And that has benefits in terms of confidence and where we’re going. But it also generates profits that can be reinvested into the system to be able to fund all of those remodels. As you pointed out, interest rates are higher and that is a higher cost on the margin. But I really look at those unlevered unit economics, the unlevered returns on the remodels. That’s what we can control and we can impact. So we are very focused on making sure that those gross returns are good, and we’re getting to a place that we feel much better in. The last thing I would just point out, it usually gets less attention, but I think it’s perhaps one of the most important is operations. And Tom has brought an incredible focus on the quality of operations and guest experience, everything from product quality and temperature to hours of operations and speed of service.
And we’re making a lot of progress under the surface there. And I think that’s a really important ingredient to what’s driven the same store traffic improvements to where we are today. Patrick, I don’t know if you want to add anything to that.
Patrick Doyle: Yeah, I would, so that last point that Josh just made, I mean, you listen to all these calls and there’s always a lot of discussion about operational improvements. I will tell you, it is very real. We are foundationally running these restaurants better than we were a year ago, and I am sure better than we were five years ago and it’s working. In terms of the assets, I guess what I’d say is you’re exactly right. You know, we’re a little bit under 50% in the image that we want to be in. It’s not a great reflection of where we are. And we’ve got all of those improvements ahead of us. So if we’ve got assets that don’t all look great today and we’re already outperforming on a traffic standpoint that tells you we should be pretty confident about what we’re going to be able to do once we get those assets where we want to be.
The last thing I would say is the comment I made about the alignment with the franchisees, it is pretty remarkable right now. We are going through an awful lot of change, and our great franchisees in the Burger King system are aggressively talking to us about keep going. You’re going the right way. This is working. Keep the pressure on to continue improving operations, to continue getting our assets where they need to be. That alignment is what allows us to move fast. Trust levels are building with Tom and his team, and it’s what allows forward progress. So I’ll tell you, I am awfully confident about our ability to keep this going. This is you know, these are foundational things that are driving this business right now. And that’s pretty exciting.
David Palmer: Thank you.
Operator: Our next question comes from Andrew Charles with TD Cowen. Your line is open.
Andrew Charles: Great. Thank you. I wanted to pivot to Tims Canada for a second, obviously impressive performance in the third quarter. There seems to be investor concern on the Canadian consumer. That might be even more concern than the broader US consumer. And I’m curious, you know, in the context of very strong 3Q results. You know, what part of the plan for Tims would you guys lean on the most if we were to see the consumer pull back more in Canada?
Josh Kobza: Yeah. Thanks, Andrew. I would tell you, we haven’t seen any big change in consumer behaviour yet in Canada at this point. As I mentioned a little bit earlier, the business is doing really well. I think Axel and the team have done a really nice job focusing on the basics and that’s what’s propelling both traffic and sales growth. And it has for an awful lot of quarters now. I think if you just step back and look at how Tims is positioned in the Canadian market, we do all of the fundamentals of QSR, right? We have high quality products. We are incredibly convenient. And we offer it at a compelling price point. And I think that’s a great place to be in any market, whether you’re in a good sign of the economic cycle or a little bit more difficult one.
So we’re just going to keep focusing on that. We’re going to keep introducing really fantastic products. We’re going to have compelling value. And the teams working on operations to make sure we do it even faster. Some of the things I mentioned earlier are really incredible. We improved the speed of service in the drive thru by 10% year-on-year. That’s a tough thing to do in a big business like this with a ton of volume. And so I think Matt Moore and the team there have been doing some good things. So we’re just going to keep focusing on the basics. I think we’re well positioned regardless of the economic environment. And we’ll keep you updated as things evolve.
Operator: We now turn to Lauren Silberman with Deutsche Bank. Your line is open.
Lauren Silberman: Thank you very much. My question is on BK International. Two parts. One is a follow-up to Dennis’ question. As you look out over the next few years, do you think that BK global can get back to 6% plus global unit growth that it saw pre-COVID and then just on BK International for this quarter? I think you mentioned a decel in comps is largely driven by price. It looks like relative to 19 also a bit of a decel from 2Q? Is there any specific market call out or additional color you can provide on what you’re seeing across markets? Thank you.
Josh Kobza: So, Lauren, I’ll take both of those. Maybe I’ll take them in inverse order. So, first, in terms of the evolution from Q2 to Q3, we did see a bit of a slowdown in comps, and I’ll give it a little bit of color. The biggest driver on that I think is some reduction in year-on-year price. One market that moved a bit is France, which I would just say Q2 was really incredible. We were doing double-digit same-store sales and that slowed down a little bit into Q3, but we’re still high single-digits, around 9% same-store sales, and we’re taking significant market share. So we’re performing above the industry. So you have some of those where you saw a little bit of a slowdown sequentially, but generally the performance is still really good, especially in France where we’re really pleased with the business there.
And it’s actually it’s our biggest market at this point for BK International. In terms of the unit, the pace of unit growth won’t get into breaking down the exact numbers of the forecast. But I do think there’s an opportunity for us to improve a little bit in terms of the BK International pace of growth. The piece I mentioned a little bit earlier that I think is already starting to move is working in China. That had been a bit of a slower grower for the last couple of years and we’ve seen improvements. So we’ve already seen the openings year-to-date are improving a lot year-on-year and I think the outlook is for some pretty meaningful improvement in ’23 versus ’22. So that’s probably the most important or specific piece that started to go in the right direction.
And we hope to see more next year.
Operator: We now turn to John Ivankoe with JPMorgan. Your line is open.
