Burger King parent's stock falls premarket after earnings fall short of estimates

By Ciara Linnane

Restaurant Brands International Inc.'s stock (QSR) fell 2.5% early Thursday, after the operator of fast-food restaurants Burger King, Tim Hortons and Popeyes posted weaker-than-expected second-quarter revenue as consumers remain pressured.

The Toronto-based company had net income of $280 million, or 88 cents a share, for the quarter, up from $241 million, or 77 cents a share, in the year-earlier period.

Adjusted for one-time items, EPS came to 86 cents, matching the FactSet consensus.

Revenue rose to $2.080 billion from $1.775 billion a year ago, below the $2.100 billion FactSet consensus.

Consolidated same-restaurant sales rose 1.9%, while FactSet was expecting a 2.8% gain.

Chief Executive Josh Kobza acknowledged "short-term consumer pressures," in prepared remarks.

Sales at Tim Hortons rose 5.4%, after rising 12.1% in 2023. Sales at Burger King fell 0.7%, after rising 8.1% a year ago.

Popeyes sales were up 4.6%, and the international segment was up 9.2%.

The quarterly numbers included revenue, costs and income from Carrols Restaurant Group Inc., which Restaurant Brands acquired on May 16. On June 28, it also completed the acquisition of Popeyes China, which will be included in the results starting in the third quarter.

The company has a new operating and reportable segment since closing those deals, called Restaurant Holdings, or RH. That means the company now has six reportable segments consisting of Tim Hortons, Burger King, Popeyes Louisiana Kitchen, Firehouse Subs, International and RH.

"RBI plans to maintain the franchisor dynamics in its TH, INTL, BK, PLK and FHS segments ("five franchisor segments") to report results consistent with how the business will be managed long-term given RBI's plans to refranchise the vast majority of the Carrols Burger King restaurants and to find a new partner for PLK China in the future," the company said in its release.

In 2023 and the first quarter of 2024, Burger King acquired about 125 restaurants from non-Carrols franchisees, boosting the number of Burger King-owned and operated restaurants to 175 as of June 30, from 60 as of the same date in 2023.

The company backed its long-term guidance for growth of 3-plus % in same-restaurant sales from 2024 to 2028, as well as systemwide sales growth of more than 8%.

The stock has fallen 9.7% in the year to date, while the S&P 500 has gained 9%.

-Ciara Linnane

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08-08-24 0740ET

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