Proxy Alert: Shareholder Proposal on Workforce Practices at Restaurant Brands International Inc.

Restaurant Brands International Inc.
Symbol: QSR (TSX/NYSE)
Annual Meeting Date: June 11, 2019
Filer: The Atkinson Charitable Foundation, supported by SHARE

Recommendation:
Vote FOR shareholder proposal on Workforce Practices at Restaurant Brands International

Shareholder proposal on Human Rights Due Diligence at Restaurant Brands International Inc.

Effective workforce management is critical to a company’s bottom line. Skillful management of human capital is associated with better corporate performance including lower employee turnover, higher productivity and innovation, and mitigation of risk. For instance, a review of 92 studies on human capital management found that there is sufficient evidence of materiality to warrant inclusion of human capital management in standard investment analysis.[1]

The importance of workforce management to company success is especially significant in customer-facing service industries where employees are critical to the customer experience.

Over the past few years’ media reports of a number of incidents at Restaurant Brands International (RBI) franchises have raised concern about the quality of workforce management in both its direct and franchise operations. These include the claw-back of employee benefits required by employment law or contract by some Tim Horton’s franchisees in response to Ontario’s minimum wage increase in 2018 and reports from Burger King and Tim Horton’s employees in Canada and the US of on-call shift scheduling and unpaid overtime.[2] In 2018, Burger King employees went on strike in New Zealand over low wages and employment conditions arguing that they  are paid less than industry competitors, including McDonald’s and Wendy’s.[3]

The Atkinson Charitable Foundation filed this shareholder proposal at RBI in order seek additional information about its efforts to uphold decent work in its operations. The shareholder proposal reads:

RESOLVED That the board of directors report to shareholders, at reasonable cost and omitting proprietary information, on actions the company is taking to ensure decent work practices are upheld in the company’s franchisee operations, including:

  1. RBI’s minimum requirements and standards related to workforce practices (including wages and benefits, working hours and breaks, health and safety, shift scheduling and training) for corporate offices, branded operations and franchises;
  2. RBI’s programs, activities and financial or operational arrangements to support franchisees in adopting best practices for workforce management; and
  3. Systems and key performance indicators used by RBI to evaluate whether its minimum requirements and standards are being upheld in its own and franchisee operations.

Vote Recommendation and Rationale

This proposal follows extensive dialogue efforts by SHARE, on behalf of the Atkinson Charitable Foundation and other RBI shareholders, on the issues raised in the proposal.

In its response, RBI management argues that it is not responsible for employment as “our franchisees, who are independent business owners, are responsible for handling all employment matters, including all policies for benefits and wages, for their restaurants”.

Although RBI franchisees hold the direct employer relationships, with all but a handful of RBI’s 25,000 restaurant locations run by franchisees, the success of RBI’s brands depend on these franchisees and their hundreds of thousands of employees. As the franchisor, RBI can provide standards and guidance on workforce practices for franchisees to ensure consistent good human capital management across branded locations. It is unclear from RBI’s current disclosure whether and to what extent it does so.

Management also states that it is “committed to protecting and promoting a fair and rewarding work experience at our branded restaurants”. Although the sentiment is well taken, the company does not provide any information in its circular, annual information form or elsewhere that would allow shareholders to evaluate how RBI protects or promotes a fair and rewarding work experience across branded locations. The proposal aims to address this information gap.

RBI says that it does “not adhere to a one-size-fits-all policy that ignores local market dynamics and applicable laws and regulations”. It goes without saying that local operations should abide by applicable laws and regulations. However, businesses regularly establish minimum standards that supplement local law to advance worker well-being and brand success. RBI sets minimum standards for other aspects of its franchisees operations. It also sets minimum human capital standards for suppliers across international jurisdictions with different local market dynamics and laws, through the Business Partner Supplier Code of Conduct. This proposal seeks information on minimum workplace standards for the people who interact with customers at its branded restaurants every day.

Finally, RBI management does not address the proposal’s request for information about systems and performance indicators used by RBI to evaluate employment practices. RBI collects data from franchisees on other aspects of their business to inform both core business planning, and its approach to franchisee training and development. Clear performance indicators and systems to collect relevant data are a means to identify and address workforce-related risks and opportunities.

Given the importance of RBI’s franchisees and their employees to the success of RBI and its brands, and the absence of reporting from the company on this workforce, SHARE recommends a vote in favour of this proposal.

SHARE’s Recommendation:

Vote FOR proposal at Restaurant Brands International on workforce practices

Link to full proposal: https://share.ca/share-proposals/ensuring-decent-work-practices-are-upheld-in-restaurant-brands-internationals-franchisee-operations/

Contact:

Delaney Greig
Manager, Engagement and Policy
Shareholder Association for Research & Education
[email protected]   
(416)-306-6463

[1] Bernstein, Aaron and Larry Beeferman, “The Materiality of Human Capital to Corporate Financial Performance,” Pensions and Capital Stewardship Project, Labor and Worklife Program, Harvard Law School, April 2015.

[2] Global News. Tim Hortons’ reputation plummets in new survey — why Canadians may be fed up. April 5, 2018. https://globalnews.ca/news/4124961/tim-hortons-brand-reputation-survey/

[3] New Zealand Herald. Burger King workers strike for better rights, fast food chain ‘disappointed’ by action, June 15, 2018. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12071420