Insight
Behring: Most 3G Value Creation Came From Growth, Not Zero-Based Budgeting
“In spite of all the publicity the zero-based budget gets, the portion of that value creation that is directly associated with the efficiencies and therefore with the zero-based budget is small. I mean, frankly, the majority of that growth came from, again, the…”
Assertion Supported
Behring: 3G Capital Generated 28x Return and 30% IRR on RBI
“We had this big returns in companies like RBI and where I think we made 28 times the original billion plus capital we put in, and we had a 30% IRR in 14 years and all, and things like that”
Disclosure
Behring: 3G Capital uses single-deal funds where partners are largest investors
“If you were to compare and contrast the approach at Three G Capital with a more traditional private equity, Approach. I think the three main points I would make is one, we are the largest investors. We, the partners and affiliated entities are the largest inve…”
Disclosure
Behring: Kraft investment broke even, validating 3G's capital preservation floor
“Then we had the Kraft investment, which was merged with the Heinz investment, but it was a totally separate vehicle. That investment, we just basically got our money back. Wasn't a successful investment, but he validated a fundamental premise of ours, which is…”
Insight
Behring: 3G's model places a partner directly as CEO of acquired companies
“To the extent that the partners were able to acquire a good business, one of the partners would take a CEO role in that business.”
Insight
Behring: Burger King's business was significantly smaller than its brand
“The business of Burger King was significantly smaller than the brand. I mean, it turned out that I wasn't alone. So the brand was a much bigger thing than the business, which is a great opportunity, meaning of course there is growth of the brand, but growing t…”
Assertion Supported
Behring: 3G returned 130% of capital on Burger King IPO while keeping 70%
“We ended up going public in 2012, year and a half into this, mid-twelve, and this was a late 2010 closing, and between the dividend that was paid and the proceeds of selling quarter of the business or whatever that was, we returned a 130% of capital, give or t…”
Assertion Partly supported
Behring: Popeyes sales tripled after seven years under RBI ownership
“Then you fast forward to today on a company three times as big in sales than what we bought. And again, a function of fast international and domestic expansion or restaurant count and basically launching A boneless product, which is a chicken sandwich.”
Disclosure
Behring: 3G Capital receives two-thirds of its RBI equity in annual dividends
“The company pays a lot of dividends today, by the way, we receive two thirds of our notional equity check a year.”
Assertion Supported
Behring: Franchised Fast Food Is Non-Cyclical and Grew EBITDA in 2008 Crisis
“Incidentally, that's one of the things that's so great about this fully franchised quick service restaurant businesses, which is they're really not cyclical at all. Meaning on downturns, people trade down, look at what happened to the EBITDA of McDonald's or B…”
Insight
Behring: Long-term investing requires great businesses, not operational turnarounds
“There is no substitute for that, particularly if you're going to hold it for a long, long multi-decade period. It needs to be a good business. I don't know that we are one of these people like a Steve Jobs or someone that's really, really smart and the genius …”
Assertion Supported
Behring: 3G founders have held AB InBev for 35 years and RBI for 14
“My co-founders have been investors of AB InBev now coming on 35 years. We investors in RBI for 14 years now and counting.”
Assertion Supported
Behring: 80% of RBI leadership was developed internally
“You can see the result of that in a company like RBI, where today, 80% of the leadership team is people that are grown into the company.”
Insight
Behring: A Franchised Brand Is Only Sustainable If Franchisees Profit
“It's a great business to have a fully franchised brand, but it needs to be very good for everyone to be sustainable, meaning your franchisees making money is left, right, and center of this business.”
Assertion Contradicted
Behring: Burger King was largest post-crisis LBO at $4B
“Convincing the sellers in that case that you would have financing, because it's hard even to conceive of that today, but a four billion dollar LBO in 2010 was by far the largest deal after the crisis.”
Assertion Partly supported
Behring: 3G reduced Burger King's leverage from ~6.5x to under 3x
“We levered, what, quasi seven times, six and a half times off the gates. And we were a few years into this process back to two and change, or three, or not even three.”
Disclosure
Behring: 3G Capital began as a family office replicating Brazilian operating model
“So Ted, we started 20 years ago originally as a family office of my co-founders, so just house capital, and what we intended to do originally was to replicate this approach of being long-term operating owners of good businesses, a model that was originally dev…”
