Burger King Inc.’s sales fell last quarter despite touting discounts on its menu as inflation-weary customers continued to avoid eating out, parent company Restaurant Brands Inc. said Thursday.
The Toronto-based conglomerate, which also owns brands such as Tim Hortons, Papa John’s and Popeyes, said same-store sales at the Whopper maker fell 0.1 per cent and warned that sales for the rest of the year would be even weaker.
“It is clear that sales fell short of expectations across our business in the second quarter, and it is not yet clear when these areas will recover,” Executive Chairman J. Patrick Doyle said on a conference call after the earnings release.
Burger King reinstated its $5 value menu item in early June, shortly before rival McDonald’s rolled out a similar option, in an effort to attract cash-strapped customers struggling with high inflation.
The company extended the offer through October, with executives suggesting that the Value Set has been well received among low- and middle-income consumers.
Burger King managed to outperform McDonald’s, whose US business fell by nearly 1% in the second quarter.
“While quick-service restaurants generally underperformed fast-casual in second-quarter earnings, their results look better compared to peers such as Wendy’s, McDonald’s and Yum Brands,” said Morningstar analyst Sean Dunlop.
Burger King has announced a restructuring plan for 2022 aimed at revitalizing the business, including investing $400 million in renovating restaurants and upgrading technology to improve service.
Restaurant Brands CEO Josh Kobza said Thursday the company is balancing “thoughtful investments” and “cost controls” to weather “near-term consumer pressures.”
In April, Burger King announced it would spend an additional $300 million on the restructuring plan, and also completed the acquisition of Carroll’s Restaurant Group, currently its largest U.S. franchise.
“In our view, RBI is pursuing the right strategy to help Burger King grow market share through menu innovation, operational improvements and a focus on value without overdoing it,” he said. TD Cowen analyst Andrew Charles said in a note..
The restaurant brand managed to pull out a win, bringing in $2.08 billion in total revenue, beating expectations of $2.02 billion.
The increase was driven by steady demand at its Tim Hortons business: The Canadian coffee and doughnut chain’s same-store sales rose 4.6%, beating the 4.3% increase LSEG analysts had expected.
Tim Hortons accounted for nearly half of total restaurant brand revenue in the second quarter.
With post wire
