Restaurant Manufacturers Worldwide (QSR) beat Q2 ends in 2021
Jose Cil, CEO of Restaurant Brands International, speaks during an interview with CNBC on the floor of the New York Stock Exchange in New York, USA, 6 November 2019.
Brendan McDermid I Reuters
Restaurant Brands International reported quarterly earnings and earnings on Friday that exceeded Wall Street expectations, driven in part by strong growth in digital sales in their brands’ home markets.
The company’s shares rose 3% in morning trading.
Here’s what the company said, relative to Wall Street expectations, based on an analyst survey by Refinitiv:
- Earnings per share: 77 cents adjusted vs. 61 cents expected
- Revenue: $ 1.44 billion versus an expected $ 1.36 billion
The company reported net income of $ 391 million, or 84 cents per share, for the second quarter, compared to $ 164 million, or 35 cents per share, a year earlier.
Without items, Restaurant Brands earned 77 cents per share, beating the 61 cents per share expected by the analysts surveyed by Refinitiv.
Net sales rose 37% to $ 1.44 billion, beating expectations of $ 1.36 billion. At the same time last year, the company’s sales fell 25%, hurt by lockdowns and stay-at-home orders.
This quarter, digital sales in the three brands’ home markets grew nearly 60% year over year and 15% year over year.
Tim Hortons reported sales growth in the same store of 27.6%. A year ago, the Canadian coffee chain saw a 29.3% sales crater when consumers stayed at home and made their own coffee.
From his parent company’s portfolio, it has taken Tims the longest to recover from the pandemic. Executives said they were encouraged by this quarter’s results. The chain typically accounts for around 60% of Restaurant Brands’ total sales.
“It’s important to remember that Canada, Ontario in particular, continued to face severe lockdowns in the second quarter even as vaccination rates improved,” Jose Cil, CEO of Restaurant Brands, told analysts.
Tims added more cold drinks to its menu, a strategy that has worked well for rival Starbucks. Cold Brew Coffee and Real Fruit Quenchers were launched during the quarter.
As growth slowed in his home market, Tims started looking for new customers in China. The chain plans to double its presence there to 400 locations by the end of 2021.
Burger King’s sales in the same store rose 18.2% for the quarter. A year ago, the metric fell 13.4%. Despite the burger chain rebound, Cil expressed disappointment with the overall performance in the United States.
“Our underlying problem was really focus and pace. We didn’t focus enough on the few priorities that will have the greatest impact,” said Cil. “We haven’t moved fast enough on these priorities to accelerate business performance to the level we know we can.”
Burger King, for example, launched its version of the chicken sandwich in June, almost two years after sister chain Popeyes turned the fast food sector upside down with its version. Cil said the company plans to work on its breakfast menu as part of a broader plan to improve its offering.
Popeyes was the only brand to report a drop in sales in the same store, even though the metric fell less than 1%. It faced tough comparisons to last year as sales in the same store rose 24.8% despite lockdowns. In the United States, sales in the same store decreased 2.5%. Cil said new chicken sandwiches from rivals like McDonald’s, as well as work-related challenges, put pressure on Popeyes’ sales this quarter.
The company also announced that it would increase its share buyback authorization to $ 1 billion over the next two years.
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