Restaurant Brands International Misses Revenue Expectations as Burger King Sales Fall Short

         

Summary: Restaurant Brands International reported weaker-than-expected quarterly revenue due to Burger King’s disappointing same-store sales growth. The company’s net income and revenue did not meet Wall Street expectations, with earnings per share at 90 cents (compared to the expected 86 cents) and revenue at $1.84 billion (compared to the expected $1.87 billion). Burger King’s same-store sales grew by 7.2%, below estimates, and its U.S. business reported flat traffic for the quarter. Other chains under Restaurant Brands, such as Tim Hortons and Popeyes, performed better in terms of same-store sales growth.

Revenue misses expectations due to Burger King’s performance

Restaurant Brands International reported weaker-than-expected quarterly revenue, primarily due to Burger King’s disappointing same-store sales growth. The company’s net income attributable to shareholders was $252 million, or 79 cents per share, down from $360 million, or $1.17 per share, compared to the same quarter last year.

Earnings per share and revenue fall short of Wall Street estimates

Restaurant Brands International’s earnings per share for the third quarter were adjusted to 90 cents, surpassing the expected 86 cents. However, the company’s revenue stood at $1.84 billion, falling short of the expected $1.87 billion. The company highlighted that unfavorable currency exchange rates negatively impacted the performance of Tim Hortons, which accounts for about 60% of its revenue.

Burger King’s same-store sales growth misses estimates

Burger King, a subsidiary of Restaurant Brands International, reported same-store sales growth of 7.2% for the quarter, falling short of StreetAccount estimates of 8.6%. The company’s CEO, Josh Kobza, mentioned that in recent quarters, Burger King has been behind the industry in terms of its same-store traffic. However, the company has shown progress in this area and achieved flat traffic for this quarter, a significant milestone.

Efforts to rejuvenate Burger King’s U.S. business

To revive its U.S. business, Burger King has implemented a $400 million plan called ‘Reclaim the Flame,’ which focuses on initiatives such as promoting the Whopper, renovating restaurants, and contributing its own funds to the advertising fund. The strategy aims to help the chain catch up to its rivals in the domestic market. While the U.S. same-store sales growth was flat this quarter, Burger King’s international same-store sales increased by 7.6%.

Performance of other chains under Restaurant Brands

Tim Hortons, another chain owned by Restaurant Brands International, reported same-store sales growth of 6.8%, meeting Wall Street’s expectations. The Canadian market performed particularly well, with Tim Hortons’ same-store sales climbing 8.1%. However, in China, the growth rate slightly decelerated compared to the previous quarter. On the other hand, Popeyes, the fried chicken chain, surpassed expectations with a same-store sales growth rate of 7%, becoming the second-largest chicken chain in the U.S., overtaking KFC.

Tags: Restaurant Brands International, Burger King, earnings, revenue, same-store sales, Tim Hortons, Popeyes, QSR

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