In recent years, workforce management practices among franchisees of Restaurant Brands International—the parent company of Burger King, Tim Hortons, and Popeyes—has drawn public criticism. We met with company leaders to discuss a shareholder proposal, received for the second year in a row, asking for a report on the workforce practices of its franchisee operations.
Restaurant Brands identifies labor practices as a material risk to its business, which is in line with the SASB reporting framework. We appreciated the company’s continued concern regarding the feasibility of producing a report that can address its multiple jurisdictions and individual franchisee agreements, and we recognized that franchisee employees do not necessarily fall under the company’s direct responsibility.
Ultimately, as a result of our analysis, the funds supported the proposal. Given that consumers don’t view restaurant chains as individual entities, the company has active reputational risks from failing to report on the management of workforce issues. From the time of our 2019 engagement, we have failed to see meaningful progress in Restaurant Brands’ disclosures or a commitment by its board to address this topic. The proposal is broad enough to allow the company flexibility to tailor a report to its jurisdiction and franchisee limitations.
The funds’ support of the proposal reinforced our belief in the importance of material disclosure, and we will continue to engage with Restaurant Brands to make positive changes in this area.