Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

qsr-20200930
false2020Q3000161875612/313111100016187562020-01-012020-09-30xbrli:shares00016187562020-10-20iso4217:USD00016187562020-09-3000016187562019-12-31iso4217:USDxbrli:shares0001618756us-gaap:ProductMember2020-07-012020-09-300001618756us-gaap:ProductMember2019-07-012019-09-300001618756us-gaap:ProductMember2020-01-012020-09-300001618756us-gaap:ProductMember2019-01-012019-09-300001618756qsr:RoyaltyPropertyRevenueandFranchisorMember2020-07-012020-09-300001618756qsr:RoyaltyPropertyRevenueandFranchisorMember2019-07-012019-09-300001618756qsr:RoyaltyPropertyRevenueandFranchisorMember2020-01-012020-09-300001618756qsr:RoyaltyPropertyRevenueandFranchisorMember2019-01-012019-09-3000016187562020-07-012020-09-3000016187562019-07-012019-09-3000016187562019-01-012019-09-300001618756us-gaap:CommonStockMember2019-12-310001618756us-gaap:RetainedEarningsMember2019-12-310001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001618756us-gaap:NoncontrollingInterestMember2019-12-310001618756us-gaap:CommonStockMember2020-01-012020-03-3100016187562020-01-012020-03-310001618756us-gaap:RetainedEarningsMember2020-01-012020-03-310001618756us-gaap:NoncontrollingInterestMember2020-01-012020-03-310001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001618756us-gaap:CommonStockMember2020-03-310001618756us-gaap:RetainedEarningsMember2020-03-310001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001618756us-gaap:NoncontrollingInterestMember2020-03-3100016187562020-03-310001618756us-gaap:CommonStockMember2020-04-012020-06-3000016187562020-04-012020-06-300001618756us-gaap:RetainedEarningsMember2020-04-012020-06-300001618756us-gaap:NoncontrollingInterestMember2020-04-012020-06-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001618756us-gaap:CommonStockMember2020-06-300001618756us-gaap:RetainedEarningsMember2020-06-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001618756us-gaap:NoncontrollingInterestMember2020-06-3000016187562020-06-300001618756us-gaap:CommonStockMember2020-07-012020-09-300001618756us-gaap:RetainedEarningsMember2020-07-012020-09-300001618756us-gaap:NoncontrollingInterestMember2020-07-012020-09-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001618756us-gaap:CommonStockMember2020-09-300001618756us-gaap:RetainedEarningsMember2020-09-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001618756us-gaap:NoncontrollingInterestMember2020-09-300001618756us-gaap:CommonStockMember2018-12-310001618756us-gaap:RetainedEarningsMember2018-12-310001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001618756us-gaap:NoncontrollingInterestMember2018-12-3100016187562018-12-310001618756us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001618756us-gaap:NoncontrollingInterestMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001618756srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001618756us-gaap:CommonStockMember2019-01-012019-03-3100016187562019-01-012019-03-310001618756us-gaap:RetainedEarningsMember2019-01-012019-03-310001618756us-gaap:NoncontrollingInterestMember2019-01-012019-03-310001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001618756us-gaap:CommonStockMember2019-03-310001618756us-gaap:RetainedEarningsMember2019-03-310001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-310001618756us-gaap:NoncontrollingInterestMember2019-03-3100016187562019-03-310001618756us-gaap:CommonStockMember2019-04-012019-06-3000016187562019-04-012019-06-300001618756us-gaap:RetainedEarningsMember2019-04-012019-06-300001618756us-gaap:NoncontrollingInterestMember2019-04-012019-06-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001618756us-gaap:CommonStockMember2019-06-300001618756us-gaap:RetainedEarningsMember2019-06-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001618756us-gaap:NoncontrollingInterestMember2019-06-3000016187562019-06-300001618756us-gaap:CommonStockMember2019-07-012019-09-300001618756us-gaap:RetainedEarningsMember2019-07-012019-09-300001618756us-gaap:NoncontrollingInterestMember2019-07-012019-09-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001618756us-gaap:CommonStockMember2019-09-300001618756us-gaap:RetainedEarningsMember2019-09-300001618756us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001618756us-gaap:NoncontrollingInterestMember2019-09-3000016187562019-09-30qsr:restaurant0001618756qsr:TimHortonsMember2020-09-300001618756qsr:BurgerKingMember2020-09-300001618756qsr:PopeyesLouisianaKitchenMember2020-09-30qsr:countryxbrli:pure0001618756qsr:RestaurantMember2020-01-012020-09-300001618756qsr:RestaurantMember2019-01-012019-12-310001618756qsr:TimHortonsMember2019-12-310001618756qsr:BurgerKingMember2019-12-310001618756qsr:PopeyesLouisianaKitchenMember2019-12-310001618756qsr:TimHortonsMember2020-01-012020-09-300001618756qsr:BurgerKingMember2020-01-012020-09-300001618756qsr:PopeyesLouisianaKitchenMember2020-01-012020-09-3000016187562020-10-01qsr:TimHortonsMember2020-09-300001618756qsr:BurgerKingMember2020-10-012020-09-3000016187562020-10-01qsr:PopeyesLouisianaKitchenMember2020-09-3000016187562020-10-012020-09-3000016187562021-01-01qsr:TimHortonsMember2020-09-300001618756qsr:BurgerKingMember2021-01-012020-09-300001618756qsr:PopeyesLouisianaKitchenMember2021-01-012020-09-3000016187562021-01-012020-09-3000016187562022-01-01qsr:TimHortonsMember2020-09-300001618756qsr:BurgerKingMember2022-01-012020-09-3000016187562022-01-01qsr:PopeyesLouisianaKitchenMember2020-09-3000016187562022-01-012020-09-3000016187562023-01-01qsr:TimHortonsMember2020-09-3000016187562023-01-01qsr:BurgerKingMember2020-09-3000016187562023-01-01qsr:PopeyesLouisianaKitchenMember2020-09-3000016187562023-01-012020-09-3000016187562024-01-01qsr:TimHortonsMember2020-09-300001618756qsr:BurgerKingMember2024-01-012020-09-3000016187562024-01-01qsr:PopeyesLouisianaKitchenMember2020-09-3000016187562024-01-012020-09-3000016187562025-01-01qsr:TimHortonsMember2020-09-300001618756qsr:BurgerKingMember2025-01-012020-09-300001618756qsr:PopeyesLouisianaKitchenMember2025-01-012020-09-3000016187562025-01-012020-09-300001618756us-gaap:RoyaltyMember2020-07-012020-09-300001618756us-gaap:RoyaltyMember2019-07-012019-09-300001618756us-gaap:RoyaltyMember2020-01-012020-09-300001618756us-gaap:RoyaltyMember2019-01-012019-09-300001618756us-gaap:FranchisorMember2020-07-012020-09-300001618756us-gaap:FranchisorMember2019-07-012019-09-300001618756us-gaap:FranchisorMember2020-01-012020-09-300001618756us-gaap:FranchisorMember2019-01-012019-09-300001618756us-gaap:FranchiseRightsMember2020-09-300001618756us-gaap:FranchiseRightsMember2019-12-310001618756us-gaap:OffMarketFavorableLeaseMember2020-09-300001618756us-gaap:OffMarketFavorableLeaseMember2019-12-310001618756us-gaap:TradeNamesMemberqsr:TimHortonsMember2020-09-300001618756us-gaap:TradeNamesMemberqsr:TimHortonsMember2019-12-310001618756qsr:BurgerKingMemberus-gaap:TradeNamesMember2020-09-300001618756qsr:BurgerKingMemberus-gaap:TradeNamesMember2019-12-310001618756qsr:PopeyesLouisianaKitchenMemberus-gaap:TradeNamesMember2020-09-300001618756qsr:PopeyesLouisianaKitchenMemberus-gaap:TradeNamesMember2019-12-310001618756us-gaap:TradeNamesMember2020-09-300001618756us-gaap:TradeNamesMember2019-12-310001618756us-gaap:OtherAssetsMember2020-09-300001618756us-gaap:OtherAssetsMember2019-12-310001618756qsr:WendysCompanyTimwenPartnershipMembercountry:CA2020-09-300001618756qsr:WendysCompanyTimwenPartnershipMemberqsr:TimHortonsMember2020-07-012020-09-300001618756qsr:WendysCompanyTimwenPartnershipMemberqsr:TimHortonsMember2019-07-012019-09-300001618756qsr:WendysCompanyTimwenPartnershipMemberqsr:TimHortonsMember2020-01-012020-09-300001618756qsr:WendysCompanyTimwenPartnershipMemberqsr:TimHortonsMember2019-01-012019-09-300001618756qsr:CarrolsRestaurantGroupIncMembercountry:US2020-09-300001618756qsr:CarrolsRestaurantGroupIncMember2020-09-300001618756qsr:BKBrasilMember2020-09-300001618756srt:AffiliatedEntityMemberus-gaap:RoyaltyMember2020-07-012020-09-300001618756srt:AffiliatedEntityMemberus-gaap:RoyaltyMember2019-07-012019-09-300001618756srt:AffiliatedEntityMemberus-gaap:RoyaltyMember2020-01-012020-09-300001618756srt:AffiliatedEntityMemberus-gaap:RoyaltyMember2019-01-012019-09-300001618756srt:AffiliatedEntityMember2020-07-012020-09-300001618756srt:AffiliatedEntityMember2019-07-012019-09-300001618756srt:AffiliatedEntityMember2020-01-012020-09-300001618756srt:AffiliatedEntityMember2019-01-012019-09-300001618756us-gaap:FranchisorMembersrt:AffiliatedEntityMember2020-07-012020-09-300001618756us-gaap:FranchisorMembersrt:AffiliatedEntityMember2019-07-012019-09-300001618756us-gaap:FranchisorMembersrt:AffiliatedEntityMember2020-01-012020-09-300001618756us-gaap:FranchisorMembersrt:AffiliatedEntityMember2019-01-012019-09-300001618756us-gaap:EquityMethodInvesteeMember2020-09-300001618756us-gaap:EquityMethodInvesteeMember2019-12-310001618756qsr:TermLoanFacilityDueFebruarySeventeenTwoThousandAndTwentyFourMember2020-09-300001618756qsr:TermLoanFacilityDueFebruarySeventeenTwoThousandAndTwentyFourMember2019-12-310001618756qsr:TermLoanADueOctoberSevenTwoThousandAndTwentyFourMember2020-09-300001618756qsr:TermLoanADueOctoberSevenTwoThousandAndTwentyFourMember2019-12-310001618756qsr:TwoThousandSeventeenSeniorNotesDueMayFifteenTwoThousandTwentyFourMember2020-09-300001618756qsr:TwoThousandSeventeenSeniorNotesDueMayFifteenTwoThousandTwentyFourMember2019-12-310001618756qsr:TwoThousandNineteenSeniorNotesDueJanuaryFifteenTwoThousandTwentyEightMember2020-09-300001618756qsr:TwoThousandNineteenSeniorNotesDueJanuaryFifteenTwoThousandTwentyEightMember2019-12-310001618756qsr:A2020575SeniorNotesDueApril152025Member2020-09-300001618756qsr:A2020575SeniorNotesDueApril152025Member2019-12-310001618756qsr:TwoThousandSeventeenSeniorNotesDueOctoberFifteenTwoThousandTwentyFiveMember2020-09-300001618756qsr:TwoThousandSeventeenSeniorNotesDueOctoberFifteenTwoThousandTwentyFiveMember2019-12-310001618756qsr:TwoThousandNineteen4.375SeniorNotesdueJanuary152028Member2020-09-300001618756qsr:TwoThousandNineteen4.375SeniorNotesdueJanuary152028Member2019-12-310001618756us-gaap:RevolvingCreditFacilityMember2020-03-012020-03-310001618756us-gaap:RevolvingCreditFacilityMember2020-09-300001618756us-gaap:RevolvingCreditFacilityMember2020-04-02iso4217:CAD0001618756qsr:THFacilityMember2020-09-300001618756qsr:THFacilityMemberqsr:CanadianBankersAcceptanceRateMember2020-01-012020-09-300001618756qsr:THFacilityMemberus-gaap:PrimeRateMember2020-01-012020-09-300001618756qsr:SeniorNotes5.75DueApril152025Memberus-gaap:SeniorNotesMember2020-04-070001618756qsr:SeniorNotes5.75DueApril152025Memberus-gaap:SeniorNotesMember2020-04-072020-04-070001618756qsr:SeniorNotes400DueOctober152030Memberus-gaap:SubsequentEventMemberus-gaap:SeniorNotesMember2020-10-050001618756qsr:SeniorNotes400DueOctober152030Memberus-gaap:SubsequentEventMemberus-gaap:SeniorNotesMember2020-10-052020-10-050001618756qsr:TwoThousandSeventeenSeniorNotesDueOctoberFifteenTwoThousandTwentyFiveMemberus-gaap:SubsequentEventMember2020-10-162020-10-160001618756qsr:November2020400SeniorNotesMemberus-gaap:SubsequentEventMemberus-gaap:SeniorNotesMember2020-10-140001618756qsr:TwoThousandSeventeenSeniorNotesDueOctoberFifteenTwoThousandTwentyFiveMembersrt:ScenarioForecastMember2020-11-012020-11-300001618756us-gaap:SubsequentEventMemberus-gaap:SeniorNotesMemberqsr:A350SeniorNotesDueFebruary152029Member2020-10-200001618756srt:ScenarioForecastMemberqsr:TwoThousandSeventeenSeniorNotesDueMayFifteenTwoThousandTwentyFourMember2020-10-012020-10-270001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMemberus-gaap:InterestExpenseMember2020-07-012020-09-300001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMemberus-gaap:InterestExpenseMember2019-07-012019-09-300001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMemberus-gaap:InterestExpenseMember2020-01-012020-09-300001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMemberus-gaap:InterestExpenseMember2019-01-012019-09-300001618756qsr:RestaurantBrandsInternationalLimitedPartnershipMember2020-01-012020-09-300001618756qsr:RestaurantBrandsInternationalLimitedPartnershipMember2019-01-012019-12-310001618756qsr:RestaurantBrandsInternationalLimitedPartnershipMember2020-09-300001618756qsr:RestaurantBrandsInternationalLimitedPartnershipMember2019-12-310001618756qsr:PartnershipsWithExchangeableUnitsMember2020-01-012020-09-300001618756us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-12-310001618756us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-310001618756us-gaap:AccumulatedTranslationAdjustmentMember2019-12-310001618756us-gaap:AccumulatedTranslationAdjustmentMember2020-01-012020-09-300001618756us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-01-012020-09-300001618756us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-09-300001618756us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-09-300001618756us-gaap:AccumulatedTranslationAdjustmentMember2020-09-300001618756qsr:InterestRateSwapsPeriodOneMember2020-09-300001618756qsr:InterestRateSwapsPeriodTwoMember2020-09-300001618756us-gaap:InterestRateSwapMember2019-12-310001618756us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2019-01-012019-12-310001618756us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2020-01-012020-09-300001618756us-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2015-01-012015-12-310001618756us-gaap:CrossCurrencyInterestRateContractMemberus-gaap:FixedIncomeInterestRateMember2020-09-30iso4217:EUR0001618756us-gaap:HedgeFundsMemberus-gaap:CrossCurrencyInterestRateContractMemberus-gaap:FixedIncomeInterestRateMember2020-09-300001618756us-gaap:NetInvestmentHedgingMemberus-gaap:CrossCurrencyInterestRateContractMemberus-gaap:FixedIncomeInterestRateMember2018-12-310001618756us-gaap:NetInvestmentHedgingMemberus-gaap:CrossCurrencyInterestRateContractMemberus-gaap:FixedIncomeInterestRateMember2019-12-310001618756srt:MaximumMember2020-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2020-07-012020-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2019-07-012019-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2020-01-012020-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestRateSwapMember2019-01-012019-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CashFlowHedgingMember2020-07-012020-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CashFlowHedgingMember2019-07-012019-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CashFlowHedgingMember2020-01-012020-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CashFlowHedgingMember2019-01-012019-09-300001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2020-07-012020-09-300001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2019-07-012019-09-300001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2020-01-012020-09-300001618756us-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2019-01-012019-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2020-07-012020-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2019-07-012019-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2020-01-012020-09-300001618756us-gaap:CashFlowHedgingMemberus-gaap:InterestExpenseMemberus-gaap:InterestRateSwapMember2019-01-012019-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMember2020-07-012020-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMember2019-07-012019-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMember2020-01-012020-09-300001618756qsr:ForwardCurrencyContractsMemberus-gaap:CostOfSalesMemberus-gaap:CashFlowHedgingMember2019-01-012019-09-300001618756us-gaap:InterestRateContractMemberus-gaap:OtherAssetsMemberus-gaap:CashFlowHedgingMember2020-09-300001618756us-gaap:InterestRateContractMemberus-gaap:OtherAssetsMemberus-gaap:CashFlowHedgingMember2019-12-310001618756us-gaap:NetInvestmentHedgingMemberus-gaap:OtherAssetsMemberqsr:ForeignCurrencyMember2020-09-300001618756us-gaap:NetInvestmentHedgingMemberus-gaap:OtherAssetsMemberqsr:ForeignCurrencyMember2019-12-310001618756us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateContractMemberus-gaap:CashFlowHedgingMember2020-09-300001618756us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateContractMemberus-gaap:CashFlowHedgingMember2019-12-310001618756us-gaap:CashFlowHedgingMemberqsr:OtherAccruedLiabilitiesMemberqsr:ForeignCurrencyMember2020-09-300001618756us-gaap:CashFlowHedgingMemberqsr:OtherAccruedLiabilitiesMemberqsr:ForeignCurrencyMember2019-12-310001618756us-gaap:OtherLiabilitiesMemberus-gaap:NetInvestmentHedgingMemberqsr:ForeignCurrencyMember2020-09-300001618756us-gaap:OtherLiabilitiesMemberus-gaap:NetInvestmentHedgingMemberqsr:ForeignCurrencyMember2019-12-31qsr:segment0001618756qsr:TimHortonsMember2020-07-012020-09-300001618756qsr:TimHortonsMember2019-07-012019-09-300001618756qsr:TimHortonsMember2019-01-012019-09-300001618756qsr:BurgerKingMember2020-07-012020-09-300001618756qsr:BurgerKingMember2019-07-012019-09-300001618756qsr:BurgerKingMember2019-01-012019-09-300001618756qsr:PopeyesLouisianaKitchenMember2020-07-012020-09-300001618756qsr:PopeyesLouisianaKitchenMember2019-07-012019-09-300001618756qsr:PopeyesLouisianaKitchenMember2019-01-012019-09-300001618756country:CA2020-07-012020-09-300001618756country:CA2019-07-012019-09-300001618756country:CA2020-01-012020-09-300001618756country:CA2019-01-012019-09-300001618756country:US2020-07-012020-09-300001618756country:US2019-07-012019-09-300001618756country:US2020-01-012020-09-300001618756country:US2019-01-012019-09-300001618756qsr:OthersMember2020-07-012020-09-300001618756qsr:OthersMember2019-07-012019-09-300001618756qsr:OthersMember2020-01-012020-09-300001618756qsr:OthersMember2019-01-012019-09-300001618756us-gaap:OperatingSegmentsMemberqsr:TimHortonsMember2020-07-012020-09-300001618756us-gaap:OperatingSegmentsMemberqsr:TimHortonsMember2019-07-012019-09-300001618756us-gaap:OperatingSegmentsMemberqsr:TimHortonsMember2020-01-012020-09-300001618756us-gaap:OperatingSegmentsMemberqsr:TimHortonsMember2019-01-012019-09-300001618756qsr:BurgerKingMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001618756qsr:BurgerKingMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001618756qsr:BurgerKingMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001618756qsr:BurgerKingMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001618756qsr:PopeyesLouisianaKitchenMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300001618756qsr:PopeyesLouisianaKitchenMemberus-gaap:OperatingSegmentsMember2019-07-012019-09-300001618756qsr:PopeyesLouisianaKitchenMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300001618756qsr:PopeyesLouisianaKitchenMemberus-gaap:OperatingSegmentsMember2019-01-012019-09-300001618756us-gaap:MaterialReconcilingItemsMember2020-07-012020-09-300001618756us-gaap:MaterialReconcilingItemsMember2019-07-012019-09-300001618756us-gaap:MaterialReconcilingItemsMember2020-01-012020-09-300001618756us-gaap:MaterialReconcilingItemsMember2019-01-012019-09-300001618756qsr:PartnershipsWithExchangeableUnitsMember2020-09-300001618756qsr:PartnershipsWithExchangeableUnitsMemberus-gaap:SubsequentEventMember2020-10-022020-10-020001618756us-gaap:SubsequentEventMember2020-10-022020-10-020001618756qsr:PartnershipsWithExchangeableUnitsMemberqsr:RestaurantBrandsInternationalLimitedPartnershipMemberus-gaap:SubsequentEventMember2020-10-022020-10-020001618756us-gaap:SubsequentEventMember2020-10-012020-10-270001618756qsr:PartnershipsWithExchangeableUnitsMemberqsr:RestaurantBrandsInternationalLimitedPartnershipMemberus-gaap:SubsequentEventMember2020-10-012020-10-27
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-36786
 
 RESTAURANT BRANDS INTERNATIONAL INC.
(Exact Name of Registrant as Specified in its Charter)


Canada 98-1202754
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
130 King Street West, Suite 300 M5X 1E1
Toronto, Ontario
(Address of Principal Executive Offices) (Zip Code)
(905) 845-6511
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class Trading SymbolsName of each exchange on which registered
Common Shares, without par value QSRNew York Stock Exchange
 Toronto Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Table of Contents
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of October 20, 2020, there were 303,902,641 common shares of the Registrant outstanding.



Table of Contents
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
TABLE OF CONTENTS
 
  Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 6.
3

Table of Contents
PART I — Financial Information
Item 1. Financial Statements
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions of U.S. dollars, except share data)
(Unaudited)
 As of
September 30,
2020
December 31,
2019
ASSETS
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, net87 84 
Prepaids and other current assets85 52 
Total current assets2,680 2,196 
Property and equipment, net of accumulated depreciation and amortization of $831 and $746, respectively
1,975 2,007 
Operating lease assets, net1,122 1,176 
Intangible assets, net10,415 10,563 
Goodwill5,571 5,651 
Net investment in property leased to franchisees63 48 
Other assets, net707 719 
Total assets$22,533 $22,360 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and drafts payable$523 $644 
Other accrued liabilities883 790 
Gift card liability108 168 
Current portion of long-term debt and finance leases107 101 
Total current liabilities1,621 1,703 
Long-term debt, net of current portion12,300 11,759 
Finance leases, net of current portion304 288 
Operating lease liabilities, net of current portion1,054 1,089 
Other liabilities, net1,917 1,698 
Deferred income taxes, net1,422 1,564 
Total liabilities18,618 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 earnings692 775 
Accumulated other comprehensive income (loss)(997)(763)
Total Restaurant Brands International Inc. shareholders’ equity2,343 2,490 
Noncontrolling interests1,572 1,769 
Total shareholders’ equity3,915 4,259 
Total liabilities and shareholders’ equity$22,533 $22,360 
See accompanying notes to condensed consolidated financial statements.
4

Table of Contents
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In millions of U.S. dollars, except per share data)
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Revenues:
Sales$541 $624 $1,450 $1,735 
Franchise and property revenues796 834 2,160 2,389 
Total revenues1,337 1,458 3,610 4,124 
Operating costs and expenses:
Cost of sales418 475 1,156 1,334 
Franchise and property expenses128 133 388 401 
Selling, general and administrative expenses302 320 922 948 
(Income) loss from equity method investments18 (11)36 (11)
Other operating expenses (income), net54 (30)59 (44)
Total operating costs and expenses920 887 2,561 2,628 
Income from operations417 571 1,049 1,496 
Interest expense, net129 137 376 406 
Loss on early extinguishment of debt 4  4 
Income before income taxes288 430 673 1,086 
Income tax expense65 79 62 232 
Net income223 351 611 854 
Net income attributable to noncontrolling interests (Note 12)78 150 216 376 
Net income attributable to common shareholders$145 $201 $395 $478 
Earnings per common share
Basic$0.48 $0.76 $1.31 $1.85 
Diluted$0.47 $0.75 $1.30 $1.82 
Weighted average shares outstanding
Basic303 267 301 258 
Diluted470 470 469 469 
See accompanying notes to condensed consolidated financial statements.

5

Table of Contents
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions of U.S. dollars)
(Unaudited)

Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Net income$223 $351 $611 $854 
Foreign currency translation adjustment239 (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 interests94 129 91 424 
Comprehensive income (loss) attributable to common shareholders$175 $172 $172 $533 
See accompanying notes to condensed consolidated financial statements.

6

Table of Contents
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
 Issued Common SharesRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest
Total
 SharesAmount
Balances at December 31, 2019298,281,081 $2,478 $775 (763)$1,769 $4,259 
Stock option exercises1,053,264 30 — — — 30 
Share-based compensation— 19 — — — 19 
Issuance of shares255,325 6 — — — 6 
Dividends declared ($0.52 per share)
— — (156)— — (156)
Dividend equivalents declared on restricted stock units— 2 (2)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)
— — — — (86)(86)
Exchange of Partnership exchangeable units for RBI common shares178,046 2 — — (2) 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 144 — 80 224 
Other comprehensive income (loss)— — — (350)(193)(543)
Balances at March 31, 2020299,767,716 $2,537 $761 $(1,113)$1,567 $3,752 
Stock option exercises316,172 11 — — — 11 
Share-based compensation— 20 — — — 20 
Issuance of shares45,071  — — —  
Dividends declared ($0.52 per share)
— — (158)— — (158)
Dividend equivalents declared on restricted stock units— 1 (1)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)
— — — — (85)(85)
Exchange of Partnership exchangeable units for RBI common shares2,494,854 33 — (9)(24) 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 106 — 58 164 
Other comprehensive income (loss)— — — 97 52 149 
Balances at June 30, 2020302,623,813 $2,602 $708 $(1,025)$1,567 $3,852 
Stock option exercises567,636 19 — — — 19 
Share-based compensation— 16 — — — 16 
Issuance of shares63,686 — — — — — 
Dividends declared ($0.52 per share)
— — (158)— — (158)
Dividend equivalents declared on restricted stock units— 3 (3)— — — 
Distributions declared by Partnership on Partnership exchangeable units ($0.52 per unit)
— — — — (84)(84)
Exchange of Partnership exchangeable units for RBI common shares622,068 8 — (2)(6)— 
Restaurant VIE contributions (distributions)— — — — 1 1 
Net income— — 145 — 78 223 
Other comprehensive income (loss)— — — 30 16 46 
Balances at September 30, 2020303,877,203 $2,648 $692 $(997)$1,572 $3,915 
See accompanying notes to condensed consolidated financial statements.
7

Table of Contents
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Equity
(In millions of U.S. dollars, except shares and per share data)
(Unaudited)
Issued Common SharesRetained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling
Interest
Total
SharesAmount
Balances at December 31, 2018251,532,493 $1,737 $674 $(800)$2,007 $3,618 
Cumulative effect adjustment— — 12 — 9 21 
Stock option exercises2,019,620 42 — — — 42 
Share-based compensation— 22 — — — 22 
Issuance of shares134,809 7 — — — 7 
Dividends declared ($0.50 per share)
— — (127)— — (127)
Dividend equivalents declared on restricted stock units— 2 (2)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.50 per unit)
— — — — (104)(104)
Exchange of Partnership exchangeable units for RBI common shares141,190 2 — (1)(1) 
Net income— — 135 — 111 246 
Other comprehensive income (loss)— — — 26 22 48 
Balances at March 31, 2019253,828,112 $1,812 $692 $(775)$2,044 $3,773 
Stock option exercises1,697,488 38 — — — 38 
Share-based compensation— 17 — — — 17 
Issuance of shares59,970  — — —  
Dividends declared ($0.50 per share)
— — (128)— — (128)
Dividend equivalents declared on restricted stock units— 2 (2)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.50 per unit)
— — — — (103)(103)
Exchange of Partnership exchangeable units for RBI common shares45,325 1 — — (1) 
Restaurant VIE contributions (distributions)— — — — 1 1 
Net income— — 142 — 115 257 
Other comprehensive income (loss)— — — 58 47 105 
Balances at June 30, 2019255,630,895 $1,870 $704 $(717)$2,103 $3,960 
Stock option exercises636,918 19 — — — 19 
Share-based compensation— 17 — — — 17 
Issuance of shares20,700 — — — —  
Dividends declared ($0.50 per share)
— — (141)— — (141)
Dividend equivalents declared on restricted stock units— 2 (2)— —  
Distributions declared by Partnership on Partnership exchangeable units ($0.50 per unit)
— — — — (92)(92)
Exchange of Partnership exchangeable units for RBI common shares41,807,254 552 — (118)(434) 
Restaurant VIE contributions (distributions)— — — — (1)(1)
Net income— — 201 — 150 351 
Other comprehensive income (loss)— — — (29)(21)(50)
Balances at September 30, 2019298,095,767 $2,460 $762 $(864)$1,705 $4,063 
See accompanying notes to condensed consolidated financial statements.
8

Table of Contents
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions of U.S. dollars)
(Unaudited)
 Nine Months Ended September 30,
 20202019
Cash flows from operating activities:
Net income$611 $854 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization139 139 
Premiums paid and non-cash loss on early extinguishment of debt 4 
Amortization of deferred financing costs and debt issuance discount19 22 
(Income) loss from equity method investments36 (11)
(Gain) loss on remeasurement of foreign denominated transactions54 (38)
Net (gains) losses on derivatives14 (43)
Share-based compensation expense55 56 
Deferred income taxes(120)(16)
Other23 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 liabilities10 97 
Net cash provided by operating activities608 911 
Cash flows from investing activities:
Payments for property and equipment(71)(32)
Net proceeds from disposal of assets, restaurant closures, and refranchisings9 22 
Settlement/sale of derivatives, net29 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 debt1,585 750 
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 exercises60 99 
(Payments) proceeds from derivatives(29)17 
Other financing activities, net(1) 
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 equivalents386 819 
Cash and cash equivalents at beginning of period1,533 913 
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 
See accompanying notes to condensed consolidated financial statements.
9

Table of Contents
RESTAURANT BRANDS INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. 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.

Note 2. 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.
10

Table of Contents
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.

Note 3. 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.
11

Table of Contents
Accounting Relief for the Transition Away from LIBOR and Certain other Reference Rates – In March 2020, the FASB issued guidance which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This amendment is effective as of March 12, 2020 through December 31, 2022. The expedients and exceptions provided by this new guidance do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationships. We are currently evaluating the impact that the adoption of this new guidance will have on our Financial Statements and have not adopted any of the transition relief available under the new guidance as of September 30, 2020.

Note 4. 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
September 30,
Nine Months Ended
September 30,
2020201920202019
Lease income - operating leases
Minimum lease payments$112 $112 $333 $335 
Variable lease payments82 100 191 281 
Amortization of favorable and unfavorable income lease contracts, net1 1 4 5 
Subtotal - lease income from operating leases195 213 528 621 
Earned income on direct financing leases1 2 4 7 
Total property revenues$196 $215 $532 $628 

12

Table of Contents
Note 5. 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 LiabilitiesTHBKPLKConsolidated
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 period5 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 inTHBKPLKConsolidated
Remainder of 2020$2 $9 $1 $12 
20218 34 2 44 
20228 33 2 43 
20237 32 2 41 
20247 31 2 40 
Thereafter29 282 26 337 
Total$61 $421 $35 $517 
Disaggregation of Total Revenues
Total revenues consist of the following (in millions):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020201920202019
Sales$541 $624 $1,450 $1,735 
Royalties581 602 1,576 1,706 
Property revenues196 215 532 628 
Franchise fees and other revenue19 17 52 55 
Total revenues$1,337 $1,458 $3,610 $4,124 

13

Table of Contents
Note 6. 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,
2020201920202019
Numerator:
Net income attributable to common shareholders - basic$145 $201 $395 $478 
Add: Net income attributable to noncontrolling interests78 150 215 376 
Net income available to common shareholders and noncontrolling interests - diluted$223 $351 $610 $854 
Denominator:
Weighted average common shares - basic303 267