ 3,610 $ 4,124 |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share An economic interest in Partnership common equity is held by the holders of Class B exchangeable limited partnership units (the “Partnership exchangeable units”), which is reflected as a noncontrolling interest in our equity. See Note 12, Shareholders’ Equity . Basic and diluted earnings per share is computed using the weighted average number of shares outstanding for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by outstanding equity awards, unless the effect of their inclusion is anti-dilutive. The diluted earnings per share calculation assumes conversion of 100% of the Partnership exchangeable units under the “if converted” method. Accordingly, the numerator is also adjusted to include the earnings allocated to the holders of noncontrolling interests. The following table summarizes the basic and diluted earnings per share calculations (in millions, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net income attributable to common shareholders - basic $ 145 $ 201 $ 395 $ 478 Add: Net income attributable to noncontrolling interests 78 150 215 376 Net income available to common shareholders and noncontrolling interests - diluted $ 223 $ 351 $ 610 $ 854 Denominator: Weighted average common shares - basic 303 267 301 258 Exchange of noncontrolling interests for common shares (Note 12) 162 197 164 204 Effect of other dilutive securities 5 6 4 7 Weighted average common shares - diluted 470 470 469 469 Basic earnings per share (a) $ 0.48 $ 0.76 $ 1.31 $ 1.85 Diluted earnings per share (a) $ 0.47 $ 0.75 $ 1.30 $ 1.82 Anti-dilutive securities outstanding 8 3 8 3 (a) Earnings per share may not recalculate exactly as it is calculated based on unrounded numbers. |
Intangible Assets, net and Good
Intangible Assets, net and Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net and Goodwill | Intangible Assets, net and Goodwill Intangible assets, net and goodwill consist of the following (in millions): As of September 30, 2020 December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Identifiable assets subject to amortization: Franchise agreements $ 724 $ (252) $ 472 $ 720 $ (225) $ 495 Favorable leases 116 (63) 53 127 (65) 62 Subtotal 840 (315) 525 847 (290) 557 Indefinite-lived intangible assets: Tim Hortons brand $ 6,390 $ — $ 6,390 $ 6,534 $ — $ 6,534 Burger King brand 2,145 — 2,145 2,117 — 2,117 Popeyes brand 1,355 — 1,355 1,355 — 1,355 Subtotal 9,890 — 9,890 10,006 — 10,006 Intangible assets, net $ 10,415 $ 10,563 Goodwill Tim Hortons segment $ 4,119 $ 4,207 Burger King segment 606 598 Popeyes segment 846 846 Total $ 5,571 $ 5,651 Amortization expense on intangible assets totaled $11 million and $12 million for the three months ended September 30, 2020 and 2019, respectively, and $33 million and $33 million for the nine months ended September 30, 2020 and 2019, respectively. The change in the brands and goodwill balances during the nine months ended September 30, 2020 was due to the impact of foreign currency translation. |
Equity Method Investments
Equity Method Investments | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments The aggregate carrying amount of our equity method investments was $198 million and $266 million as of September 30, 2020 and December 31, 2019, respectively, and is included as a component of Other assets, net in our accompanying condensed consolidated balance sheets. TH and BK both have equity method investments. PLK does not have any equity method investments. With respect to our TH business, the most significant equity method investment is our 50% joint venture interest with The Wendy’s Company (the “TIMWEN Partnership”), which jointly holds real estate underlying Canadian combination restaurants. Distributions received from this joint venture were $2 million and $3 million during the three months ended September 30, 2020 and 2019, respectively. Distributions received from this joint venture were $6 million and $10 million during the nine months ended September 30, 2020 and 2019, respectively. Except for the following equity method investments, no quoted market prices are available for our other equity method investments. The aggregate market value of our 15.2% equity interest in Carrols Restaurant Group, Inc. (“Carrols”) based on the quoted market price on September 30, 2020 was approximately $61 million. The aggregate market value of our 9.8% equity interest in BK Brasil Operação e Assessoria a Restaurantes S.A. based on the quoted market price on September 30, 2020 was approximately $43 million. We have equity interests in entities that own or franchise Tim Hortons or Burger King restaurants. Franchise and property revenues recognized from franchisees that are owned or franchised by entities in which we have an equity interest consist of the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues from affiliates: Royalties $ 82 $ 89 $ 209 $ 254 Property revenues 8 8 24 25 Franchise fees and other revenue 4 1 10 7 Total $ 94 $ 98 $ 243 $ 286 We recognized $4 million and $5 million of rent expense associated with the TIMWEN Partnership during the three months ended September 30, 2020 and 2019, respectively. We recognized $11 million and $14 million of rent expense associated with the TIMWEN Partnership during the nine months ended September 30, 2020 and 2019, respectively. At September 30, 2020 and December 31, 2019, we had $72 million and $47 million, respectively, of accounts receivable, net from our equity method investments which were recorded in Accounts and notes receivable, net in our condensed consolidated balance sheets. |
Other Accrued Liabilities and O
Other Accrued Liabilities and Other Liabilities, net | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Accrued Liabilities and Other Liabilities, net | Other Accrued Liabilities and Other Liabilities, net Other accrued liabilities (current) and other liabilities, net (noncurrent) consist of the following (in millions): As of September 30, December 31, Current: Dividend payable $ 243 $ 232 Interest payable 106 71 Accrued compensation and benefits 62 57 Taxes payable 157 126 Deferred income 41 35 Accrued advertising expenses 65 40 Restructuring and other provisions 12 8 Current portion of operating lease liabilities 128 126 Other 69 95 Other accrued liabilities $ 883 $ 790 Noncurrent: Taxes payable $ 604 $ 579 Contract liabilities 517 541 Derivatives liabilities 592 341 Unfavorable leases 83 103 Accrued pension 55 65 Deferred income 26 25 Other 40 44 Other liabilities, net $ 1,917 $ 1,698 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following (in millions): As of September 30, December 31, Term Loan B (due November 19, 2026) $ 5,310 $ 5,350 Term Loan A (due October 7, 2024) 736 750 2017 4.25% Senior Notes (due May 15, 2024) 1,500 1,500 2019 3.875% Senior Notes (due January 15, 2028) 750 750 2020 5.75% Senior Notes (due April 15, 2025) 500 — 2017 5.00% Senior Notes (due October 15, 2025) 2,800 2,800 2019 4.375% Senior Notes (due January 15, 2028) 750 750 TH Facility and other 171 81 Less: unamortized deferred financing costs and deferred issue discount (139) (148) Total debt, net 12,378 11,833 Less: current maturities of debt (78) (74) Total long-term debt $ 12,300 $ 11,759 Credit Facilities In March 2020, we drew $995 million on our senior secured revolving credit facility (the “Revolving Credit Facility”), which we repaid in June 2020. As of September 30, 2020, we had no amounts outstanding under our Revolving Credit Facility, had $2 million of letters of credit issued against the Revolving Credit Facility, and our borrowing availability under our Revolving Credit Facility was $998 million. Funds available under the Revolving Credit Facility may be used to repay other debt, finance debt or share repurchases, fund acquisitions or capital expenditures and for other general corporate purposes. We have a $125 million letter of credit sublimit as part of the Revolving Credit Facility, which reduces our borrowing availability thereunder by the cumulative amount of outstanding letters of credit. On April 2, 2020, two of our subsidiaries (the “Borrowers”) entered into a fifth amendment (the “Fifth Amendment”) to the credit agreement (the “Credit Agreement”) governing our senior secured term loan facilities (the “Term Loan Facilities”) and Revolving Credit Facility. The Fifth Amendment provides the Borrowers with the option to comply with a $1,000 million minimum liquidity covenant in lieu of the 6.50:1.00 net first lien senior secured leverage ratio financial maintenance covenant for the period after June 30, 2020 and prior to September 30, 2021. Additionally, for the periods ending September 30, 2021 and December 31, 2021, to determine compliance with the net first lien senior secured leverage ratio, we are permitted to annualize the Adjusted EBITDA (as defined in the Credit Agreement) for the three months ending September 30, 2021 and six months ending December 31, 2021, respectively, in lieu of calculating the ratio based on Adjusted EBITDA for the prior four quarters. There were no other material changes to the terms of the Credit Agreement. TH Facility One of our subsidiaries entered into a non-revolving delayed drawdown term credit facility in a total aggregate principal amount of C$225 million with a maturity date of October 4, 2025 (the “TH Facility”). The interest rate applicable to the TH Facility is the Canadian Bankers’ Acceptance rate plus an applicable margin equal to 1.40% or the Prime Rate plus an applicable margin equal to 0.40%, at our option. Obligations under the TH Facility are guaranteed by four of our subsidiaries, and amounts borrowed under the TH Facility are secured by certain parcels of real estate. During the nine months ended September 30, 2020, we drew down the remaining availability of C$125 million under the TH Facility and, as of September 30, 2020, we had outstanding C$224 million under the TH Facility with a weighted average interest rate of 1.88%. 2020 First Lien Senior Notes On April 7, 2020, the Borrowers entered into an indenture (the “2020 5.75% Senior Notes Indenture”) in connection with the issuance of $500 million of 5.75% first lien notes due April 15, 2025 (the “2020 5.75% Senior Notes”). No principal payments are due until maturity and interest is paid semi-annually. The net proceeds from the offering of the 2020 5.75% Senior Notes were used for general corporate purposes. In connection with the issuance of the 2020 5.75% Senior Notes, we capitalized approximately $9 million in debt issuance costs. Obligations under the 2020 5.75% Senior Notes are guaranteed on a senior secured basis, jointly and severally, by the Borrowers and substantially all of the Borrowers' Canadian and U.S. subsidiaries, including The TDL Group Corp., Burger King Worldwide, Inc., Popeyes Louisiana Kitchen, Inc. and substantially all of their respective Canadian and U.S. subsidiaries (the “Note Guarantors”). The 2020 5.75% Senior Notes are first lien senior secured obligations and rank equal in right of payment with all of the existing and future first lien senior debt of the Borrowers and Note Guarantors, including borrowings and guarantees of the Credit Facilities. Our 2020 5.75% Senior Notes may be redeemed in whole or in part, on or after April 15, 2022 at the redemption prices set forth in the 2020 5.75% Senior Notes Indenture, plus accrued and unpaid interest, if any, at the date of redemption. The 2020 5.75% Senior Notes Indenture also contains optional redemption provisions related to tender offers, change of control and equity offerings, among others. 2020 Second Lien Senior Notes On October 5, 2020, the Borrowers entered into an indenture (the “2020 4.00% Senior Notes Indenture”) in connection with the issuance of $1,400 million of 4.00% second lien notes due October 15, 2030 (the “October 2020 4.00% Senior Notes”). No principal payments are due until maturity and interest is paid semi-annually. On October 16, 2020, the proceeds from the offering of the October 2020 4.00% Senior Notes were used to redeem $1,350 million of the outstanding aggregate principal amount of our existing $2,800 million 2017 5.00% Senior Notes (due October 15, 2025) and pay related redemption premiums, fees and expenses. On October 14, 2020, the Borrowers entered into a purchase agreement relating to the sale of $1,500 million in aggregate principal amount of 4.00% second lien notes due October 15, 2030 (the “November 2020 4.00% Senior Notes” and together with the October 2020 4.00% Senior Notes, the “2020 4.00% Senior Notes”), which will be issued as additional notes under the 2020 4.00% Senior Notes Indenture. The closing of the offering of the November 2020 4.00% Senior Notes is expected to occur on or about November 2, 2020, subject to customary closing conditions. The November 2020 4.00% Senior Notes are treated as a single series with the October 2020 4.00% Senior Notes and have the same terms for all purposes under the 2020 4.00% Senior Notes Indenture, including waivers, amendments, redemptions and offers to purchase. The net proceeds from the offering of the November 2020 4.00% Senior Notes will be used to redeem the remaining $1,450 million principal amount outstanding of the 2017 5.00% Senior Notes on or about November 13, 2020 and pay related redemption premiums, fees and expenses. Obligations under the 2020 4.00% Senior Notes are guaranteed on a senior secured basis, jointly and severally, by the Borrowers and Note Guarantors. The 2020 4.00% Senior Notes are second lien senior secured obligations and rank equal in right of payment will all of the existing and future senior debt of the Borrowers and Note Guarantors and effectively subordinated to all of the existing and future first lien senior debt of the Borrowers and Note Guarantors. Our 2020 4.00% Senior Notes may be redeemed in whole or in part, on or after October 15, 2025 at the redemption prices set forth in the 2020 4.00% Senior Notes Indenture, plus accrued and unpaid interest, if any, at the date of redemption. The 2020 4.00% Senior Notes Indenture also contains optional redemption provisions related to tender offers, change of control and equity offerings, among others. 2020 3.50% First Lien Notes On October 20, 2020, the Borrowers entered into a purchase agreement relating to the sale of $750 million in aggregate principal amount of 3.50% first lien notes due February 15, 2029 (the “2020 3.50% Senior Notes”). The closing of the offering of the 2020 3.50% Senior Notes is expected to occur on or about November 9, 2020, subject to customary closing conditions. The net proceeds from the offering of the 2020 3.50% Senior Notes will be used to redeem $725 million of our 4.25% first lien notes due 2024 and pay related redemption premiums, fees and expenses. Restrictions and Covenants As of September 30, 2020, we were in compliance with all applicable financial debt covenants under the Credit Facilities, the TH Facility, and the indentures governing our Senior Notes. Fair Value Measurement The following table presents the fair value of our variable rate term debt and senior notes, estimated using inputs based on bid and offer prices that are Level 2 inputs, and principal carrying amount (in millions): As of September 30, December 31, Fair value of our variable term debt and senior notes $ 12,283 $ 12,075 Principal carrying amount of our variable term debt and senior notes 12,346 11,900 Interest Expense, net Interest expense, net consists of the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Debt (a) $ 119 $ 130 $ 351 $ 382 Finance lease obligations 4 5 14 16 Amortization of deferred financing costs and debt issuance discount 7 7 19 22 Interest income (1) (5) (8) (14) Interest expense, net $ 129 $ 137 $ 376 $ 406 (a) Amount includes $15 million and $16 million benefit during the three months ended September 30, 2020 and 2019, respectively, and $56 million and $53 million benefit during the nine months ended September 30, 2020 and 2019, respectively, related to the amortization of the Excluded Component as defined in Note 13, Derivatives . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rate was 22.6% and 9.2% for the three and nine months ended September 30, 2020, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions and the impact of internal financing arrangements. Additionally, the effective tax rate during the nine months ended September 30, 2020 reflects a $64 million increase in deferred tax assets which decreased the effective tax rate by (9.5)% during this period. Based on the analysis of final guidance related to the Tax Cuts and Jobs Act (the “Tax Act”) received during this period, a deferred tax asset was recorded. Our effective tax rate was 18.3% and 21.4% for the three and nine months ended September 30, 2019, respectively. The effective tax rate during these periods reflects the mix of income from multiple tax jurisdictions, the impact of internal financing arrangements and stock option exercises. Additionally, the effective tax rate during the nine months ended September 30, 2019 reflects a $37 million increase in the provision for unrecognized tax benefits related to a prior restructuring transaction that is not applicable to ongoing operations which increased the effective tax rate by 3.4% during this period. Benefits from stock option exercises reduced the effective tax rate by 1.2% and 2.9% for the three and nine months ended September 30, 2019, respectively. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Noncontrolling Interests The holders of Partnership exchangeable units held an economic interest of approximately 34.8% and 35.7% in Partnership common equity through the ownership of 162,212,231 and 165,507,199 Partnership exchangeable units as of September 30, 2020 and December 31, 2019, respectively. During the nine months ended September 30, 2020, Partnership exchanged 3,294,968 Partnership exchangeable units, pursuant to exchange notices received. In accordance with the terms of the partnership agreement, Partnership satisfied the exchange notices by exchanging these Partnership exchangeable units for the same number of newly issued RBI common shares. See Note 17, Subsequent Events , for detail of Partnership exchangeable units repurchased for cash on October 2, 2020. The exchanges represented increases in our ownership interest in Partnership and were accounted for as equity transactions, with no gain or loss recorded in the accompanying condensed consolidated statement of operations. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit is automatically deemed cancelled concurrently with the exchange. Accumulated Other Comprehensive Income (Loss) The following table displays the changes in the components of accumulated other comprehensive income (loss) (“AOCI”) (in millions): Derivatives Pensions Foreign Currency Translation Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2019 $ 199 $ (19) $ (943) $ (763) Foreign currency translation adjustment — — (170) (170) Net change in fair value of derivatives, net of tax (229) — — (229) Amounts reclassified to earnings of cash flow hedges, net of tax 51 — — 51 Amounts attributable to noncontrolling interests 64 — 50 114 Balance at September 30, 2020 $ 85 $ (19) $ (1,063) $ (997) |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments Disclosures about Derivative Instruments and Hedging Activities We enter into derivative instruments for risk management purposes, including derivatives designated as cash flow hedges, derivatives designated as net investment hedges and those utilized as economic hedges. We use derivatives to manage our exposure to fluctuations in interest rates and currency exchange rates. Interest Rate Swaps At September 30, 2020, we had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $3,500 million to hedge the variability in the interest payments on a portion of our senior secured term loan facilities (the “Term Loan Facilities”) beginning October 31, 2019 through the termination date of November 19, 2026. Additionally, at September 30, 2020, we also had outstanding receive-variable, pay-fixed interest rate swaps with a total notional value of $500 million to hedge the variability in the interest payments on a portion of our Term Loan Facilities effective September 30, 2019 through the termination date of September 30, 2026. At inception, all of these interest rate swaps were designated as cash flow hedges for hedge accounting. The unrealized changes in market value are recorded in AOCI and reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. During 2019, we extended the term of our previous $3,500 million receive-variable, pay-fixed interest rate swaps to align the maturity date of the new interest rate swaps with the new maturity date of our Term Loan B. The extension of the term resulted in a de-designation and re-designation of the interest rate swaps and the swaps continue to be accounted for as a cash flow hedge for hedge accounting. In connection with the de-designation, we recognized a net unrealized loss of $213 million in AOCI and this amount gets reclassified into Interest expense, net as the original forecasted transaction affects earnings. The amount of pre-tax losses in AOCI as of September 30, 2020 that we expect to be reclassified into interest expense within the next 12 months is $51 million. During 2015, we settled certain interest rate swaps and recognized a net unrealized loss of $85 million in AOCI at the date of settlement. This amount gets reclassified into Interest expense, net as the original hedged forecasted transaction affects earnings. The amount of pre-tax losses in AOCI as of September 30, 2020 that we expect to be reclassified into interest expense within the next 12 months is $12 million. Cross-Currency Rate Swaps To protect the value of our investments in our foreign operations against adverse changes in foreign currency exchange rates, we hedge a portion of our net investment in one or more of our foreign subsidiaries by using cross-currency rate swaps. At September 30, 2020, we had outstanding cross-currency rate swap contracts between the Canadian dollar and U.S. dollar and the Euro and U.S. dollar that have been designated as net investment hedges of a portion of our equity in foreign operations in those currencies. The component of the gains and losses on our net investment in these designated foreign operations driven by changes in foreign exchange rates are economically partly offset by movements in the fair value of our cross-currency swap contracts. The fair value of the swaps is calculated each period with changes in fair value reported in AOCI, net of tax. Such amounts will remain in AOCI until the complete or substantially complete liquidation of our investment in the underlying foreign operations. At September 30, 2020, we had outstanding fixed-to-fixed cross-currency rate swaps to partially hedge the net investment in our Canadian subsidiaries. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as net investment hedges. These swaps are contracts to exchange quarterly fixed-rate interest payments we make on the Canadian dollar notional amount of C$6,754 million for quarterly fixed-rate interest payments we receive on the U.S. dollar notional amount of $5,000 million through the maturity date of June 30, 2023. At September 30, 2020, we had outstanding cross-currency rate swaps in which we pay quarterly fixed-rate interest payments on the Euro notional value of €1,108 million and receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $1,200 million. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge. During 2018, we extended the term of the swaps from March 31, 2021 to the maturity date of February 17, 2024. The extension of the term resulted in a re-designation of the hedge and the swaps continue to be accounted for as a net investment hedge. Additionally, at September 30, 2020, we also had outstanding cross-currency rate swaps in which we receive quarterly fixed-rate interest payments on the U.S. dollar notional value of $400 million, entered during 2018, and $500 million, entered during 2019, through the maturity date of February 17, 2024. At inception, these cross-currency rate swaps were designated as a hedge and are accounted for as a net investment hedge. The fixed to fixed cross-currency rate swaps hedging Canadian dollar and Euro net investments utilized the forward method of effectiveness assessment prior to March 15, 2018. On March 15, 2018, we de-designated and subsequently re-designated the outstanding fixed to fixed cross-currency rate swaps to prospectively use the spot method of hedge effectiveness assessment. Additionally, as a result of adopting new hedge accounting guidance during 2018, we elected to exclude the interest component (the “Excluded Component”) from the accounting hedge without affecting net investment hedge accounting and elected to amortize the Excluded Component over the life of the derivative instrument. The amortization of the Excluded Component is recognized in Interest expense, net in the condensed consolidated statement of operations. The change in fair value that is not related to the Excluded Component is recorded in AOCI and will be reclassified to earnings when the foreign subsidiaries are sold or substantially liquidated. Foreign Currency Exchange Contracts We use foreign exchange derivative instruments to manage the impact of foreign exchange fluctuations on U.S. dollar purchases and payments, such as coffee purchases made by our Canadian Tim Hortons operations. At September 30, 2020, we had outstanding forward currency contracts to manage this risk in which we sell Canadian dollars and buy U.S. dollars with a notional value of $98 million with maturities to November 2021. We have designated these instruments as cash flow hedges, and as such, the unrealized changes in market value of effective hedges are recorded in AOCI and are reclassified into earnings during the period in which the hedged forecasted transaction affects earnings. Credit Risk By entering into derivative contracts, we are exposed to counterparty credit risk. Counterparty credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is in an asset position, the counterparty has a liability to us, which creates credit risk for us. We attempt to minimize this risk by selecting counterparties with investment grade credit ratings and regularly monitoring our market position with each counterparty. Credit-Risk Related Contingent Features Our derivative instruments do not contain any credit-risk related contingent features. Quantitative Disclosures about Derivative Instruments and Fair Value Measurements The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions): Gain or (Loss) Recognized in Other Comprehensive Income (Loss) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Derivatives designated as cash flow hedges (1) Interest rate swaps $ (22) $ (35) $ (370) $ (156) Forward-currency contracts $ (2) $ 1 $ 3 $ (3) Derivatives designated as net investment hedges Cross-currency rate swaps $ (238) $ 180 $ 51 $ 25 (1) We did not exclude any components from the cash flow hedge relationships presented in this table. Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Derivatives designated as cash flow hedges Interest rate swaps Interest expense, net $ (30) $ (7) $ (71) $ (14) Forward-currency contracts Cost of sales $ — $ — $ 2 $ 4 Location of Gain or (Loss) Recognized in Earnings Gain or (Loss) Recognized in Earnings Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Derivatives designated as net investment hedges Cross-currency rate swaps Interest expense, net $ 15 $ 16 $ 56 $ 53 Fair Value as of September 30, December 31, 2019 Balance Sheet Location Assets: Derivatives designated as cash flow hedges Interest rate $ — $ 7 Other assets, net Derivatives designated as net investment hedges Foreign currency 18 22 Other assets, net Total assets at fair value $ 18 $ 29 Liabilities: Derivatives designated as cash flow hedges Interest rate $ 490 $ 175 Other liabilities, net Foreign currency 1 2 Other accrued liabilities Derivatives designated as net investment hedges Foreign currency 102 166 Other liabilities, net Total liabilities at fair value $ 593 $ 343 |
Other Operating Expenses (Incom
Other Operating Expenses (Income), net | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Other Operating Expenses (Income), net | Other Operating Expenses (Income), net Other operating expenses (income), net consist of the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net losses (gains) on disposal of assets, restaurant closures, and refranchisings $ 4 $ 6 $ 2 $ (1) Litigation settlements (gains) and reserves, net 4 1 5 1 Net losses (gains) on foreign exchange 44 (35) 54 (38) Other, net 2 (2) (2) (6) Other operating expenses (income), net $ 54 $ (30) $ 59 $ (44) Net losses (gains) on disposal of assets, restaurant closures, and refranchisings represent sales of properties and other costs related to restaurant closures and refranchisings. Gains and losses recognized in the current period may reflect certain costs related to closures and refranchisings that occurred in previous periods. Net losses (gains) on foreign exchange is primarily related to revaluation of foreign denominated assets and liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation From time to time, we are involved in legal proceedings arising in the ordinary course of business relating to matters including, but not limited to, disputes with franchisees, suppliers, employees and customers, as well as disputes over our intellectual property. On October 5, 2018, a class action complaint was filed against Burger King Worldwide, Inc. (“BKW”) and Burger King Corporation (“BKC”) in the U.S. District Court for the Southern District of Florida by Jarvis Arrington, individually and on behalf of all others similarly situated. On October 18, 2018, a second class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Monique Michel, individually and on behalf of all others similarly situated. On October 31, 2018, a third class action complaint was filed against BKC and BKW in the U.S. District Court for the Southern District of Florida by Geneva Blanchard and Tiffany Miller, individually and on behalf of all others similarly situated. On November 2, 2018, a fourth class action complaint was filed against RBI, BKW and BKC in the U.S. District Court for the Southern District of Florida by Sandra Muster, individually and on behalf of all others similarly situated. These complaints have been consolidated and allege that the defendants violated Section 1 of the Sherman Act by incorporating an employee no-solicitation and no-hiring clause in the standard form franchise agreement all Burger King franchisees are required to sign. Each plaintiff seeks injunctive relief and damages for himself or herself and other members of the class. On March 24, 2020, the Court granted BKC’s motion to dismiss for failure to state a claim and on April 20, 2020 the plaintiffs filed a motion for leave to amend their complaint. On April 27, 2020, BKC filed a motion opposing the motion for leave to amend. The court denied the plaintiffs motion for leave to amend their complaint in August 2020 and the plaintiffs are appealing this ruling. While we currently believe these claims are without merit, we are unable to predict the ultimate outcome of these cases or estimate the range of possible loss, if any. In July 2019, a class action complaint was filed against The TDL Group Corp. (“TDL”) in the Supreme Court of British Columbia by Samir Latifi, individually and on behalf of all others similarly situated. The complaint alleges that TDL violated the Canadian Competition Act by incorporating an employee no-solicitation and no-hiring clause in the standard form franchise agreement all Tim Hortons franchisees are required to sign. The plaintiff seeks damages and restitution, on behalf of himself and other members of the class. While we currently believe this claim is without merit, we are unable to predict the ultimate outcome of this case or estimate the range of possible loss, if any. On June 30, 2020, a class action complaint was filed against Restaurant Brands International Inc., Restaurant Brands International Limited Partnership and The TDL Group Corp. in the Quebec Superior Court by Steve Holcman, individually and on behalf of all Quebec residents who downloaded the Tim Hortons mobile application. On July 2, 2020, a Notice of Action related to a second class action complaint was filed against Restaurant Brands International Inc., in the Ontario Superior Court by Ashley Sitko and Ashley Cadeau, individually and on behalf of all Canadian residents who downloaded the Tim Hortons mobile application. On August 31, 2020, a notice of claim was filed against Restaurant Brands International Inc. in the Supreme Court of British Columbia by Wai Lam Jacky Law on behalf of all persons in Canada who downloaded the Tim Hortons mobile application or the Burger King mobile application. On September 30, 2020, a notice of action was filed against Restaurant Brands International Inc., Restaurant Brands International Limited Partnership, The TDL Group Corp., Burger King Worldwide, Inc. and Popeyes Louisiana Kitchen, Inc. in the Ontario Superior Court of Justice by William Jung on behalf of a to be determined class. All of the complaints allege that the defendants violated the plaintiff’s privacy rights, the Personal Information Protection and Electronic Documents Act, consumer protection and competition laws or app-based undertakings to users, in each case in connection with the collection of geolocation data through the Tim Hortons mobile application, and in certain cases, the Burger King and Popeyes mobile applications. Each plaintiff seeks injunctive relief and monetary damages for himself or herself and other members of the class. These cases are in preliminary stages and we intend to vigorously defend against these lawsuits, but we are unable to predict the ultimate outcome of any of these cases or estimate the range of possible loss, if any. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting As stated in Note 1, Description of Business and Organization , we manage three brands. Under the Tim Hortons brand, we operate in the donut/coffee/tea category of the quick service segment of the restaurant industry. Under the Burger King brand, we operate in the fast food hamburger restaurant category of the quick service segment of the restaurant industry. Under the Popeyes brand, we operate in the chicken category of the quick service segment of the restaurant industry. Our business generates revenue from the following sources: (i) franchise revenues, consisting primarily of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees; (ii) property revenues from properties we lease or sublease to franchisees; and (iii) sales at restaurants owned by us (“Company restaurants”). In addition, our TH business generates revenue from sales to franchisees related to our supply chain operations, including manufacturing, procurement, warehousing and distribution, as well as sales to retailers. We manage each of our brands as an operating segment and each operating segment represents a reportable segment. The following tables present revenues, by segment and by country (in millions): Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Revenues by operating segment: TH $ 762 $ 881 $ 2,028 $ 2,472 BK 433 457 1,168 1,315 PLK 142 120 414 337 Total revenues $ 1,337 $ 1,458 $ 3,610 $ 4,124 Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Revenues by country (a): Canada $ 691 $ 805 $ 1,837 $ 2,245 United States 499 489 1,392 1,412 Other 147 164 381 467 Total revenues $ 1,337 $ 1,458 $ 3,610 $ 4,124 (a) Only Canada and the United States represented 10% or more of our total revenues in each period presented. Our measure of segment income is Adjusted EBITDA. Adjusted EBITDA represents earnings (net income or loss) before interest expense, net, loss on early extinguishment of debt, income tax expense, and depreciation and amortization, adjusted to exclude (i) the non-cash impact of share-based compensation and non-cash incentive compensation expense, (ii) (income) loss from equity method investments, net of cash distributions received from equity method investments, (iii) other operating expenses (income), net and, (iv) income/expenses from non-recurring projects and non-operating activities. For the periods referenced, this included costs incurred in connection with the centralization and relocation of our Canadian and U.S. restaurant support centers to new offices in Toronto, Ontario, and Miami, Florida, respectively, and from professional advisory and consulting services associated with certain transformational corporate restructuring initiatives that rationalize our structure and optimize cash movements, including consulting services related to the interpretation of final and proposed regulations and guidance under the Tax Cuts and Jobs Act (the “Tax Act”). Adjusted EBITDA is used by management to measure operating performance of the business, excluding these non-cash and other specifically identified items that management believes are not relevant to management’s assessment of our operating business. A reconciliation of segment income to net income consists of the following (in millions): Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Segment income: TH $ 258 $ 301 $ 594 $ 825 BK 245 254 605 728 PLK 58 47 164 129 Adjusted EBITDA 561 602 1,363 1,682 Share-based compensation and non-cash incentive compensation expense 19 18 63 62 Corporate restructuring and tax advisory fees 3 5 11 22 Office centralization and relocation costs — — — 6 Impact of equity method investments (a) 20 (9) 42 1 Other operating expenses (income), net 54 (30) 59 (44) EBITDA 465 618 1,188 1,635 Depreciation and amortization 48 47 139 139 Income from operations 417 571 1,049 1,496 Interest expense, net 129 137 376 406 Loss on early extinguishment of debt — 4 — 4 Income tax expense 65 79 62 232 Net income $ 223 $ 351 $ 611 $ 854 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Exchange of Partnership Exchangeable Units In September 2020 Partnership received an exchange notice for 6,757,692 Partnership exchange units (the “Exchangeable Units”). In accordance with the terms of the partnership agreement, Partnership chose to satisfy the exchange by repurchasing all of these Exchangeable Units on October 2, 2020 for approximately $380 million with available cash on hand. The exchange represented an increase in our ownership interest in Partnership and will be accounted for as an equity transaction, with no gain or loss recorded in the condensed consolidated statement of operations. Pursuant to the terms of the partnership agreement, upon the exchange of Partnership exchangeable units, each such Partnership exchangeable unit is automatically deemed cancelled. Dividends On October 2, 2020, we paid a cash dividend of $0.52 per common share to common shareholders of record on September 18, 2020. On such date, Partnership also made a distribution in respect of each Partnership exchangeable unit in the amount of $0.52 per exchangeable unit to holders of record on September 18, 2020. Subsequent to September 30, 2020, our board of directors declared a cash dividend of $0.52 per common share, which will be paid on January 5, 2021 to common shareholders of record on December 21, 2020. Partnership will also make a distribution in respect of each Partnership exchangeable unit in the amount of $0.52 per Partnership exchangeable unit, and the record date and payment date for distributions on Partnership exchangeable units are the same as the record date and payment date set forth above. Issuance of Senior Notes and Redemption of Senior Notes As discussed in Note 10, Long-Term Debt , on October 5, 2020, the Borrowers entered into the 2020 4.00% Senior Notes Indenture in connection with the issuance of the October 2020 4.00% Senior Notes. The proceeds from the offering of the October 2020 4.00% Senior Notes were used to redeem $1,350 million of the outstanding aggregate principal amount of our existing $2,800 million 2017 5.00% Senior Notes (due October 15, 2025) on October 16, 2020 and pay related redemption premiums, fees and expenses. Also as discussed in Note 10, Long-Term Debt , on October 14, 2020, the Borrowers entered into a purchase agreement relating to the sale of the November 2020 4.00% Senior Notes, which will be issued as additional notes under the 2020 4.00% Senior Notes Indenture. The closing of the offering of the November 2020 4.00% Senior Notes is expected to occur on or about November 2, 2020, subject to customary closing conditions. The net proceeds from the offering of the November 2020 4.00% Senior Notes will be used to redeem the remaining $1,450 million principal amount outstanding of the 2017 5.00% Senior Notes and pay related redemption premiums, fees and expenses. As additionally discussed in Note 10, Long-Term Debt, on October 20, 2020, the Borrowers entered into a purchase agreement relating to the sale of the 2020 3.50% Senior Notes. The closing of the offering of the 2020 3.50% Senior Notes is expected to occur on or about November 9, 2020, subject to customary closing conditions. The net proceeds from the offering of the 2020 3.50% Senior Notes will be used to redeem $725 million of our 4.25% first lien notes due 2024 and pay related redemption premiums, fees and expenses. During the three months ending December 31, 2020, we will record a loss on early extinguishment of debt that will include the redemption premiums paid as well as the write-off of unamortized debt issuance costs in connection with the redemption of the notes discussed above. Litigation On October 26, 2020, City of Warwick Municipal Employees Pension Fund, a purported stockholder of Restaurant Brands International, individually and on behalf of all other stockholders similarly situated, filed a lawsuit in the Supreme Court of the State of New York County of New York naming the Company and certain of its officers, directors and selling shareholders as defendants alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, in connection with the offering of securities by an affiliate of 3G Capital Partners Ltd. in August and September 2019. The complaint alleges that the shelf registration statement used in connection with such offering contained certain false and/or misleading statements or omissions. The complaint seeks, among other relief, class certification of the lawsuit, unspecified compensatory damages, rescission, pre-judgement and post-judgement interest, costs and expenses. The Company is currently evaluating the lawsuit, but believes that the claims are without merit and intends to vigorously defend. While we believe these |
Basis of Presentation and Con_2
Basis of Presentation and Consolidation (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting | We have prepared the accompanying unaudited condensed consolidated financial statements (the “Financial Statements”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements. Therefore, the Financial Statements should be read in conjunction with the audited consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC and Canadian securities regulatory authorities on February 21, 2020. |
Consolidation, Variable Interest Entity | We also consider for consolidation entities in which we have certain interests, where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary is the entity that possesses the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to it. Our maximum exposure to loss resulting from involvement with VIEs is attributable to accounts and notes receivable balances, outstanding loan guarantees and future lease payments, where applicable. As our franchise and master franchise arrangements provide the franchise and master franchise entities the power to direct the activities that most significantly impact their economic performance, we do not consider ourselves the primary beneficiary of any such entity that might be a VIE. |
Use of Estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP and related rules and regulations of the SEC requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. The carrying amounts for cash and cash equivalents, accounts and notes receivable and accounts and drafts payable approximate fair value based on the short-term nature of these amounts. |
New Accounting Pronouncements | Credit Losses – In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that requires companies to measure and recognize lifetime expected credit losses for certain financial instruments, including trade accounts receivable and net investments in direct financing and sales-type leases. Expected credit losses are estimated using relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This amendment was effective commencing in 2020, using a modified retrospective approach. The adoption of this new guidance did not have a material impact on our Financial Statements. Simplifying the Accounting for Income Taxes – In December 2019, the FASB issued guidance which simplifies the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance applicable to accounting for income taxes . The amendment is effective commencing in 2021 with early adoption permitted. While we are currently evaluating the impact that the adoption of this new guidance will have on our Financial Statements, we do not currently anticipate this adoption will have a material impact on our Financial Statements. |
Contract Liabilities | Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees paid by franchisees, as well as upfront fees paid by master franchisees, which are generally recognized on a straight-line basis over the term of the underlying agreement. We may recognize unamortized upfront fees when a contract with a franchisee or master franchisee is modified and is accounted for as a termination of the existing contract. We classify these contract liabilities as Other liabilities, net in our condensed consolidated balance sheets |
Earnings Per Share, Basic & Diluted | Basic and diluted earnings per share is computed using the weighted average number of shares outstanding for the period. We apply the treasury stock method to determine the dilutive weighted average common shares represented by outstanding equity awards, unless the effect of their inclusion is anti-dilutive. The diluted earnings per share calculation assumes conversion of 100% of the Partnership exchangeable units under the “if converted” method. Accordingly, the numerator is also adjusted to include the earnings allocated to the holders of noncontrolling interests. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Schedule of property revenues | Property revenues are comprised primarily of lease income from operating leases and earned income on direct financing leases with franchisees as follows (in millions): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Lease income - operating leases Minimum lease payments $ 112 $ 112 $ 333 $ 335 Variable lease payments 82 100 191 281 Amortization of favorable and unfavorable income lease contracts, net 1 1 4 5 Subtotal - lease income from operating leases 195 213 528 621 Earned income on direct financing leases 1 2 4 7 Total property revenues $ 196 $ 215 $ 532 $ 628 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Change in contract liabilities | The following table reflects the change in contract liabilities between December 31, 2019 and September 30, 2020 (in millions): Contract Liabilities TH BK PLK Consolidated Balance at December 31, 2019 $ 64 $ 449 $ 28 $ 541 Recognized during period and included in the contract liability balance at the beginning of the year (7) (50) (2) (59) Increase, excluding amounts recognized as revenue during the period 5 15 9 29 Impact of foreign currency translation (1) 7 — 6 Balance at September 30, 2020 $ 61 $ 421 $ 35 $ 517 |
Schedule of estimated revenues expected to be recognized | The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2020 (in millions): Contract liabilities expected to be recognized in TH BK PLK Consolidated Remainder of 2020 $ 2 $ 9 $ 1 $ 12 2021 8 34 2 44 2022 8 33 2 43 2023 7 32 2 41 2024 7 31 2 40 Thereafter 29 282 26 337 Total $ 61 $ 421 $ 35 $ 517 |
Disaggregation of total revenues | Total revenues consist of the following (in millions): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Sales $ 541 $ 624 $ 1,450 $ 1,735 Royalties 581 602 1,576 1,706 Property revenues 196 215 532 628 Franchise fees and other revenue 19 17 52 55 Total revenues $ 1,337 $ 1,458 $ 3,610 $ 4,124 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Share | The following table summarizes the basic and diluted earnings per share calculations (in millions, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net income attributable to common shareholders - basic $ 145 $ 201 $ 395 $ 478 Add: Net income attributable to noncontrolling interests 78 150 215 376 Net income available to common shareholders and noncontrolling interests - diluted $ 223 $ 351 $ 610 $ 854 Denominator: Weighted average common shares - basic 303 267 301 258 Exchange of noncontrolling interests for common shares (Note 12) 162 197 164 204 Effect of other dilutive securities 5 6 4 7 Weighted average common shares - diluted 470 470 469 469 Basic earnings per share (a) $ 0.48 $ 0.76 $ 1.31 $ 1.85 Diluted earnings per share (a) $ 0.47 $ 0.75 $ 1.30 $ 1.82 Anti-dilutive securities outstanding 8 3 8 3 (a) Earnings per share may not recalculate exactly as it is calculated based on unrounded numbers. |
Intangible Assets, net and Go_2
Intangible Assets, net and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets, Net and Goodwill | Intangible assets, net and goodwill consist of the following (in millions): As of September 30, 2020 December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Identifiable assets subject to amortization: Franchise agreements $ 724 $ (252) $ 472 $ 720 $ (225) $ 495 Favorable leases 116 (63) 53 127 (65) 62 Subtotal 840 (315) 525 847 (290) 557 Indefinite-lived intangible assets: Tim Hortons brand $ 6,390 $ — $ 6,390 $ 6,534 $ — $ 6,534 Burger King brand 2,145 — 2,145 2,117 — 2,117 Popeyes brand 1,355 — 1,355 1,355 — 1,355 Subtotal 9,890 — 9,890 10,006 — 10,006 Intangible assets, net $ 10,415 $ 10,563 Goodwill Tim Hortons segment $ 4,119 $ 4,207 Burger King segment 606 598 Popeyes segment 846 846 Total $ 5,571 $ 5,651 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summary of Franchise and Property Revenues | Franchise and property revenues recognized from franchisees that are owned or franchised by entities in which we have an equity interest consist of the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues from affiliates: Royalties $ 82 $ 89 $ 209 $ 254 Property revenues 8 8 24 25 Franchise fees and other revenue 4 1 10 7 Total $ 94 $ 98 $ 243 $ 286 |
Other Accrued Liabilities and_2
Other Accrued Liabilities and Other Liabilities, net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Accrued Liabilities (Current) and Other Liabilities (Non-Current), Net | Other accrued liabilities (current) and other liabilities, net (noncurrent) consist of the following (in millions): As of September 30, December 31, Current: Dividend payable $ 243 $ 232 Interest payable 106 71 Accrued compensation and benefits 62 57 Taxes payable 157 126 Deferred income 41 35 Accrued advertising expenses 65 40 Restructuring and other provisions 12 8 Current portion of operating lease liabilities 128 126 Other 69 95 Other accrued liabilities $ 883 $ 790 Noncurrent: Taxes payable $ 604 $ 579 Contract liabilities 517 541 Derivatives liabilities 592 341 Unfavorable leases 83 103 Accrued pension 55 65 Deferred income 26 25 Other 40 44 Other liabilities, net $ 1,917 $ 1,698 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt | Long-term debt consists of the following (in millions): As of September 30, December 31, Term Loan B (due November 19, 2026) $ 5,310 $ 5,350 Term Loan A (due October 7, 2024) 736 750 2017 4.25% Senior Notes (due May 15, 2024) 1,500 1,500 2019 3.875% Senior Notes (due January 15, 2028) 750 750 2020 5.75% Senior Notes (due April 15, 2025) 500 — 2017 5.00% Senior Notes (due October 15, 2025) 2,800 2,800 2019 4.375% Senior Notes (due January 15, 2028) 750 750 TH Facility and other 171 81 Less: unamortized deferred financing costs and deferred issue discount (139) (148) Total debt, net 12,378 11,833 Less: current maturities of debt (78) (74) Total long-term debt $ 12,300 $ 11,759 |
Summary of Fair Value Measurement | The following table presents the fair value of our variable rate term debt and senior notes, estimated using inputs based on bid and offer prices that are Level 2 inputs, and principal carrying amount (in millions): As of September 30, December 31, Fair value of our variable term debt and senior notes $ 12,283 $ 12,075 Principal carrying amount of our variable term debt and senior notes 12,346 11,900 |
Schedule of Interest Expense, Net | Interest expense, net consists of the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Debt (a) $ 119 $ 130 $ 351 $ 382 Finance lease obligations 4 5 14 16 Amortization of deferred financing costs and debt issuance discount 7 7 19 22 Interest income (1) (5) (8) (14) Interest expense, net $ 129 $ 137 $ 376 $ 406 (a) Amount includes $15 million and $16 million benefit during the three months ended September 30, 2020 and 2019, respectively, and $56 million and $53 million benefit during the nine months ended September 30, 2020 and 2019, respectively, related to the amortization of the Excluded Component as defined in Note 13, Derivatives . |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Summary of Change in Components of Accumulated Other Comprehensive Income (Loss) ("AOCI") | The following table displays the changes in the components of accumulated other comprehensive income (loss) (“AOCI”) (in millions): Derivatives Pensions Foreign Currency Translation Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2019 $ 199 $ (19) $ (943) $ (763) Foreign currency translation adjustment — — (170) (170) Net change in fair value of derivatives, net of tax (229) — — (229) Amounts reclassified to earnings of cash flow hedges, net of tax 51 — — 51 Amounts attributable to noncontrolling interests 64 — 50 114 Balance at September 30, 2020 $ 85 $ (19) $ (1,063) $ (997) |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Quantitative disclosures of derivative instruments | The following tables present the required quantitative disclosures for our derivative instruments, including their estimated fair values (all estimated using Level 2 inputs) and their location on our condensed consolidated balance sheets (in millions): Gain or (Loss) Recognized in Other Comprehensive Income (Loss) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Derivatives designated as cash flow hedges (1) Interest rate swaps $ (22) $ (35) $ (370) $ (156) Forward-currency contracts $ (2) $ 1 $ 3 $ (3) Derivatives designated as net investment hedges Cross-currency rate swaps $ (238) $ 180 $ 51 $ 25 (1) We did not exclude any components from the cash flow hedge relationships presented in this table. Location of Gain or (Loss) Reclassified from AOCI into Earnings Gain or (Loss) Reclassified from Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Derivatives designated as cash flow hedges Interest rate swaps Interest expense, net $ (30) $ (7) $ (71) $ (14) Forward-currency contracts Cost of sales $ — $ — $ 2 $ 4 Location of Gain or (Loss) Recognized in Earnings Gain or (Loss) Recognized in Earnings Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Derivatives designated as net investment hedges Cross-currency rate swaps Interest expense, net $ 15 $ 16 $ 56 $ 53 |
Summary of fair value measurements | Fair Value as of September 30, December 31, 2019 Balance Sheet Location Assets: Derivatives designated as cash flow hedges Interest rate $ — $ 7 Other assets, net Derivatives designated as net investment hedges Foreign currency 18 22 Other assets, net Total assets at fair value $ 18 $ 29 Liabilities: Derivatives designated as cash flow hedges Interest rate $ 490 $ 175 Other liabilities, net Foreign currency 1 2 Other accrued liabilities Derivatives designated as net investment hedges Foreign currency 102 166 Other liabilities, net Total liabilities at fair value $ 593 $ 343 |
Other Operating Expenses (Inc_2
Other Operating Expenses (Income), net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Income and Expenses [Abstract] | |
Other Operating Expenses (Income), net | Other operating expenses (income), net consist of the following (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net losses (gains) on disposal of assets, restaurant closures, and refranchisings $ 4 $ 6 $ 2 $ (1) Litigation settlements (gains) and reserves, net 4 1 5 1 Net losses (gains) on foreign exchange 44 (35) 54 (38) Other, net 2 (2) (2) (6) Other operating expenses (income), net $ 54 $ (30) $ 59 $ (44) |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Revenues by Operating Segment and Country | The following tables present revenues, by segment and by country (in millions): Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Revenues by operating segment: TH $ 762 $ 881 $ 2,028 $ 2,472 BK 433 457 1,168 1,315 PLK 142 120 414 337 Total revenues $ 1,337 $ 1,458 $ 3,610 $ 4,124 Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Revenues by country (a): Canada $ 691 $ 805 $ 1,837 $ 2,245 United States 499 489 1,392 1,412 Other 147 164 381 467 Total revenues $ 1,337 $ 1,458 $ 3,610 $ 4,124 (a) Only Canada and the United States represented 10% or more of our total revenues in each period presented. |
Reconciliation of Segment Income to Net Income (Loss) | A reconciliation of segment income to net income consists of the following (in millions): Three Months Ended September 30, Nine Months Ended 2020 2019 2020 2019 Segment income: TH $ 258 $ 301 $ 594 $ 825 BK 245 254 605 728 PLK 58 47 164 129 Adjusted EBITDA 561 602 1,363 1,682 Share-based compensation and non-cash incentive compensation expense 19 18 63 62 Corporate restructuring and tax advisory fees 3 5 11 22 Office centralization and relocation costs — — — 6 Impact of equity method investments (a) 20 (9) 42 1 Other operating expenses (income), net 54 (30) 59 (44) EBITDA 465 618 1,188 1,635 Depreciation and amortization 48 47 139 139 Income from operations 417 571 1,049 1,496 Interest expense, net 129 137 376 406 Loss on early extinguishment of debt — 4 — 4 Income tax expense 65 79 62 232 Net income $ 223 $ 351 $ 611 $ 854 |
Description of Business and O_2
Description of Business and Organization - Additional Information (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2020USD ($)restaurantcountry | Sep. 30, 2019USD ($) | |
Basis Of Presentation [Line Items] | ||
Number of restaurants in operation | 27,027 | |
Number of countries in which company and franchise restaurants operated (more than) | country | 100 | |
Percentage of franchised Tim Hortons, Burger King, and Popeyes restaurants | 100.00% | |
Bad debt expense | $ | $ 27 | $ 3 |
Tim Hortons | ||
Basis Of Presentation [Line Items] | ||
Number of restaurants in operation | 4,934 | |
Burger King | ||
Basis Of Presentation [Line Items] | ||
Number of restaurants in operation | 18,675 | |
Popeyes | ||
Basis Of Presentation [Line Items] | ||
Number of restaurants in operation | 3,418 |
Basis of Presentation and Con_3
Basis of Presentation and Consolidation - Additional Information (Details) - restaurant | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Restaurant VIEs | ||
Summary Of Accounting Policies [Line Items] | ||
Number of consolidated restaurants | 40 | 35 |
Leases - Property revenues (Det
Leases - Property revenues (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Percent of rent structure, variable rent | 100.00% | |||
Lease income - operating leases | ||||
Minimum lease payments | $ 112 | $ 112 | $ 333 | $ 335 |
Variable lease payments | 82 | 100 | 191 | 281 |
Amortization of favorable and unfavorable income lease contracts, net | 1 | 1 | 4 | 5 |
Subtotal - lease income from operating leases | 195 | 213 | 528 | 621 |
Earned income on direct financing leases | 1 | 2 | 4 | 7 |
Total property revenues | $ 196 | $ 215 | $ 532 | $ 628 |
Revenue Recognition - Change in
Revenue Recognition - Change in contract liabilities (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | $ 541 |
Recognized during period and included in the contract liability balance at the beginning of the year | (59) |
Increase, excluding amounts recognized as revenue during the period | 29 |
Impact of foreign currency translation | 6 |
Ending balance | 517 |
Tim Hortons | |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | 64 |
Recognized during period and included in the contract liability balance at the beginning of the year | (7) |
Increase, excluding amounts recognized as revenue during the period | 5 |
Impact of foreign currency translation | (1) |
Ending balance | 61 |
Burger King | |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | 449 |
Recognized during period and included in the contract liability balance at the beginning of the year | (50) |
Increase, excluding amounts recognized as revenue during the period | 15 |
Impact of foreign currency translation | 7 |
Ending balance | 421 |
Popeyes | |
Change In Contract With Customer Liability [Roll Forward] | |
Beginning balance | 28 |
Recognized during period and included in the contract liability balance at the beginning of the year | (2) |
Increase, excluding amounts recognized as revenue during the period | 9 |
Impact of foreign currency translation | 0 |
Ending balance | $ 35 |
Revenue Recognition - Estimated
Revenue Recognition - Estimated revenue recognition (Details) $ in Millions | Sep. 30, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 517 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 12 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 44 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 43 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 41 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 40 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 337 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | |
Tim Hortons | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 61 |
Tim Hortons | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 2 |
Tim Hortons | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 8 |
Tim Hortons | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 8 |
Tim Hortons | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 7 |
Tim Hortons | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 7 |
Tim Hortons | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 29 |
Burger King | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 421 |
Burger King | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 9 |
Burger King | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 34 |
Burger King | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 33 |
Burger King | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 32 |
Burger King | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 31 |
Burger King | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 282 |
Popeyes | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 35 |
Popeyes | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 1 |
Popeyes | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 2 |
Popeyes | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 2 |
Popeyes | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 2 |
Popeyes | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | 2 |
Popeyes | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Contract liabilities expected to be recognized in | $ 26 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of total revenues (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||||
Property revenues | $ 196 | $ 215 | $ 532 | $ 628 |
Total revenues | 1,337 | 1,458 | 3,610 | 4,124 |
Sales | ||||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||||
Sales | 541 | 624 | 1,450 | 1,735 |
Royalties | ||||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||||
Sales | 581 | 602 | 1,576 | 1,706 |
Franchise fees and other revenue | ||||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||||
Sales | $ 19 | $ 17 | $ 52 | $ 55 |
Earnings per Share - Basic and
Earnings per Share - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||
Net income attributable to common shareholders - basic | $ 145 | $ 201 | $ 395 | $ 478 |
Add: Net income attributable to noncontrolling interests | 78 | 150 | 215 | 376 |
Net income available to common shareholders and noncontrolling interests - diluted | $ 223 | $ 351 | $ 610 | $ 854 |
Denominator: | ||||
Weighted average common shares - basic (shares) | 303 | 267 | 301 | 258 |
Exchange of noncontrolling interests for common shares (in shares) | 162 | 197 | 164 | 204 |
Effect of other dilutive securities (in shares) | 5 | 6 | 4 | 7 |
Weighted average common shares - diluted (in shares) | 470 | 470 | 469 | 469 |
Basic earnings per share (in usd per share) | $ 0.48 | $ 0.76 | $ 1.31 | $ 1.85 |
Diluted earnings per share (in usd per share) | $ 0.47 | $ 0.75 | $ 1.30 | $ 1.82 |
Anti-dilutive securities outstanding (in shares) | 8 | 3 | 8 | 3 |
Intangible Assets, net and Go_3
Intangible Assets, net and Goodwill - Schedule of Intangible Assets, Net and Goodwill (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross | $ 840 | $ 847 |
Accumulated Amortization | (315) | (290) |
Net | 525 | 557 |
Intangible assets, net | 10,415 | 10,563 |
Goodwill | 5,571 | 5,651 |
Trade Names | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets: | 9,890 | 10,006 |
Tim Hortons | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Goodwill | 4,119 | 4,207 |
Tim Hortons | Trade Names | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets: | 6,390 | 6,534 |
Burger King | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Goodwill | 606 | 598 |
Burger King | Trade Names | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets: | 2,145 | 2,117 |
Popeyes | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Goodwill | 846 | 846 |
Popeyes | Trade Names | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets: | 1,355 | 1,355 |
Franchise agreements | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross | 724 | 720 |
Accumulated Amortization | (252) | (225) |
Net | 472 | 495 |
Favorable leases | ||
Finite And Indefinite Lived Intangible Assets [Line Items] | ||
Gross | 116 | 127 |
Accumulated Amortization | (63) | (65) |
Net | $ 53 | $ 62 |
Intangible Assets, net and Go_4
Intangible Assets, net and Goodwill - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense on intangible assets | $ 11 | $ 12 | $ 33 | $ 33 |
Equity Method Investments - Add
Equity Method Investments - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Equity Method Investee | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Accounts receivable from equity method investments | $ 72 | $ 72 | $ 47 | ||
Wendy's Company TIMWEN Partnership | Tim Hortons | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Cash distributions | 2 | $ 3 | 6 | $ 10 | |
Rent expense | 4 | $ 5 | 11 | $ 14 | |
Carrols Restaurant Group, Inc. | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Quoted market price | $ 61 | $ 61 | |||
BK Brasil | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 9.80% | 9.80% | |||
Quoted market price | $ 43 | $ 43 | |||
Canada | Wendy's Company TIMWEN Partnership | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 50.00% | 50.00% | |||
United States | Carrols Restaurant Group, Inc. | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 15.20% | 15.20% | |||
Other assets, net | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments | $ 198 | $ 198 | $ 266 |
Equity Method Investments - Sum
Equity Method Investments - Summary of Franchise and Property Revenues (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues from affiliates: | ||||
Total revenues | $ 1,337 | $ 1,458 | $ 3,610 | $ 4,124 |
Affiliates | ||||
Revenues from affiliates: | ||||
Property revenues | 8 | 8 | 24 | 25 |
Total revenues | 94 | 98 | 243 | 286 |
Royalties | ||||
Revenues from affiliates: | ||||
Sales | 581 | 602 | 1,576 | 1,706 |
Royalties | Affiliates | ||||
Revenues from affiliates: | ||||
Sales | 82 | 89 | 209 | 254 |
Franchise fees and other revenue | ||||
Revenues from affiliates: | ||||
Sales | 19 | 17 | 52 | 55 |
Franchise fees and other revenue | Affiliates | ||||
Revenues from affiliates: | ||||
Sales | $ 4 | $ 1 | $ 10 | $ 7 |
Other Accrued Liabilities and_3
Other Accrued Liabilities and Other Liabilities, net - Schedule of Other Accrued Liabilities (Current) and Other Liabilities (Noncurrent), Net (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Current: | ||
Dividend payable | $ 243 | $ 232 |
Interest payable | 106 | 71 |
Accrued compensation and benefits | 62 | 57 |
Taxes payable | 157 | 126 |
Deferred income | 41 | 35 |
Accrued advertising expenses | 65 | 40 |
Restructuring and other provisions | 12 | 8 |
Current portion of operating lease liabilities | 128 | 126 |
Other | 69 | 95 |
Other accrued liabilities | 883 | 790 |
Noncurrent: | ||
Taxes payable | 604 | 579 |
Contract liabilities | 517 | 541 |
Derivatives liabilities | 592 | 341 |
Unfavorable leases | 83 | 103 |
Accrued pension | 55 | 65 |
Deferred income | 26 | 25 |
Other | 40 | 44 |
Other liabilities, net | $ 1,917 | $ 1,698 |
Long-Term Debt - Summary of Lon
Long-Term Debt - Summary of Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Other | $ 171 | $ 81 |
Less: unamortized deferred financing costs and deferred issue discount | (139) | (148) |
Total debt, net | 12,378 | 11,833 |
Less: current maturities of debt | (78) | (74) |
Total long-term debt | 12,300 | 11,759 |
Term Loan B (due November 19, 2026) | ||
Debt Instrument [Line Items] | ||
Term loan facility | 5,310 | 5,350 |
Term Loan A (due October 7, 2024) | ||
Debt Instrument [Line Items] | ||
Term loan facility | 736 | 750 |
2017 4.25% Senior Notes (due May 15, 2024) | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 1,500 | 1,500 |
Stated interest rate (as a percent) | 4.25% | |
2019 3.875% Senior Notes (due January 15, 2028) | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 750 | 750 |
Stated interest rate (as a percent) | 3.875% | |
2020 5.75% Senior Notes (due April 15, 2025) | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 500 | 0 |
Stated interest rate (as a percent) | 5.75% | |
2017 5.00% Senior Notes (due October 15, 2025) | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 2,800 | 2,800 |
Stated interest rate (as a percent) | 5.00% | |
2019 4.375% Senior Notes (due January 15, 2028) | ||
Debt Instrument [Line Items] | ||
Senior notes | $ 750 | $ 750 |
Stated interest rate (as a percent) | 4.375% |
Long-Term Debt - Revolving Cred
Long-Term Debt - Revolving Credit Facility - Additional Information (Details) | 1 Months Ended | |||
Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Apr. 02, 2020USD ($) | Dec. 31, 2019USD ($) | |
Line of Credit Facility [Line Items] | ||||
Amount outstanding | $ 12,378,000,000 | $ 11,833,000,000 | ||
Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Amount drawn | $ 995,000,000 | |||
Amount outstanding | 0 | |||
Letters of credit issued against credit facility | 2,000,000 | |||
Remaining borrowing capacity | 998,000,000 | |||
Letter of credit sublimit as part of revolving credit facility | $ 125,000,000 | |||
Minimum liquidity covenant, amount | $ 1,000,000,000 | |||
Secured leverage ratio | 6.50 |
Long-Term Debt - TH Facility (D
Long-Term Debt - TH Facility (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2020CAD ($) | Dec. 31, 2019USD ($) | |
Line of Credit Facility [Line Items] | |||
Amount outstanding | $ 12,378 | $ 11,833 | |
TH Facility | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 225,000,000 | ||
Remaining borrowing capacity | 125,000,000 | ||
Amount outstanding | $ 224,000,000 | ||
Weighted average interest rate | 1.88% | 1.88% | |
TH Facility | Canadian Bankers' Acceptance Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.40% | ||
TH Facility | Prime Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.40% |
Long-Term Debt Long-Term Debt -
Long-Term Debt Long-Term Debt - 2020 Senior Notes (Details) - USD ($) | Oct. 16, 2020 | Oct. 05, 2020 | Apr. 07, 2020 | Nov. 30, 2020 | Oct. 27, 2020 | Oct. 20, 2020 | Oct. 14, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
2017 5.00% Senior Notes (due October 15, 2025) | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated interest rate (as a percent) | 5.00% | ||||||||
Senior notes | $ 2,800,000,000 | $ 2,800,000,000 | |||||||
2017 5.00% Senior Notes (due October 15, 2025) | Forecast | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal amount redeemed | $ 1,450,000,000 | ||||||||
2017 5.00% Senior Notes (due October 15, 2025) | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal amount redeemed | $ 1,350,000,000 | ||||||||
2017 4.25% Senior Notes (due May 15, 2024) | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated interest rate (as a percent) | 4.25% | ||||||||
Senior notes | $ 1,500,000,000 | $ 1,500,000,000 | |||||||
2017 4.25% Senior Notes (due May 15, 2024) | Forecast | |||||||||
Debt Instrument [Line Items] | |||||||||
Principal amount redeemed | $ 725,000,000 | ||||||||
Senior Notes | 2020 5.75% Senior Notes (Due April 15, 2025) | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated interest rate (as a percent) | 5.75% | ||||||||
Debt instrument, face amount | $ 500,000,000 | ||||||||
Principal payments | 0 | ||||||||
Capitalized debt issuance costs | $ 9,000,000 | ||||||||
Senior Notes | 2020 4.00% Senior Notes (Due October 15, 2030) | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated interest rate (as a percent) | 4.00% | ||||||||
Debt instrument, face amount | $ 1,400,000,000 | ||||||||
Principal payments | $ 0 | ||||||||
Senior Notes | November 2020 4.00% Senior Notes | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated interest rate (as a percent) | 4.00% | ||||||||
Debt instrument, face amount | $ 1,500,000,000 | ||||||||
Senior Notes | 3.50% Senior Notes (Due February 15, 2029) | Subsequent Event | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated interest rate (as a percent) | 3.50% | ||||||||
Debt instrument, face amount | $ 750,000,000 |
Long-Term Debt - Summary of Fai
Long-Term Debt - Summary of Fair Value Measurement (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Fair value of our variable term debt and senior notes | $ 12,283 | $ 12,075 |
Principal carrying amount of our variable term debt and senior notes | $ 12,346 | $ 11,900 |
Long-Term Debt - Schedule of In
Long-Term Debt - Schedule of Interest Expense, Net and Other (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Disclosure [Abstract] | ||||
Debt | $ 119 | $ 130 | $ 351 | $ 382 |
Finance lease obligations | 4 | 5 | 14 | 16 |
Amortization of deferred financing costs and debt issuance discount | 7 | 7 | 19 | 22 |
Interest income | (1) | (5) | (8) | (14) |
Interest expense, net | 129 | 137 | 376 | 406 |
Cross-currency rate swaps | Derivatives designated as net investment hedges | Interest expense, net | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Gain (loss) reclassified to earnings, net investment hedge | $ 15 | $ 16 | $ 56 | $ 53 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 22.60% | 18.30% | 9.20% | 21.40% |
Deferred tax asset, period increase (decrease) | $ 64 | $ 64 | ||
Effective tax rate, period increase (decrease) | (9.50%) | 3.40% | ||
Unrecognized tax benefits, increase related to prior restructuring transaction | $ 37 | |||
Effective income tax rate reconciliation, stock option exercises | 1.20% | 2.90% |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Details) - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Partnerships Exchangeable Units | ||
Stockholders Equity [Line Items] | ||
Exchange of partnership exchangeable units for RBI common shares (in shares) | 3,294,968 | |
Restaurant Brands International Limited Partnership | ||
Stockholders Equity [Line Items] | ||
Partnership exchangeable units economic interest | 34.80% | 35.70% |
Partnership exchangeable units economic interest, shares | 162,212,231 | 165,507,199 |
Shareholders' Equity - Summary
Shareholders' Equity - Summary of Change in Components of AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balances | $ 3,852 | $ 3,960 | $ 4,259 | $ 3,618 |
Foreign currency translation adjustment | 239 | (173) | (170) | 185 |
Net change in fair value of derivatives, net of tax | (229) | |||
Amounts reclassified to earnings of cash flow hedges, net of tax | 22 | 5 | 51 | 7 |
Amounts attributable to noncontrolling interests | 114 | |||
Ending balances | 3,915 | 4,063 | 3,915 | 4,063 |
Derivatives | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balances | 199 | |||
Net change in fair value of derivatives, net of tax | (229) | |||
Amounts reclassified to earnings of cash flow hedges, net of tax | 51 | |||
Amounts attributable to noncontrolling interests | 64 | |||
Ending balances | 85 | 85 | ||
Pensions | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balances | (19) | |||
Ending balances | (19) | (19) | ||
Foreign Currency Translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balances | (943) | |||
Foreign currency translation adjustment | (170) | |||
Amounts attributable to noncontrolling interests | 50 | |||
Ending balances | (1,063) | (1,063) | ||
Accumulated Other Comprehensive Income (Loss) | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balances | (1,025) | (717) | (763) | (800) |
Ending balances | $ (997) | $ (864) | $ (997) | $ (864) |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) € in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2020CAD ($) | Sep. 30, 2020EUR (€) | Dec. 31, 2018USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Net unrealized loss recognized in AOCI | $ 17,000,000 | $ 25,000,000 | $ 268,000,000 | $ 116,000,000 | |||||
Amount of pre-tax losses in AOCI expect to be reclassified into interest expense | 12,000,000 | ||||||||
Maximum | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Notional value | 98,000,000 | 98,000,000 | |||||||
Interest Rate Swaps - Beginning March 29, 2018 | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Notional value | 3,500,000,000 | 3,500,000,000 | |||||||
Interest Rate Swaps - Beginning September 30, 2019 | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Notional value | 500,000,000 | 500,000,000 | |||||||
Interest rate swaps | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Notional value | $ 3,500,000,000 | ||||||||
Interest rate swaps | Interest expense, net | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Net unrealized loss recognized in AOCI | 213,000,000 | ||||||||
Gain (loss) reclassified from AOCI to Income | 51,000,000 | ||||||||
Net unrealized loss recognized at settlement | $ 85,000,000 | ||||||||
Cross currency interest rate contract | Fixed income interest rate | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Notional value | 5,000,000,000 | 5,000,000,000 | $ 6,754 | ||||||
Cross currency interest rate contract | Fixed income interest rate | Derivatives designated as net investment hedges | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Notional value | $ 500,000,000 | $ 400,000,000 | |||||||
Cross currency interest rate contract | Fixed income interest rate | Hedge Funds | |||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||
Notional value | $ 1,200,000,000 | $ 1,200,000,000 | € 1,108 |
Derivative Instruments - Quanti
Derivative Instruments - Quantitative Disclosures of Derivative Instruments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Derivatives designated as cash flow hedges | Interest rate swaps | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain or (Loss) Recognized in Other Comprehensive Income (Loss) | $ (22) | $ (35) | $ (370) | $ (156) |
Derivatives designated as cash flow hedges | Interest rate swaps | Interest expense, net | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain or (Loss) Reclassified from AOCI into Earnings | (30) | (7) | (71) | (14) |
Derivatives designated as cash flow hedges | Forward-currency contracts | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain or (Loss) Recognized in Other Comprehensive Income (Loss) | (2) | 1 | 3 | (3) |
Derivatives designated as cash flow hedges | Forward-currency contracts | Cost of sales | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain or (Loss) Reclassified from AOCI into Earnings | 0 | 0 | 2 | 4 |
Derivatives designated as net investment hedges | Cross-currency rate swaps | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain or (Loss) Recognized in Other Comprehensive Income (Loss) | (238) | 180 | 51 | 25 |
Derivatives designated as net investment hedges | Cross-currency rate swaps | Interest expense, net | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain or (Loss) Recognized in Earnings (Amount Excluded from Effectiveness Testing) | $ 15 | $ 16 | $ 56 | $ 53 |
Derivative Instruments - Summar
Derivative Instruments - Summary of Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Derivatives assets | $ 18 | $ 29 |
Derivatives liabilities | 593 | 343 |
Derivatives designated as cash flow hedges | Interest rate | Other assets, net | ||
Derivative [Line Items] | ||
Derivatives assets | 0 | 7 |
Derivatives designated as cash flow hedges | Interest rate | Other liabilities, net | ||
Derivative [Line Items] | ||
Derivatives liabilities | 490 | 175 |
Derivatives designated as cash flow hedges | Foreign currency | Other accrued liabilities | ||
Derivative [Line Items] | ||
Derivatives liabilities | 1 | 2 |
Derivatives designated as net investment hedges | Foreign currency | Other assets, net | ||
Derivative [Line Items] | ||
Derivatives assets | 18 | 22 |
Derivatives designated as net investment hedges | Foreign currency | Other liabilities, net | ||
Derivative [Line Items] | ||
Derivatives liabilities | $ 102 | $ 166 |
Other Operating Expenses (Inc_3
Other Operating Expenses (Income), net - Other Operating Expenses (Income), Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other Income and Expenses [Abstract] | ||||
Net losses (gains) on disposal of assets, restaurant closures, and refranchisings | $ 4 | $ 6 | $ 2 | $ (1) |
Litigation settlements (gains) and reserves, net | 4 | 1 | 5 | 1 |
Net losses (gains) on foreign exchange | 44 | (35) | 54 | (38) |
Other, net | 2 | (2) | (2) | (6) |
Other operating expenses (income), net | $ 54 | $ (30) | $ 59 | $ (44) |
Segment Reporting - Additional
Segment Reporting - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020segment | |
Segment Reporting [Abstract] | |
Number of brands | 3 |
Number of operating segments | 3 |
Number of reportable segments | 3 |
Segment Reporting - Revenues by
Segment Reporting - Revenues by Operating Segment and Country (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue, Major Customer [Line Items] | ||||
Total revenues | $ 1,337 | $ 1,458 | $ 3,610 | $ 4,124 |
Canada | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 691 | 805 | 1,837 | 2,245 |
United States | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 499 | 489 | 1,392 | 1,412 |
Other | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 147 | 164 | 381 | 467 |
Tim Hortons | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 762 | 881 | 2,028 | 2,472 |
Burger King | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | 433 | 457 | 1,168 | 1,315 |
Popeyes | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenues | $ 142 | $ 120 | $ 414 | $ 337 |
Segment Reporting - Reconciliat
Segment Reporting - Reconciliation of Segment Income to Net Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||
Adjusted EBITDA | $ 561 | $ 602 | $ 1,363 | $ 1,682 | ||||
Impact of equity method investments | 18 | (11) | 36 | (11) | ||||
Other operating expenses (income), net | 54 | (30) | 59 | (44) | ||||
EBITDA | 465 | 618 | 1,188 | 1,635 | ||||
Depreciation and amortization | 48 | 47 | 139 | 139 | ||||
Income from operations | 417 | 571 | 1,049 | 1,496 | ||||
Interest expense, net | 129 | 137 | 376 | 406 | ||||
Loss on early extinguishment of debt | 0 | 4 | 0 | 4 | ||||
Income tax expense | 65 | 79 | 62 | 232 | ||||
Net income | 223 | $ 164 | $ 224 | 351 | $ 257 | $ 246 | 611 | 854 |
Unallocated Management G&A | ||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||
Share-based compensation and non-cash incentive compensation expense | 19 | 18 | 63 | 62 | ||||
Corporate restructuring and tax advisory fees | 3 | 5 | 11 | 22 | ||||
Office centralization and relocation costs | 0 | 0 | 0 | 6 | ||||
Impact of equity method investments | 20 | (9) | 42 | 1 | ||||
Other operating expenses (income), net | 54 | (30) | 59 | (44) | ||||
Tim Hortons | Operating Segments | ||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||
Adjusted EBITDA | 258 | 301 | 594 | 825 | ||||
Burger King | Operating Segments | ||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||
Adjusted EBITDA | 245 | 254 | 605 | 728 | ||||
Popeyes | Operating Segments | ||||||||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||||||||
Adjusted EBITDA | $ 58 | $ 47 | $ 164 | $ 129 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | Oct. 16, 2020 | Oct. 02, 2020 | Nov. 30, 2020 | Oct. 27, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Oct. 20, 2020 | Oct. 14, 2020 | Oct. 05, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||||||||||||||
Common stock, dividends declared (in usd per share) | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.50 | $ 0.50 | $ 0.50 | ||||||||
2017 5.00% Senior Notes (due October 15, 2025) | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Stated interest rate (as a percent) | 5.00% | |||||||||||||
Senior notes | $ 2,800 | $ 2,800 | ||||||||||||
2017 5.00% Senior Notes (due October 15, 2025) | Forecast | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Principal amount redeemed | $ 1,450 | |||||||||||||
2017 4.25% Senior Notes (due May 15, 2024) | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Stated interest rate (as a percent) | 4.25% | |||||||||||||
Senior notes | $ 1,500 | $ 1,500 | ||||||||||||
2017 4.25% Senior Notes (due May 15, 2024) | Forecast | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Principal amount redeemed | $ 725 | |||||||||||||
Subsequent Event | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Common stock, dividends paid (in usd per share) | $ 0.52 | |||||||||||||
Common stock, dividends declared (in usd per share) | $ 0.52 | |||||||||||||
Subsequent Event | 2020 4.00% Senior Notes (Due October 15, 2030) | Senior Notes | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Stated interest rate (as a percent) | 4.00% | |||||||||||||
Subsequent Event | 2017 5.00% Senior Notes (due October 15, 2025) | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Principal amount redeemed | $ 1,350 | |||||||||||||
Subsequent Event | November 2020 4.00% Senior Notes | Senior Notes | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Stated interest rate (as a percent) | 4.00% | |||||||||||||
Subsequent Event | 3.50% Senior Notes (Due February 15, 2029) | Senior Notes | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Stated interest rate (as a percent) | 3.50% | |||||||||||||
Partnerships Exchangeable Units | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Exchange notice, partnership exchange units (in shares) | 6,757,692 | |||||||||||||
Partnerships Exchangeable Units | Subsequent Event | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Repurchase of exchangeable units | $ 380 | |||||||||||||
Partnerships Exchangeable Units | Restaurant Brands International Limited Partnership | Subsequent Event | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Partnership exchangeable unit (in usd per unit) | $ 0.52 | $ 0.52 |