Restaurant Brands International on Thursday reported mixed quarterly results, as same-store sales declines for Popeyes were offset by strong demand internationally and at Tim Hortons.
Shares of the company fell more than 4% in morning trading.
Here’s what the company reported for the period ended June 30 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 94 cents adjusted vs. 97 cents expected
- Revenue: $2.41 billion vs. $2.32 billion expected
Restaurant Brands reported second-quarter net income attributable to shareholders of $189 million, or 57 cents per share, down from $280 million, or 88 cents per share, a year earlier.
Excluding transaction costs from its acquisition of Burger King China and other one-time costs, the company earned 94 cents per share.
Net sales climbed 16% to $2.41 billion.
The company’s same-store sales, which only tracks the metric at restaurants open at least a year, rose 2.4% during the quarter.
CEO Josh Kobza told CNBC that Restaurant Brands has seen a “modest improvement” in the consumer environment compared with the first quarter, when the company’s three largest brands saw same-store sales decline.
This quarter, Restaurant Brands’ international restaurants reported same-store sales growth of 4.2%.
Tim Hortons, which accounts for more than 40% of Restaurant Brands’ total revenue, reported same-store sales growth of 3.4%. In April, the Canadian coffee chain launched the Scrambled Eggs Loaded Breakfast Box, and the following month it brought actor Ryan Reynolds on to promote it, which executives called a “big success.”
Burger King reported same-store sales growth of 1.3%. Its U.S. division, which has been in turnaround mode for nearly three years, saw same-store sales increase by 1.5%. Burger King’s domestic marketing has focused on the Whopper and targeting families with offerings like its “How to Train Your Dragon” movie tie-in meal. More than half of its U.S. restaurants have been renovated since the turnaround began; the burger chain aims to have 85% of its U.S. footprint upgraded by 2028.
“We saw the turning point at Tims in Canada a few years ago, and we’re working towards that same kind of turning point at Burger King U.S.,” Restaurant Brands Chair Patrick Doyle said on the company’s conference call.
Popeyes was the laggard of the portfolio for the most recent quarter, reporting same-store sales declines of 1.4%. But the fried chicken chain’s results have improved compared with the first three months of the year, when its same-store sales slid 4%. To lift sales in the second half of the year, Popeyes has a “bunch of innovation” on its schedule, Kobza said. The chain has also been trying to improve its store operations.
As beef prices rise and consumer preferences shift away from red meat, more fast-food chains have been leaning into chicken. McDonald’s released its McCrispy Strips and brought back its Snack Wraps, while Yum Brands’ Taco Bell launched Crispy Chicken Nuggets.
The increased competition has put pressure on Popeyes — and likely some of its biggest rivals, like Chick-fil-A, which doesn’t disclose its quarterly results because it is privately held.
For the full year, Restaurant Brands reiterated its forecast, anticipating that it will spend between $400 million and $450 million on consolidated capital expenditures, tenant inducements and other incentives. The company also said that it still expects to reach its long-term algorithm, which projects 3% same-store sales growth and 8% organic adjusted operating income growth on average between 2024 and 2028.
