Restaurant Brands International announced Monday a $45 million investment to grow in China, one of the fastest-growing quick-service markets in the world.

As part of the deal, the company will buy Popeyes China for $15 million from Tims China, the master franchisee group running development for Tim Hortons in mainland China, Hong Kong, and Macau. RBI will also partner with Cartesian Capital Group—which cofounded Tims China alongside Tim Hortons—to pour up to $50 million into the beverage business. RBI will provide up to $30 million and Cartesian Capital Group will bring $20 million.

Popeyes entered China in August 2023 and now has 14 restaurants in Shanghai. RBI expects the pace of growth to increase via investments in local teams and restaurant development. Rafael Odorizzi, president of Asia Pacific for RBI, described China as “one of the largest chicken [quick-service] markets globally.” He also noted Popeyes is “off to a strong start” in China and that the company is hoping to unlock the brand’s development potential in the region.

Tims China opened its first store in February 2019. It finished Q1 with 917 shops, but same-store sales dropped 13.6 percent during the three-month period. Systemwide sales increased 7.1 percent to $50.3 million in the quarter. Adjusted store EBITDA was $800,000, or 2 percent growth year-over-year, and EBITDA margin was 2 percent, a slight improvement from Q1 2023. Registered loyalty club members totaled 20.3 million in Q1, up 63.6 percent from the year-ago quarter.

“We are pleased to announce this major funding package, which underscores the commitment of our founding shareholders to this dynamic business,” Tims China CEO Yongchen Lu said in a statement. “This year will be a pivotal one for us, and fortifying our balance sheet is an important step forward towards ensuring our long-term success in this highly competitive market. This transaction enables us to drive growth in and intensify our focus on our core Tim Hortons brand.”

RBI said its purchase of Popeyes China will allow Tims China to “redouble its focus” on the Tim Hortons segment. Following the transaction, the company will have the right to appoint two members to Tims China’s board of directors. It will also see its equity ownership increase to as much as 18 percent.

RBI emphasized during its Q4 earnings call in February that it was dissatisfied with its growth rate in China. Initially, RBI aimed for over 5 percent net restaurant growth in 2024, expecting accelerated development compared to 2023. However, the company now projects a mid-4 percent range due to insufficient investment from Chinese franchise partners. CEO Josh Kobza said there is some “question on the outlook and kind of appetite and alignment for growth” in the country. He said there needs to be a long-term commitment to triumph in China, especially with heavy competition from the likes of Starbucks and Luckin Coffee.

“We have a strong belief in China as an attractive growth market for our brands, given the incredible geographic scope and population of the market,” Kobza told investors in February. “Success that requires a serious long-term capital commitment from our partners, a long-term time horizon, and a commitment to grow the brand in the face of tough competition.”

Fast Food, Finance, Growth, Story, Popeyes, Tim Hortons