International restaurant brand Quarterly earnings and revenue reported Tuesday missed analysts’ expectations as domestic same-store sales growth at all four of its chains fell short of Wall Street expectations.
The company’s shares fell about 2% in early trading after the report was released.
What’s this company reports Third-quarter results compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: Adjusted 93 cents, expected 95 cents
- income: $2.29 billion vs. $2.31 billion expected
The company’s global same-store sales grew just 0.3% in the quarter. Burger King, Firehouse Subs and Popeyes all reported same-store sales declines in their home markets.
But same-store sales trends have improved so far in the fourth quarter.
“Across the business, same-store sales were positive in the low single digits in October, which was better than what we saw in the (third quarter),” CEO Josh Kobza told CNBC The situation has improved.”
He attributed the improved sales to more successful marketing promotions and better consumer confidence in the United States.
“If you look at some of the things that are really working out financially for our guests, from gas prices going down, interest rates starting to come down, inflation is really starting to slow down a little bit,” Kobza said.
Burger King’s same-store sales fell 0.7% in the three months ended September 30. Analysts had expected the gauge to be flat, according to StreetAccount estimates. The chain is in the process of turning a profit in the United States, but consumers are also spending less at restaurants, reigniting a value war between Burger King and its rivals.
Like other restaurant chains, Burger King’s consumer spending weakened over the summer, Kobza said on the company’s earnings call. Additionally, the industry’s focus on value has overshadowed other marketing initiatives, such as Fiery menus. Still, Kobza said the business is much healthier now than when the company launched its turnaround plan in September 2022.
Popeyes reported a 4% same-store sales decline, well below expectations for a 0.2% rise, according to StreetAccount estimates. The chain has recently tried to bolster its value offerings, first promoting three-piece bone-in chicken for $5 and then re-introducing the Big Box deal for $6.
“We’ve seen both products drive traffic and sales growth,” Kobza said.
Same-store sales at Firehouse Subs fell 4.8% in the quarter, compared with expectations for a 0.4% decline, according to StreetAccount. As of 2021, the sandwich chain is the newest addition to the Restaurant Brands portfolio and the smallest brand by footprint, with just 1,300 stores at the end of the third quarter.
Tim Hortons performed best, with domestic same-store sales rising 2.3%. Tims has been increasing traffic and improving service speeds, Kobza said. But the Canadian coffee chain still fell short of Wall Street’s 4.1% same-store sales growth forecast.
Excluding the United States and Canada, Restaurant Brands’ international same-store sales increased 1.8% in the quarter, slightly below expectations of 2.2%.
Restaurant Brands reported third-quarter net income attributable to common shareholders of $252 million, or 79 cents per share, unchanged from the same period a year earlier.
Excluding items, the company earned 93 cents per share.
net sales It grew 24.7% to $2.29 billion, mainly due to the company’s acquisition earlier this year of its largest U.S. Burger King franchise and its Popeyes business in China.
Restaurant Brands on Tuesday lowered its full-year system-wide sales growth forecast to 5% to 5.5% from the previous forecast of 5.5% to 6%.
