Restaurant Brands tops estimates; overhaul pays off

Restaurant Brands International beat Wall Street expectations for quarterly results on Tuesday, driven by a revival in demand at its Burger King outlets as well as continued strength at the Tim Hortons chain.

Quick service restaurants have turned focus towards offering better promotions and deals on their menu items as consumers increasingly opt for value-oriented meals in the face of sticky inflation.

Restaurant Brands’ U.S. and Toronto-listed shares rose about 1 per cent in early trade.

Separately, the company said it would invest an additional US$300 million toward modernizing Burger King outlets in the U.S., and provide cash incentives to top performing restaurant operators to support outlet remodels.

In January, the company said it would take full control of Burger King’s largest U.S. franchisee Carrols Restaurant Group.

“I don’t want to be limiting Burger King’s performance just to promotions. It’s an accelerating story in a decelerating environment,” said Danilo Gargiulo, senior analyst at Bernstein, adding that the Carrols acquisition acted as a catalyst for plans to revamp Burger King stores in the U.S.

Quarterly comparable sales at U.S. Burger King outlets rose 3.9 per cent, edging past analysts’ estimates of a three per cent rise, as per LSEG data.

Data from Placer.ai showed that foot traffic at Burger King chains in the U.S. stayed positive in the first quarter, defying a weaker trend in January due to severe cold weather. Tim Hortons continued to benefit from robust demand for its coffee.

Restaurant Brands reported overall quarterly same-store sales growth of 4.6 per cent beating estimates of 3.78 per cent.

The results come in contrast to rival Mcdonald’s, which missed quarterly sales expectations, as price hikes dampened demand from budget-conscious consumers.

Restaurant Brands’ total revenue of $1.74 billion surpassed expectations of $1.69 billion, while profit also beat estimates.