Restaurant Brands International on Tuesday reported that its quarterly revenue fell 8% as Burger King and Tim Hortons sales struggled to bounce back from the coronavirus pandemic.
Popeyes, however, once again reported double-digit same-store sales growth, thanks to the popularity of its chicken sandwich.
Shares of the company, which had released preliminary same-store sales results earlier this month, were down 2.5% in morning trading.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: 68 cents, adjusted, vs. 63 cents expected
- Revenue: $1.34 billion vs. $1.34 billion expected
The restaurant company reported fiscal third-quarter net income of $145 million, or 47 cents per share, down from $201 million, or 75 cents per share, a year earlier. Temporary restaurant closures and other costs related to the pandemic weighed on profits.
Excluding corporate restructuring fees and other items, Restaurant Brands earned 68 cents per share, topping the 63 cents per share expected by analysts surveyed by Refinitiv.
Net sales dropped 8% to $1.34 billion, matching expectations.
Burger King reported same-store sales declines of 7%. Executives said that moving into 2021, the burger chain will be putting more of a focus on value. The crisis has pushed the country into a recession, and the September unemployment rate in the U.S. reached 7.9%.
Tim Hortons same-store sales fell by 12.5% in the quarter. The Canadian coffee chain typically accounts for more than half of Restaurant Brands' revenue. The pandemic not only disrupted coffee drinkers' normal routines, but also hindered efforts to revitalize Tims' sales. The chain is counting on its loyalty program and improvements to its coffee brews to keep customers coming back, but in the near term they're also dealing with massive reductions to the number of commuters and Ontario dining room closures.
Popeyes, the only Restaurant Brands chain to report positive same-store sales growth, saw sales at restaurants open at least 17 months grow 17.4% in the quarter. Even with its recent success, the fried chicken chain accounts for only a tenth of Restaurant Brands' net sales.
Restaurant Brands said it expects to see a continued impact from the pandemic on its fourth-quarter results. The company is shuttering and replacing some under-performing U.S. locations as part of a plan to revitalize its restaurant footprint. As a result, the number of open restaurants by the end of the year is expected to be roughly flat compared to 2019. But executives expect that the closures will have a muted impact on sales because those locations generate 30% less revenue on average.
Despite the sales downturn, the company is still investing in its restaurants. Restaurant Brands announced plans to revamp thousands of its drive-thru lanes across the three brands, starting with 10,000 Burger King and Tim Hortons locations. Contactless payment methods and digital menu boards that change display options based on weather, previous orders and other factors are among the changes.
The pandemic has pushed drive-thru sales for fast-food restaurants higher as consumers seek convenience and safety. Executives said that Burger King's drive-thru sales climbed 28% in the third quarter.
