Burger King Fends Off Resurgent McDonald’s, Buoying Parent
(Bloomberg) -- Burger King propped up parent Restaurant Brands International Inc. last quarter as the battle for customers escalated across the fast-food industry.
Comparable sales at the burger chain, a key metric, rose 4.6 percent in the fourth quarter, Restaurant Brands said Monday. The results far surpassed analysts’ estimates, and drove the stock up the most in two years on Monday.
Burger King is having success fending off larger rival McDonald’s Corp., which recently introduced a revamped Dollar Menu. Other chains, including KFC, haven’t performed as well -- the fried-chicken chain on Thursday said its U.S. same-store sales fell last quarter. The restaurants are fighting fiercely to attract diners with cheaper deals, new foods and delivery service.
“We had good sales growth, driven primarily by Burger King,” Chief Executive Officer Daniel Schwartz said in an interview. Remodeled stores, improved marketing and new foods helped fuel fourth-quarter results at the burger chain, he said.
Shares of Restaurant Brands jumped as much as 8.3 percent to $61.17 in New York, marking the biggest intraday advance since February 2016. They had risen 11 percent in the past year through Friday.
Analysts had predicted a 2.5 percent gain in same-store sales at Burger King, according to Consensus Metrix.
Excluding some items, profit amounted to 66 cents a share in the quarter, topping the average projection of 57 cents. Revenue of $1.23 billion in the quarter fell short of projections for $1.25 billion.
Tim Hortons, Popeyes
Restaurant Brands’ other segments continued to struggle. Tim Hortons, the coffee and doughnut chain, saw comparable sales growth of just 0.1 percent in the final three months of last year, while analysts had predicted an increase of 1.2 percent. Results in the quarter were hurt by weak lunch sales in the chain’s home market of Canada, executives said on a conference call.
Popeyes Louisiana Kitchen’s same-store sales fell 1.3 percent, though the drop wasn’t as deep as the estimated 1.5 percent decline.
Restaurant Brands bought Popeyes last year for about $1.8 billion. It was the first major deal for the company that was formed with the 2014 merger of Burger King and Tim Hortons.
Internationally, the company is pushing development in China, where it said Burger King had strong fourth-quarter results. The burger chain sells chicken wings, chocolate lava cake and offers delivery in the world’s most populous country.
Fast-food chains are increasingly using digital ordering, new mobile apps and delivery to entice Americans, too. Last week, Yum! Brands Inc., the owner of KFC, Taco Bell and Pizza Hut, said it was partnering with GrubHub Inc. to offer delivery. In January, Restaurant Brands said Josh Kobza will become its chief technology and development officer, overseeing digital for all three of the company’s brands.
Delivery is an area of potential growth, as well as another battleground among fast-food chains. Restaurant Brands is testing the concept in the U.S., CEO Schwartz said.
“We’re always looking at different ways of delivering our food,” he said. “It already is significant in some international markets.”
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