Jose Cil, CEO of Restaurant Brands International, speaks during an interview with CNBC on the floor at the New York Stock Exchange in New York, U.S., November 6, 2019.
Brendan McDermid I Reuters
Restaurant Brands International on Friday reported quarterly earnings and revenue that topped Wall Street’s expectations, fueled in part by strong growth of digital sales in its brands’ home markets.
Shares of the company rose 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: 77 cents adjusted vs. 61 cents expected
- Revenue: $1.44 billion vs. $1.36 billion expected
The company reported fiscal second-quarter net income of $391 million, or 84 cents per share, up from $164 million, or 35 cents per share, a year earlier.
Excluding items, Restaurant Brands earned 77 cents per share, topping the 61 cents per share expected by analysts surveyed by Refinitiv.
Net sales rose 37% to $1.44 billion, beating expectations of $1.36 billion. The same time last year, the company’s revenue fell 25%, hurt by lockdowns and stay-at-home orders.
This quarter, digital sales jumped almost 60% year-over-year and 15% compared with last quarter across its three brands’ domestic markets.
Tim Hortons reported same-store sales growth of 27.6%. A year ago, the Canadian coffee chain saw sales crater 29.3% as consumers stayed home and brewed their own coffee.
Out of its parent company’s portfolio, Tims has taken the longest to bounce back from the pandemic, hurt by the resurgence of Covid-19 in its home market and a slower pace of vaccinations there. Executives said that they were encouraged by the results this quarter. The chain typically accounts for roughly 60% of Restaurant Brands’ overall revenue.
“It’s important to remember that Canada, especially Ontario, remained under strict lockdowns throughout the second quarter, even as vaccination rates improve,” Restaurant Brands CEO Jose Cil told analysts.
Tims has been adding more cold drinks to its menu, a strategy that has worked well for rival Starbucks. It launched cold brew coffee and Real Fruit Quenchers during the quarter.
As growth in its home market has slowed, Tims has turned to China for new customers. The chain plans to double its footprint there to 400 locations by the end of 2021.
Burger King’s same-store sales rose 18.2% in the quarter. A year ago, it saw the metric fall 13.4%. Despite the burger chain’s recovery, Cil expressed disappointment with its overall performance in the United States.
“Our underlying issue has really been focus and pace. We haven’t put enough focus in the few priorities that will have the biggest impact,” Cil said. “We haven’t moved fast enough on these priorities to accelerate the business performance to the level we know we are capable of.”
For example, Burger King launched its take on the chicken sandwich in June, nearly two years after sister chain Popeyes upended the fast-food sector with its version. Cil said that the company plans on working on its breakfast menu as part of a broader plan to improve its offerings.
Popeyes was the only brand to report same-store sales declines, although the metric fell by less than 1%. It faced tough comparisons with a year ago, when same-store sales soared 24.8% despite lockdowns. In the United States, its same-store sales fell 2.5%. Cil said that new chicken sandwiches from competitors like McDonald’s, as well as labor challenges, put pressure on Popeyes’ sales this quarter.
The company also announced an increase of its share repurchase authorization to $1 billion over the next two years.