Brian Harbour: Thanks.
Operator: We now turn to Gregory Francfort with Guggenheim Securities. Your line is open.
Gregory Francfort: Hey, thanks for the question. Maybe I don’t know if it’s for Patrick or Josh, but just, are you considering making further investments in the Burger King US business beyond the 400 million? I need to talk about it a little bit, but I ask it because I guess if you prove the returns are high enough where you would increase that size, theoretically, franchisees would then also be willing to make the investments. I’m just trying to think about the path the next 18 months that would tell you that 400 million was the right level or what you would need to see to consider raising that. Any thoughts there? Thanks.
Josh Kobza: Good morning, Greg. Thank you for the question. You know I would say that I think we’re really pleased with the progress from Tom and the team at BK. It’s really great. And we’re excited to make that $400 million investment. We’re seeing good returns on the initial portion of it. But to your point, we want to see even more data that supports the return on those investments. And I think we’ll see that over the next year and a half or so. We’ll see more and more remodels. And we want to see continued uplifts that tell us that those returns are going to be really good. And we structured the program that way intentionally. We set up about a two year program initially to cover 2023 and 2024, which would allow us that we could prove return on capital from things like our advertising spend, which is going great, and on remodels, which is going well, but it’s still a little bit earlier.
I think, to your point on, future investments will absolutely be open to making future investments in the BK system. What we’re doing in ’23 and ’24 will allow us to make progress and prove things out, but it doesn’t take us all the way to where we need to be. I mentioned earlier, we need to have effectively every restaurant in the BK system needs to be modern, beautiful, convenient. And that means that we’re all going to have to keep making investments beyond 2024. The exact form of that we still have to figure out. And we’ve got to work with our franchisees to agree on what level investments and what format that will take. We don’t have anything to share on that yet. We’ll keep working with our franchisees and we’ll share more with you all once we have it all figured out.
Operator: We now turn to Danilo Gargiulo with Bernstein. Your line is open.
Danilo Gargiulo: Thank you. I was wondering if you can share some details on the intra quarter cadence of your same-store sales and traffic especially with regards to Popeye’s and Burger King in the US and what might be impacting the cadence. That might give you some incremental confidence onto getting into 4Q and beyond. Thank you.
Josh Kobza: Good morning, Danilo. Thank you for the question. I would just reemphasize that we’re really pleased with how both of those brands performed. We mentioned that both Popeyes and Burger King in the US got to flat traffic, and BK has actually been performing above the industry in the last couple of months. I’m not going to get into the kind of month to month stuff. We generally try not to do that, but I think a lot of the things that are working are things that we’re doing very systematically across both of those brands, and that’s what gives us confidence that we can continue that pace of improvement in the quarters and years to come.
Operator: Our next question comes from Jeff Bernstein with Barclays. Your line is open.
Pratik Patel: Hi. Good morning. This is Pratik on for Jeff. I just wanted to ask about BK US and the broader quick service industries positioning into a potential macro slowdown. I think in the past you’ve spoken of a trade down benefit from above and maybe losing some customers to food at home. Can you talk about what you’re currently seeing with your customers by income cohort? We’ve heard some others in your industry talk about cheque management recently and have you seen any signs of that to date? And Patrick in a potential economic slowdown, how do the four brands compare to your prior life in what’s perceived to be a very resilient value led pizza segment? Thanks.
Josh Kobza: Thanks, Pratik. A couple of thoughts on this. And then I’ll let Patrick comment on pizza. So, you know, I would just say that the business seems to be doing pretty well, right? We’re seeing consistent same-store sales, our traffic has been stable. So the actual business performance has been good. If you look back to past macro cycles, our industry tends to do pretty well overall. I think what we offer is good value, convenience, quality products. That’s the kind of thing that tends to perform pretty well through the cycles. And as Patrick I think has pointed out a number of times, the biggest thing that really drives our industry is employment. Employment’s been pretty good. So all those factors, I think, give us a lot of comfort that the business does and should continue to perform well kind of regardless of what’s happening in a broader macro environment.
Patrick Doyle: Yeah, just to throw in data point there on what Josh was talking about. We did in the quarter. See traffic growth in the less than $100,000 income cohort with our guests, based on some of the compelling value offers that we had like the Royal Crispy Wraps and the Whopper Junior Duo. So just a data point on that. Yeah, I guess, what I would add to that is just simply, look, these categories are the same as pizza, which is they’re good value. They are not recession proof, but they are recession resistant. And they are, as Josh said, they’re driven by employment levels. We added another 150,000 jobs last month and that’s a good thing for the category. So, you know, I still see things as pretty darn and good overall as long as employment levels stay solid I think the category is going to do absolutely fine.
