Restaurant Brands International Faces Challenges as Same-Store Sales Fall Short
Restaurant Brands International, the parent company of Burger King, Tim Hortons, Popeyes, and Firehouse Subs, reported disappointing quarterly earnings and revenue, missing analysts’ expectations. The company’s worldwide same-store sales grew a mere 0.3% in the quarter, with all four chains experiencing same-store sales declines in their home markets.
Domestic Same-Store Sales Struggle
Burger King’s same-store sales fell 0.7% during the three-month period that ended September 30, contrary to analysts’ expectations of flat growth. The chain is in the midst of a turnaround in the US, but consumers are spending less at restaurants, reigniting the value wars between Burger King and its rivals.
Popeyes reported a 4% decline in same-store sales, well below the expected 0.2% gain. The chain has attempted to boost value offerings with promotions like its $5 three-piece bone-in chicken deal and the reintroduction of its Big Box deal at $6.
Firehouse Subs, the smallest brand by footprint, saw its same-store sales shrink 4.8% in the quarter, compared to an expected decline of 0.4%. The sandwich chain is still finding its footing after being acquired by Restaurant Brands in 2021.
Tim Hortons Shines Amidst Challenges
Tim Hortons was the top performer, with domestic same-store sales growth of 2.3%. The Canadian coffee chain has been growing traffic and improving its speed of service, according to CEO Josh Kobza. However, it still fell short of Wall Street’s same-store sales growth expectations of 4.1%.
International Same-Store Sales Rise
Outside of the US and Canada, Restaurant Brands’ international same-store sales rose 1.8% in the quarter, just shy of estimates of 2.2%.
Net Income and Sales
Restaurant Brands reported third-quarter net income attributable to common shareholders of $252 million, or 79 cents per share, unchanged from a year earlier. Excluding items, the company earned 93 cents per share. Net sales climbed 24.7% to $2.29 billion, largely thanks to the company’s acquisitions of its largest US Burger King franchisee and its Popeyes business in China earlier this year.
CEO Optimistic About Future
Despite the disappointing results, CEO Josh Kobza remains optimistic about the company’s future. He credits more successful marketing promotions and better consumer sentiment in the US for the improvement in sales. “If you look at some of the things that really drive finances for our guests, everything from gas prices are down, interest rates are starting to go down, inflation has really started to moderate a fair bit,” Kobza said.
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