Burger King fast food restaurant in Miami, Florida.
Jeff Greenberg | Universal Images Group | Getty Images
International restaurant brands reported better-than-expected earnings and revenue on Wednesday, fueled by another quarter of strong international growth and a successful turnaround at Burger King US.
But the company will face some potential challenges, such as high beef costs that will likely stay that way longer than Restaurant Brands initially anticipated and weakening consumer confidence due to the war between the United States, Israel and Iran.
The company’s shares fell about 5% in morning trading.
Here’s what the company reported compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: 86 cents adjusted versus 82 cents expected
- Income: $2.26 billion versus $2.24 billion expected
Restaurant Brands reported first-quarter net income attributable to common shareholders of $338 million, or 97 cents per share, compared with $159 million, or 49 cents per share, a year earlier.
Excluding one-time expenses and other items, the restaurant company earned 86 cents per share.
Income rose 7% to $2.26 billion.
Restaurant Brands’ same-store sales increased 3.2% in the quarter, driven by strong growth at Burger King’s U.S. locations and the company’s international restaurants.
Outside of the United States and Canada, Restaurant Brands’ international operations saw same-store sales jump 5.7%, beating estimates of 5.1% growth projected by Wall Street analysts polled by StreetAccount. Burger King international restaurants, which represent the majority of the segment, saw same-store sales increase 5.4%.
Burger King reported same-store sales growth of 5.8%, beating StreetAccount’s estimates of a 3.5% increase. The chain’s U.S. business has renovated its restaurants, upgraded its Whopper ingredients and offered consistent value items.
“There are some notable successes in the industry right now, including Burger King, and they are posting great numbers,” Patrick Doyle, president of Restaurant Brands, said on the call. “And there are others in the industry where things are clearly getting worse and they’re losing market share.”
Tim Hortons’ same-store sales rose 1.6%, below StreetAccount’s estimates of 2.5% growth. Restaurant Brands CEO Josh Kobza said January snowstorms and consumers’ broader economic concerns weighed on the Canadian coffee chain’s sales, even though it still outperformed the broader coffee category in Canada.
Popeyes was once again a portfolio laggard for the quarter. The fried chicken chain reported a 6.5% drop in same-store sales, a steeper decline than the 1.5% decline Wall Street predicted and its biggest quarterly decline in years.
Facing tougher competition and more value-conscious consumers, Popeyes is trying to revive sales by focusing on its operations and core menu items. The chain’s same-store sales should start growing again by the second half, Kobza told analysts on the conference call.