Reuters — Restaurant Brands International, owner of Burger King and Tim Hortons, reported a second straight quarter of decline in comparable sales at Burger King in the U.S. and Canada.
The company’s U.S.-listed shares, which had risen about 26 per cent this year up to Friday’s close, fell as much as three per cent despite a better-than-expected third-quarter profit.
Total comparable sales at Burger King rose 1.7 per cent in the quarter ended Sept. 30, far less than the 6.2 per cent rise a year earlier. Comparable sales in the U.S. and Canada fell 0.5 per cent.
McDonald’s Corp. raised expectations across the fast-food industry last week after posting a better-than-expected 1.3 per cent rise in U.S. restaurants.
“In light of McDonald’s more robust numbers, it is disappointing that Burger King did not push into positive territory,” Neil Saunders, CEO of retail research firm Conlumino, wrote in a note.
U.S. burger chains, including McDonald’s, Burger King and Wendy’s, are battling intense competition from upstart chains and meal-kit sellers.
The sector is also under pressure from a drop in grocery prices, a trend that is encouraging more people to eat at home.
Burger King introduced new menu items such as Whopperrito, a burger-burrito mash-up, and Cheetos Chicken Fries, but the launches failed to attract more customers.
“Burger King has more work to do to increase its appeal – including focusing on core lines and the overall restaurant experience,” Saunders wrote.
Total comparable sales at Tim Hortons, which operates mainly in Canada, rose two per cent in the third quarter, compared with a growth of 5.3 per cent last year, when new lunchtime offers boosted growth.
Restaurant Brands’ net profit attributable to shareholders rose to $86.3 million, or 36 cents per share, from $49.6 million, or 24 cents per share, a year earlier (all figures US$).
Total costs and expenses fell three per cent to $655.2 million.
Excluding items, the company earned 43 cents per share, beating the analysts’ average estimate of 40 cents, according to Thomson Reuters I/B/E/S.
Stephens analyst Will Slabaugh said the quarter’s performance was “sufficient.”
“QSR remains one of the few restaurants where investors can easily draw a multi-year path to margin improvement and earnings upside.”
Oakville, Ont.-based Restaurant Brands’ revenue rose 5.5 per cent to $1.08 billion, beating analysts’ estimate of $1.06 billion.
The company raised its quarterly dividend to 17 cents per share from 16 cents.
U.S.-listed shares of Restaurant Brands were down 2.1 per cent at $46.01 in early trading. The stock was down 1.96 per cent at C$61.38 in Toronto.
— Reporting for Reuters by Anet Josline Pinto in Bangalore.