A Burger King restaurant seen in Milton, Pennsylvania.
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Restaurant Brands International on Monday reported quarterly earnings that topped Wall Street’s expectations, but its revenue fell short as labor challenges weighed on sales.
Shares of the company fell 3% in morning trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 76 cents adjusted vs. 74 cents expected
- Revenue: $1.5 billion vs. $1.52 billion expected
The Burger King parent reported fiscal third-quarter net income attributable to common shareholders of $221 million, or 70 cents per share, up from $145 million, or 47 cents per share, a year earlier.
Excluding items, Restaurant Brands earned 76 cents per share, beating the 74 cents per share expected by analysts surveyed by Refinitiv.
Net sales rose 11.8% to $1.5 billion, falling short of expectations of $1.52 billion.
Restaurant Brands said Covid-19 contributed to labor challenges that led restaurants in some regions to shorten hours or reduce service modes. CEO Jose Cil said about 40% of Popeyes locations have closed dining rooms temporarily, shifting to just takeout and delivery, to deal with staffing issues.
Tim Hortons reported same-store sales growth of 8.9%, below StreetAccount estimates of 10.3%. Even before the pandemic, the chain was struggling to attract customers, pushing the company to invest more in its coffee and restaurant equipment. Canada’s slower recovery from Covid-19 has weighed on Tims’ same-store sales growth this year.
However, Tims is showing signs of improvement. Executives said all of its product categories, excluding hot coffee, are back to pre-pandemic levels or higher. The chain’s loyalty program also presents an opportunity, with more than 10% of Canadians as active users.
Burger King’s same-store sales climbed 7.9% after dropping 7% a year ago. The burger chain missed StreetAccount’s estimates of 8.6%. U.S. same-store sales shrank by 1.6%. Sales in the company’s home market have been trailing those of other burger chains, including rival McDonald’s, which is expected to report its results later this week. Burger King is trying to transition away from paper coupons and value meals to target high-margin customers.
Popeyes Louisiana Kitchen saw its same-store sales fall by 2.4% in the quarter. StreetAccount’s estimates predicted the metric would rise by that amount. The fried chicken chain was facing tough comparisons with its performance a year ago, when same-store sales climbed 17.4%. Other fast-food chains have rolled out their own versions of Popeyes’ famous chicken sandwich, putting pressure on demand.
Read the full earnings release here.