QSR

RBI is a high-quality, asset-light franchisor: per the 10-K it runs nearly $47B of system-wide sales across 33,000+ restaurants in 120+ countries under four brands (Tim Hortons, Burger King, Popeyes, Firehouse Subs), with over 95% franchised. That model shows in the cash: FY2025 operating cash flow rose 14% to $1.71B against just $265M of capex, and operating margin held at a healthy 23.3% on $9.43B of revenue (+12.2% YoY). Revenue has compounded steadily every year since 2021 ($5.74B → $9.43B). This is a genuine compounder with pricing power and royalty-stream durability.

The headline blemish — net income down 25.6% to $1.07B and diluted EPS down 26.1% to $2.35 — is largely transitional rather than core decay. The MD&A attributes meaningful drag to discontinued operations: the February 2025 BK China acquisition was immediately classified as held-for-sale, producing a $126M net loss and a $114M non-cash charge tied to the Burger King China holdings before RBI handed ~83% to CPE (retaining ~17%) in January 2026. Separately, consolidating the May 2024 Carrols Burger King acquisition and PLK China into the new 'Restaurant Holdings' segment injected lower-margin company-operated restaurant sales — which inflates the revenue line and compresses blended margins — even as management explicitly intends to refranchise 'the vast majority' of those restaurants back to the asset-light model. So both the revenue surge and the earnings dip partly reflect a temporary on-balance-sheet detour, not structural erosion. (Note: the reported 8.8% 'gross margin' is a data artifact — it derives from a FY2014 gross-profit figure — so I weight operating margin and cash flow instead.)