Want chicken fries with that?
New menu items fuel fast-food profits,
Strong sales of the creamy chocolate chill drink and chicken fries helped the parent company of Tim Hortons and Burger King post a better-than-expected second-quarter profit, said chief executive Daniel Schwartz.
Shares of Restaurant Brands International Inc., parent company of both fast-food chains, soared to a near-record high Monday after reporting a profit of $9.6 million (U.S.), or five cents per share, for the three months ended June 30. That compared with a profit of $75.1million, or 21cents per share, a year ago, before the two brands combined.
“We are pleased to report another quarter of solid results for both of our iconic brands,” said Restaurant Brands’ chief executive Daniel Schwartz, reporting the first Q2 results for the newly-merged company.
“The continued expansion of our global footprint, combined with effective marketing and successful product launches, drove system-wide sales growth,” he told analysts on a conference call.
U.S. chain Burger King announced last August it was buying Tim Hortons in a surprise blockbuster deal for $12.64 billion, creating the world’s third-largest fastfood restaurant group.
Globally, Restaurant Brands opened 52 new Tims locations in the quarter and 141 new Burger King restaurants.
Schwartz said there is “no lack of interest” from potential new franchise partners who want to open Tim Hortons locations in the U.S. and abroad.
“We are committed to the growth of the Tim Hortons brand for the long run,” Schwartz said.
Same-store sales were up 5.5 per cent at Tim Hortons locations, thanks to new products such as Nutella-filled doughnuts and an ice-cold chocolate beverage along with the continued success of its dark-roast coffee, he noted.
Burger King saw same-store sales jump 6.7 per cent, which he attributed to the revival of chicken fries and new items including extra-long pulled-pork sandwiches and mozzarella bacon cheeseburgers. Schwartz also said the burger chain is seeing success through streamlining its menu with fewer items to make the drive-thru faster.
And the revival of Burger King’s smiling mascot The King — who has popped up at numerous events including the big Mayweather-Pacquiao boxing match in Las Vegas last May — has helped expand the brand globally through social media, Schwartz said.
Restaurant Brands said revenue totalled $1.04 billion, up from $261.2 million in the second quarter of 2014 before Burger King’s official acquisition of Tim Hortons last December.
Restaurant Brands’ stock had so far soared 15 per cent on the Toronto Stock Exchange as of last Friday’s close. Its shares rose 3.85 per cent or $2.01 yesterday to close at $54.21.
Restaurant Brands also announced it will pay a quarterly dividend of 12 cents per share, up from 10 cents per share.
Meanwhile, executives at Tim Hortons are reconsidering whether it’s worth the risk of flavouring your coffee break with potential controversy.
After the restaurant chain was dragged into a clash between environmentalists and oil industry supporters last month, Schwartz said the company is reviewing its Tims TV in-store digital screens.
“We’re now taking a look at the whole Tims TV program and what makes sense for the brand,” said Schwartz in an interview with The Canadian Press.
The review comes after Tim Hortons was put in the hot seat for giving ad space to pipeline giant Enbridge on its in-store digital screens.
The commercials angered environmentalists, who launched an online petition to get them pulled from stores. But when Tim Hortons decided to yank the Enbridge ads, some oil industry supporters called it an insult to one of Canada’s biggest industries and launched their own boycott.
Tims began experimenting with Tims TV last spring before rolling out the screens at restaurants across the country. The concept was intended to pocket revenue from what’s essentially a billboard inside the restaurants.