S&P Global Ratings upgraded Restaurant Brands International Inc. to "BB+" from "BB" and assigned a stable outlook, pointing to what the agency described as solid operational execution and an improving leverage profile. The ratings firm provided a near-term leverage roadmap that shows adjusted debt to EBITDA easing to about 4.4x in 2026 and to about 4.1x in 2027, an improvement from 4.5x in 2025 and a pro forma 4.8x in 2024.
The upgrade follows a sustained period of positive comparable-sales performance: S&P noted 20 consecutive quarters of higher comparable sales beginning in 2021. Management expects the companywide restaurant count to increase by roughly 3% to 4% in 2026, supporting unit-level scale and margin expansion.
International expansion is central to growth expectations. The ratings agency said new international restaurant unit growth is anticipated to outpace new openings elsewhere in the business by about 350% over the next two to three years. Those international openings are primarily Burger King locations, while franchise partners are contributing an increasing share of Popeyes restaurants overseas. According to S&P, segment-level EBITDA margins are improving, driven by a combination of cost discipline and the operating leverage that comes with greater scale.
Brand-level initiatives are also a factor in the upgrade. Burger King’s U.S. turnaround program has involved remodeling stores, cycling limited-time offerings and rebuilding the chain’s value position with customers; the brand delivered 5.8% comparable-sales growth in the first quarter of 2026. Tim Hortons, which S&P says accounts for about 40% of Restaurant Brands’ profit, is concentrating on boosting afternoon traffic, increasing food mix and expanding its network in Canada.
Refranchising remains a stated strategic priority, particularly for the company-owned Burger King restaurants. S&P observed that refranchising will likely lower total revenue but should raise margins and improve profit stability as more locations move to a royalty and rent income model rather than direct restaurant operating income.
On capital allocation, Restaurant Brands has signaled a disciplined approach. The company plans modest dividend growth until it reaches a 60% dividend payout ratio target. Most of the free cash flow beyond that dividend is earmarked for share repurchases and selective, small acquisitions of franchise businesses as needed. S&P does not anticipate material acquisition activity in the next 12 to 24 months.
The ratings agency set a potential path for a future upgrade, contingent on a sustained adjusted debt to EBITDA below 4x, a consistent record of operating at lower leverage, continued positive comparable-sales trends and a financial policy aligned with preserving investment-grade ratings. For now, S&P characterizes the company’s longer-term leverage objective as low-to-mid-3x by 2028, which it regards as consistent with an adjusted debt to EBITDA in the mid-to-high-3x area under its adjustments.
Overall, the upgrade from S&P reflects a combination of reduced leverage, ongoing comparable-sales momentum and an international expansion program that should support further margin improvement and cash-flow stability, even as the company executes refranchising that reduces revenue but enhances profitability metrics.
Key metrics cited by S&P include adjusted debt to EBITDA of:
- Pro forma 2024: 4.8x
- 2025: 4.5x
- 2026 (expected): about 4.4x
- 2027 (expected): about 4.1x
- Stated target by 2028: low-to-mid-3x