Burger King-owner Restaurant Brands International fell after reporting first-quarter earnings that missed analysts’ estimates amid an unexpected decline in sales at its Tim Hortons chain.
Same-store sales, a key performance metric for restaurant companies, fell 0.6 per cent at Tim Hortons. Analysts had projected growth of 1.9 per cent, according to Consensus Metrix. Restaurant Brands’s earnings per share of 55 cents was 3 cents lower than the average projection.
RBI didn’t give a clear reason for the drop at Tim Hortons, and said the coffee and doughnut chain remains strong. In the US, competition is getting fierce as rivals cut prices and McDonald’s boosts advertising of egg sandwiches and McCafe drinks.
"At Burger King ... we saw strong system-wide sales growth driven by net restaurant growth, reflecting the strength of our brands and business model around the world," said Jose Cil, chief executive of Restaurant Brands International.
"Underlying fundamentals at Tim Hortons remain strong and we are excited about our first three restaurants in China. Overall, we are confident in the long-term growth prospects for each of our brands."
For the first quarter of 2019, Tim Hortons' system-wide sales growth was primarily driven by net restaurant growth of 1.9 per cent, RBI said on its website. Comparable sales were 0.6 per cent, including Canada comparable sales of 0.4 per cent.
Burger King sales grew 2.2 per cent beating estimates. For the first quarter of 2019, sales growth was driven by net restaurant growth of 5.7 per cent. The chain’s tech push is helping it capture more diners that are looking for convenience and it is adding self-order kiosks and digital menu boards, along with offering discounts and coupons for its mobile app.
Restaurant Brands is pushing big in China, where other chains are also ramping up growth. Burger King is opening more stores there, while Tim Hortons has opened three in that market, with plans for more than 1,500 in China over the next decade.
Market Reaction
The shares dropped as much as 3.7 per cent in premarket trading. The stock has climbed 27 per cent this year through Friday’s close, outperforming McDonald’s, which had gained 11 per cent.
