Restaurant Brands International beat Wall Street estimates for quarterly results on Tuesday, lifted by signs of a turnaround at its Burger King business and robust demand at coffee chain Tim Hortons.
U.S.-listed shares of the company, however, fell 6% in early trading as the international business took a hit from the Israel-Hamas war, as well as softer performance in China and some markets in Western Europe.
The impact of the conflict in the Middle East was felt in “upwards of a dozen countries,” CEO Josh Kobza said on an earnings call.
Burger King in September 2022 set the ball rolling on a revamp that included remodeling stores and tailoring marketing to draw more younger customers to boost sales amid intense rivalry with McDonald’s.
The turnaround plan has helped improve customer experience and food quality, which, coupled with strong demand for its cheaper menu items such as the Crispy Wraps, helped fuel a low
single-digit percentage growth in fourth-quarter traffic, Kobza said.
That marked Burger King’s first traffic growth since the second quarter of 2021.
Tim Hortons promising return of the Dutchie, other retro donuts in 2024
Total same-store sales at Burger King rose 6.3% in the quarter, beating estimates of a 5.87% increase, per LSEG data.
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“(Burger King showed) nice improvement across the board … Perhaps this is the beginning of an era where Burger King can step it up and narrow the gap (with McDonald’s),” said Stephens analyst Joshua Long.
Meanwhile, steady demand for cold drinks, donuts and breakfast bundles at Tim Hortons drove a same-store sales growth of 8.4% in the three months ended Dec. 31 at the coffee chain, against expectations of 4.36%.
Comparable sales growth in Restaurant Brands’ international segment slowed to 4.6% from 10.5% a year earlier.
Total revenue at the company, which also owns the Popeyes fried chicken chain, rose 7.8% to $1.82 billion in the fourth quarter, edging past analysts’ estimate of $1.81 billion.
Adjusted per-share profit of 75 cents exceeded estimates of 73 cents.
(Reporting by Deborah Sophia in Bengaluru; Editing by Sriraj)