Restaurant Brands International (RBI) has reported weaker-than-expected quarterly revenue, largely due to disappointing same-store sales growth at Burger King. As a result, RBI’s shares were down 2% in morning trading.
In terms of earnings per share, RBI performed better than expected, with 90 cents per share adjusted, compared to the anticipated 86 cents per share. However, the company’s overall revenue fell slightly short, coming in at $1.84 billion instead of the expected $1.87 billion.
RBI’s net income attributable to shareholders also experienced a decline. It was $252 million, or 79 cents per share, down from $360 million, or $1.17 per share, in the previous year.
Despite these disappointing results, RBI did report a 6.4% increase in net sales, reaching $1.84 billion. However, Tim Hortons, which accounts for 60% of RBI’s revenue, was negatively impacted by unfavorable currency exchange rates.
Burger King, specifically, was a major contributor to the underwhelming performance. Its same-store sales growth of 7.2% fell short of estimates. While international same-store sales increased by 7.6%, U.S. sales only rose by 6.6%. Additionally, Burger King’s U.S. business reported flat traffic for the quarter.
In response, Burger King has been implementing its $400 million “Reclaim the Flame” plan to revitalize its U.S. business. This strategy includes focusing on menu items, such as the Whopper, renovating restaurants, and increasing advertising spending. As part of this plan, Burger King closed underperforming locations, resulting in a 2.8% decrease in the total U.S. restaurant footprint.
On the other hand, Tim Hortons managed to meet expectations with a same-store sales growth of 6.8%. Strong sales in Canada offset a slight deceleration in China.
The only chain within RBI that exceeded expectations was Popeyes, reporting a 7% growth in same-store sales, including a 5.6% increase in the U.S. This success has propelled Popeyes to surpass KFC as the second-largest chicken chain in the U.S.
Overall, RBI’s recent financial results have raised concerns about the performance of Burger King but offered optimism for Tim Hortons and Popeyes. Investors will closely monitor the company’s strategies, particularly the “Reclaim the Flame” plan, and its impact on future revenue and growth.
“Social media scholar. Reader. Zombieaholic. Hardcore music maven. Web fanatic. Coffee practitioner. Explorer.”