Restaurant Brands’ Sales Miss on Burger King, Popeyes Slump
In This Article:
(Bloomberg) -- Restaurant Brands International Inc., the owner of Burger King and Tim Hortons, posted sales that grew slower than expected in the third quarter, highlighting many chains’ struggle to attract diners grappling with elevated costs.
Most Read from Bloomberg
-
From Housing to Immigration, Key Ballot Initiatives and Local Races to Follow
-
In Warsaw, Falling Road Deaths Signal a Traffic Safety Turnaround
The group eked out an 0.3% gain in comparable sales, according to a statement Tuesday. Still, analysts anticipated faster growth. System-wide sales of $11.4 billion were also short of the average analyst estimate.
Comparable sales declined at Burger King, Popeyes Louisiana Kitchen and Firehouse Subs, whose North America businesses are concentrated in the US. Tim Hortons, which has the bulk of its locations in Canada, was a bright spot, as was Restaurant Brands’ international business. Sales by that metric fell by 0.7% at Burger King and 4% at Popeyes, while comparable sales were up by 2.3% at Tim Hortons.
Chief Executive Officer Josh Kobza said in an interview that comparable sales have improved to positive low-single digits to start the fourth quarter, helped in part by more value offerings at Popeyes.
Yet Kobza said that discounts and meal bundles aren’t enough to woo customers. Novelty, like Burger King’s Addams Family promotion featuring a purple Whopper, is crucial, too, he said.
“If you only have value, the only thing you’re offering, you’re missing an opportunity,” he said.
Kobza said in the statement that Restaurant Brands is still on target to reach its goal of expanding adjusted operating income by at least 8% in 2024 and beyond. Tim Hortons and the international business represent 70% of the group’s profit.
Restaurant Brands has been working to renovate Burger King’s US locations while speeding up service at Popeyes and expanding Firehouse Subs’ store footprint. The chains have also been trying to attract diners with deals, including a $5 meal deal at Burger King, and twists on its classics — such as adding a lineup of “fiery” spicy offerings.
Following the sales miss, the company’s shares dropped by as much as 5% in premarket trading on Tuesday before paring the decline. The stock has declined 10% this year through Monday’s close, compared with a 20% increase in the S&P 500.
(Adds CEO comments in sixth and seventh paragraphs. Updates shares.)
Most Read from Bloomberg Businessweek
