Tim Hortons, Burger King owner’s shares tumble after sales fall in top brands

HOLLIE SHAW

TORONTO — The owner of Tim Hortons and Burger King saw its shares drop as much as six per cent in early trading Wednesday after the restaurant company reported first quarter same-store sales slipped at each of its key brands.

Sales at restaurants open for more than a year at Restaurant Brands International Inc. sank 0.1 per cent in constant currency at Tim Hortons and Burger King, respectively, and fell by 0.2 per cent at the recently acquired Popeye’s Louisiana Chicken chain.

More critically, sales also fell in the brand’s largest home markets.

Same-storevolumeatTimHortons in Canada slid 0.2 per cent, prompting analyst concerns that the brand might be getting oversaturated on its hometurfaftertwoconsecutivequarters of declining same-store sales.

“We try to not get too caught up in the quarter to quarter results,” chief executive Daniel Schwartz told a morning conference call with analysts, adding the company and its franchise owners look at investing in the restaurants over a long-term period of many years.

“In each year since we acquired Tim Hortons and created Restaurant Brands International, we have grown the profits for our franchise owners to record levels in 2016 and look forward to working collaboratively with them for many years to come to grow the brand,” Schwartz added.

At Burger King, same-store sales dropped 2.2 per cent in the U.S. and Popeye’s same-store sales fell 0.4 per cent in the U.S.

The results come after a period of sluggish performance in the fast-food industry and steep competition.

On Tuesday, McDonald’s Corp. reported stronger than expected sales results, with U.S. same-store sales rising 1.7 per cent; by the same measure, sales were up four per cent globally.

Net income at Restaurant Brands International was $50.2 million, or 21 cents per share, compared with earnings of $50 million (21 cents) a year ago.

Adjusted earnings were 36 cents, beating analyst estimates by a penny, according to Thomson Reuters, compared with 30 cents per share in the same period of last year. The company reported revenues of $1 billion, compared with $918.5 million a year ago. System-wide sales grew in constant currency by 3.3 per cent at Tim Hortons and 6.2 per cent at Burger King in the period. The company grew Tims’s restaurant count by 4.6 per cent to 4,644 units and Burger King ’s by 5.1 per cent to 15,768 locations.