Restaurant Brands' sales exceeded expectations as Burger King promotions attracted diners

Reuters, October 29 - On Thursday, Restaurant Brands International (QSR.N, QSR.TO) reported third-quarter same-store sales that exceeded Wall Street expectations, thanks to the launch of value meals and new menu items that attracted more diners to its Burger King outlets in the US.

Value offers such as “Big Mac Wednesdays,” “2 for $5,” and “3 for $7,” along with marketing campaigns and the introduction of new drinks like matcha, attracted customers who might otherwise have chosen to eat at home and helped the company defy an industry-wide growth slowdown—a trend that had caused rivals such as McDonald's (link) MCD.N and Wendy's (link) WEN.O to see sales declines.

In the quarter ended September 30, comparable sales at Burger King’s US outlets rose 8.4% year-on-year, compared with a 3.2% increase a year earlier. According to data compiled by LSEG, overall comparable sales rose 3.8%, beating analysts’ expectations of 3.25%.

Burrito chain Chipotle Mexican Grill (CMG.N) also beat third-quarter same-store sales (link) expectations, benefiting from its marketing efforts and limited-time menu items.

Burger King is currently implementing its multi-year “Reclaim the Flame” plan, which aims to invest up to $700 million by 2028 to boost sales and franchisee profitability. Up to $550 million of this will go toward the “Royal Reset” program, covering store renovations, upgrades to restaurant technology, and kitchen equipment updates.

As of September 30, the company had invested $198 million in the program.

Meanwhile, its Tim Hortons chain saw quarterly same-store sales in Canada grow by 1.8%, higher than the 0.1% recorded in the second quarter. By contrast, sales at Popeyes Louisiana Kitchen fell by 2.2%, following a 5.2% decline in the previous quarter.

The company said during its second-quarter earnings call that to offset rising costs of commodities such as beef, it had increased menu prices by a low single-digit percentage.

Adjusted earnings per share for the third quarter were $1.10, up from $1.03 a year earlier. Analysts had expected earnings of $1.09 per share.

Third-quarter revenue was $2.53 billion, slightly below analysts’ expectations of $2.54 billion.

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