BURGER BUMP
Sales are up at both Tim Hortons and Burger King following U.S. chain’s takeover,
Burger King and Tim Hortons enjoyed higher sales in their first three months as a merged company, with new items such as dark roast coffee and steak and cheese panini boosting the bottom line, said Restaurant Brands International Inc.
The Oakville-based fast-food giant reported Monday that global sales at existing restaurants rose 4.6 per cent at Burger King and 5.3 per cent at Tim Hortons during the first quarter, representing the strongest sales in several years for both brands, company executives told analysts on a conference call.
Despite cutting about 20 per cent of Tim Hortons staff after the takeover last December, Restaurant Brands remains committed to Canada and “to creating job growth across the country,” as shown by the opening of 53 new Tim Hortons stores so far this year, said chief financial officer Josh Kobza.
He said the firm is also in discussions in key U.S. markets to accelerate the pace of growth for Canada’s favourite doughnut chain south of the border.
“The real key to success for the brand is creating convenience and density in the markets” where they will operate, said Kobza, adding more details about the U.S. roll-out will emerge in the coming months.
Although Restaurant Brands International Inc. reported a loss of 4 cents per share, adjusted net income that factored in other costs (including the lower Canadian dollar) was18 cents a share, beating analysts’ expectations.
Chief executive Daniel Schwartz said Burger King used discounts, promotions and new menu items such as chicken nuggets to attract customers in the ultra-competitive industry in which McDonald’s Corp. saw a sales slump of 2.3 per cent in the same quarter.
“There’s no silver bullet. It’s a combination of running great restaurants and launching great products,” Schwartz said.
Sales at Burger King locations open at least 13 months jumped 6.9 per cent in North America in the past quarter, the most in more than nine years, Restaurant Brands said.
An $8.7-million increase in Burger King’s revenue, which rose to $249.6 million, offset the decline due to the fluctuating currency at Hortons.
“It’s a very, very tough industry right now,” said analyst Geoff Wilson of Toronto-based Strategy Inc.
“Everyone is battling for market share, and that is why we’re perpetually seeing new products and value menus,” he added.
Restaurant Brands reported $932 million of total revenue for the three months ended March 31 — littlechanged from what it would have seen last year if the two companies had been combined.
The earnings results were the first since the December close of the $11 billion merger that created the world’s third-largest fast-food chain.