It is the era of the fast food restaurant makeover. It began several years ago when Burger King was taken over by private equity, and its restaurants re-imagined to great success. The private equity firm then purchased Popeye’s Louisiana Kitchen, and Canada’s famous Tim Horton’s chain. McDonald’s Corporation (NYSE: MCD) went through a massive re-imagination and successful turnaround. And now Restaurant Brands International Inc (NYSE: QSR) has decided it’s time to do a full makeover of the Tim Horton’s franchise.

It’s probably a good idea, and not entirely unexpected. Business has been fine, if not spectacular, at the combined entity. Let’s take a look at the numbers and see what we think of QSR stock at this juncture.

We always look at comparable store sales first, because they represent the current health of the operation. Negative comps are a terrible thing, because it usually means less foot traffic. For a mature restaurant chain, we would expect comps of between 1% and 3%. Anything between 3% and 5% is strong, and anything over 5% is downright spectacular.

The Burger King chain saw a 3.8% increase in comparable sales, which was a vast improvement over the 0.1% decline in the same quarter last year. Popeye’s saw a 3.2% comp increase, also much better than last year’s 0.2% decline. Meanwhile, Tim Horton’s comps declined 0.3% on top of last year’s 0.1% decline.

On a systemwide basis, looking purely at sales growth, things are looking very strong at Burger King and Popeye’s, with growth of 11.3% and 10.9%, respectively. Tim Horton’s did see a 2.1% increase. Still, however, net restaurant growth at that chain was 2.8%. So, obviously, Tim Horton’s is lagging. Management has clearly seen enough in recent quarters to decide to engage in a makeover for Tim Horton’s.

Considering how successful the makeover and Burger King was, one would expect that Tim Horton’s will see some terrific results. However, there is a different challenge for Tim Horton’s. Burger King has half the locations that McDonald’s does, and arguably has more room to run. I am not a fan of Popeye’s, and it has less than 3,000 locations. It also faces competition from KFC, which is part of Yum! Brands, Inc. (NYSE: YUM).

Tim Horton’s, however, it is not a burger franchise. It’s primarily a coffee and baked goods franchise. It has a tremendous cult following but it also obviously faces increasing and very stiff competition from multiple competitors. QSR stock management is going to have to come up with some really great ideas on how to reposition the brand.

Meanwhile, hedge fund manager Jim Chanos is short QSR stock and has been for about a year. His theory is that the asset-light model for restaurants is going to bite the company in the back. Rather than own and operate its own stores, the parents of many restaurant chains are back to pushing the franchise model. The idea is that the parent reduces expenses by not owning the stores, sits back and collects the fat royalty checks.

Bottom Line on QSR Stock

That can be a very successful model. However, if business is flagging at the local franchise level, those royalty checks start to get smaller. And, the quality of franchise operation is all across the board.

I have cousins in the McDonald’s business, and they’ve given me untold examples of franchise operations that have been phenomenally successful and those that have not. So much depends on pride of ownership, and in the amount of time and effort the operator puts into the business.

Regardless, I do see that the good times at QSR have petered out, and I am bearish on Restaurant Brands International stock.

Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.