Josh Kobza, CEO of RBI International, had many positive comments about Burger King’s international performance.

He recalled seeing firsthand on a recent trip to Japan that performance had improved “significantly” and that the brand had been identified as “the clear winner among the best burgers on the market.” There are currently almost 250 stores in the country, with growth of 40 to 50 units per year. The company has also seen significant growth in Australia, Spain, South Korea and the United Kingdom. Each of these markets accelerated compared to the second quarter.

But there is also China.

The chain has struggled so much that it recently sent termination notices to its master franchisee in China, BK China. Kobza said the operator apparently disputed those notices and the two sides were “in the dispute resolution process.”

“We are in active discussions with the master franchise with a view to reaching an amicable resolution,” the CEO said during RBI’s third-quarter earnings call. “We believe this is a short-term situation and we are committed to the long-term success of business in China.”

The RBI said on Tuesday that it expects net restaurant growth for 2024 to be in the mid-range of 3 percent, below its long-term target of 5 percent. About 100 basis points of the shortfall comes from Burger King China, which has experienced a “significant year-over-year slowdown,” according to CFO Sami Siddiqui.

DOWNLOAD: 2024 QSR® Drive-Thru Report Home: Speed, Accuracy and Other Statistics

Earlier in the year, the RBI expected net restaurant growth in the mid-4 percent range, again due to underinvestment from Chinese partners. At the time, Kobza told investors that there were “some questions about the outlook, appetite and adjustment to growth” in the country.

The CEO remains optimistic about Burger King’s future in China.

“I can tell you that business performance there has been challenging in the short term, but let me tell you, we’re all very committed and very excited about the long-term prospects for the Burger King business and all of our businesses, obviously in China,” Kobza said. “The number two QSR market in the world. “We think we have brands that have the right to win in this market and we will make the right decisions to support this long-term growth.”

While Burger King China is struggling, the RBI has made progress in supporting Popeyes and Tim Hortons. In July, the company announced a $45 million investment to expand in China, including a $15 million acquisition of Popeyes China and pouring $30 million into the development of Tim Hortons China.

As of June 30, the number of Tim Hortons stores in China increased from 700 last year to 907. But same-store sales fell 14.6 percent in the second quarter after falling 13.6 percent in the first quarter. As of June 30, the number of loyalty club members reached 21.4 million; This figure increased compared to 14.7 million members the previous year. Popeyes entered China in August 2023 and had 14 restaurants in Shanghai by July.

Relatively speaking, Burger King, Tims and Popeyes are at the beginning of their journey in China, said RBI governor Patrick Doyle. Shout out to Starbucks, McDonald’s, Domino’s and Yum! Most major competing brands are at a point where cash flow is sufficient to manage day-to-day operations and support growth. Meanwhile, RBI’s concepts still need fresh capital to fuel development and achieve long-term scale.

“We are very bullish on the medium to long term, but we have some things to work on and that still requires some capital,” Doyle said. “Right now, as China becomes more complex, I wish we were a little further along on this journey, but we’re committed to getting there and we’re going to work at it. And one of the things I believe strongly in anything is that we’re not just going to talk about what’s going well in our business. We need to improve.” And it’s important not only for you to know, but it’s also important for the franchisees and team members who are listening to this call to know that we’re talking about things we need to get better at, and we’re talking to you about where we need to improve. we will talk.

Here’s how RBI’s other key business segments performed in the third quarter:

Popeyes USA

Same Store Sales: There was a decrease of 3.8 percent.

Important Developments:

• It introduced a $5 three-piece chicken offer and a $6 Big Box in September and October to better meet consumer value demands.
• Digital sales increased by 21 percent compared to last year and constituted 28 percent of total sales.
• We continued to simplify kitchen operations and explore new formats to improve accessibility.
• 3,107 stores in the US; 1,352 international.

Tim Hortons Canada:

Same Store Sales: Increased by 2.7 percent, mainly due to increased traffic.

Important Developments:

• Expanded its afternoon food offerings with flatbread pizzas and “Anytime Snacker,” resulting in 5.2 percent annual growth in afternoon food sales.
• Cold drink sales increased 7 percent year-on-year, driven by popular offerings such as Nutella-flavored drinks.
• Drive-thru operations have improved with faster service times.
• 3,861 stores in Canada; 1,374 international

Fire Department Subs:

Same Store Sales: There was a decrease of 4.8 percent.

Important Developments:

• It brought back the fan-favorite Hot Sauce Bar in September to enhance guests’ experience.
• Net restaurant growth reached 3.9 percent year-on-year with 49 new units, a 60 percent increase compared to last year
• Preparing for accelerated growth in 2025 by focusing on expanding unit development.
• 1,211 stores in the US; 21 internationals.