Restaurant Brands slips amid fierce competition
Restaurant Brands International Inc’s quarterly revenue missed analysts’ expectations on Monday as its biggest chain, Tim Hortons, was hit by fierce competition from high-end coffee houses and breakfast chains.
The weakness at Tim Hortons also overshadowed strong results at Popeyes, whose widely popular chicken sandwiches helped the chain record its best comparable sales growth since its acquisition by Restaurant Brands in 2017.
Chief executive Jose Cil said Tim Hortons faced a challenging quarter.
Our results at Tim Hortons were not where we want them to be.
“Our results at Tim Hortons were not where we want them to be,” Cil said on a post-earnings call.
The company has been sprucing up its Tim Hortons’ outlets and adding new coffee and lunch offerings, while rolling out breakfast sandwiches with Beyond Meat’s plant-based sausages in select Canadian cities, but those efforts are yet to bear fruit. Comparable sales fell 1.4 per cent at the breakfast chain. Analysts were expecting growth of 0.93 per cent, according to IBES data from Refinitiv.
“Tim Hortons will need more time to develop its coffee platforms to accommodate global tastes and preferences,” said Pacific Management Consulting Group’s John Gordon.
The company’s Toronto-listed shares fell 3.7 per cent to close at $86.03. They have gained over 26 per cent so far this year.
Sales at restaurants open for at least 13 months rose 4.8 per cent at Burger King and 9.7 per cent at Popeyes in the third quarter ended Sept. 30, beating analysts’ estimates of 3.98 per cent and 4.72 per cent growth, respectively.
Popeyes’ fried chicken sandwich, launched in August, became an instant hit with consumers, forcing operators of Mcdonald’s Corp to demand for a new menu addition.
Overall, revenue rose six per cent to US$1.46 billion, but fell short of the average analyst estimate of US$1.47 billion.
Excluding items, the company earned US72 cents, beating estimates by US1 cent.