Burger King-parent Restaurant Brands beats quarterly estimates on value meals demand
By Juveria Tabassum
Restaurant Brands International Reports Strong Quarterly Performance
May 6 (Reuters) - Restaurant Brands International on Wednesday edged past expectations for quarterly overall same-store sales growth and adjusted profit, helped by resilient demand at its Burger King chain.
Fast-food companies in the U.S. have increased value offerings as they try to woo budget-conscious consumers facing higher costs of living.
Burger King Drives Growth with Value Meals
In January, Restaurant Brands launched a limited-time $4.99 double cheeseburger meal, and has ongoing offers such as $5 and $7 deals since 2024.
U.S. Segment Performance
Comparable sales at its Burger King U.S. segment grew 5.8%, compared with a 1.1% fall reported in the same three-month period last year. Analysts on average had expected the segment to report comparable sales growth of about 3%.
Analyst Commentary
"Burger King has been the primary focus for U.S. investors and the brand was the bright spot on the quarter," said RBC Capital Markets analyst Logan Reich.
The company has invested over the last few years in remodeling and modernizing its Burger King restaurants.
Industry Context and Competitors
Taco Bell-parent Yum Brands also beat quarterly estimates last week, helped by its value offerings. Industry leader McDonald's reports results on Thursday.
Restaurant Brands reported an overall same-store sales rise of 3.2% for the first quarter, compared with estimates of about 3% growth, according to data compiled by LSEG.
Tim Hortons and Commodity Costs Impact
Tim Hortons Performance
TIM HORTONS, BEEF COSTS DRAG SHARES
However, Restaurant Brands' shares were down 4% in early trading as the company reported muted growth at coffee chain Tim Hortons, which makes up about 41% of its operating profit.
Executives on a post-earnings call said weak consumer spending was impacting the industry in Canada.
Revenue and Commodity Costs
Overall revenue of $2.26 billion beat estimates.
Higher commodity costs such as that of beef increased the company's supply chain sales to its franchises. Beef was 25% of Restaurant Brands' food basket, and the company expects a mid-single-digit commodities inflation for the year, the executives added.
Financial Results
Restaurant Brands' adjusted earnings per share for the three months ended March 31 were 86 cents, topping estimates of 82 cents.
(Reporting by Juveria Tabassum in Bengaluru; Editing by Maju Samuel)