Burger King fast food hamburger restaurant in Miami, Fla.
Jeff Greenberg | Universal Images Group | Getty Images
Restaurant Brands International on Wednesday reported better-than-expected earnings and revenue, fueled by another quarter of strong international growth and a successful turnaround at Burger King U.S.
But there are some potential challenges ahead for the company, like high beef costs that will likely stay that way longer than Restaurant Brands originally anticipated and weakening consumer sentiment as a result of the U.S.-Israel war with Iran.
Shares of the company fell roughly 5% in morning trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 86 cents adjusted vs. 82 cents expected
- Revenue: $2.26 billion vs. $2.24 billion expected
Restaurant Brands reported first-quarter net income attributable to common shareholders of $338 million, or 97 cents per share, up from $159 million, or 49 cents per share, a year earlier.
Excluding nonrecurring expenses and other items, the restaurant company earned 86 cents per share.
Revenue rose 7% to $2.26 billion.
Restaurant Brands’ same-store sales increased 3.2% in the quarter, driven by strong growth at Burger King’s U.S. locations and the company’s international restaurants.
Outside of the U.S. and Canada, Restaurant Brands’ international business saw same-store sales jump 5.7%, beating the estimates of 5.1% growth projected by Wall Street analysts surveyed by StreetAccount. International Burger King restaurants, which represents the bulk of the segment, saw same-store sales increase 5.4%.
Burger King reported same-store sales growth of 5.8%, topping StreetAccount estimates of a 3.5% increase. The chain’s U.S. business has been renovating its restaurants, upgrading its Whopper ingredients and offering consistent value items.
“There are notable successes in the industry right now, and that includes Burger King, and they’re putting up great numbers,” Restaurant Brands Chair Patrick Doyle said on the call. “And there are others in the industry where things are clearly getting worse and they are losing market share.”
Tim Hortons’ same-store sales ticked up 1.6%, below StreetAccount estimates of 2.5% growth. Restaurant Brands CEO Josh Kobza said snowstorms in January and consumers’ broader economic concerns weighed on sales for the Canadian coffee chain, although it still outperformed the broader coffee category in Canada.
Popeyes was the laggard of the portfolio again for the quarter. The fried chicken chain reported same-store sales declines of 6.5%, a steeper decrease than the 1.5% slide forecast by Wall Street and its biggest quarterly drop in years.
Faced with stiffer competition and more value-conscious consumers, Popeyes is trying to revive sales by focusing on its operations and core menu items. The chain’s same-store sales should start growing again by the second half of the year, Kobza told analysts on the conference call.
