Popeyes struggles, Burger King surges in fourth quarter

by Monica Watrous
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Burger King Whopper sandwiches
Burger King has system-wide sales growth of 10.1% in 2017.
 

OAKVILLE, ONT.— The fast-food value wars in the United States led to declines at Popeyes Louisiana Kitchen in the latest quarter, said Daniel S. Schwartz, chief executive officer of parent company Restaurant Brands International Inc. But at Tim Hortons and Burger King, comparable sales fared better, helped by technology and menu innovation.

Net income attributable to common shareholders of Restaurant Brands International in the year ended Dec. 31, 2017, was $626.1 million, equal to $2.64 per share on the common stock, up sharply from $345.6 million, or $1.48 per share, the year before. Revenues totaled $4,576.1 million, up 10% from $4,145.8 million.

Daniel Schwartz, Restaurant Brands International
Daniel Schwartz, c.e.o. of Restaurant Brands International

"Our Tim Hortons business achieved 3% system-wide sales growth for the year, primarily driven by net restaurant growth," Mr. Schwartz said during a Feb. 12 earnings call. "We achieved some important initiatives at Tim's this year, including launching our mobile app and our espresso-based beverage platform across Canada and the U.S. and opening our first restaurants under our Master Franchise Joint Venture partnerships in each of Asia, Europe and Latin America.

"We had a good year at Burger King, where we achieved comparable sales of 3.1%, which, coupled with net restaurant growth of 6.5%, led to system-wide sales growth of 10.1%. We also achieved important initiatives at BK, including continued acceleration of net restaurant growth, the signing of numerous development agreements and the continued creative promotion of our brand, as recognized through the receipt of several marketing awards, including Creative Marketer of the Year at Cannes Lions.

Tim Hortons restaurant
Tim Hortons achieved 3% system-wide sales growth for the year, primarily driven by net restaurant growth.
 

"At Popeyes, we made good progress integrating the business after acquiring it earlier in the year. System-wide sales grew by 5.1% for the year, driven by net restaurant growth of 6.1%, partially offset by global comparable sales of negative 1.5% resulting from the heightened competitive activity that we saw in the U.S." 

For the fourth quarter, net income attributable to common shareholders of Restaurant Brands International equaled $395 million, or $1.64 per share, up from $118.4 million, or 50c, in the year-ago period. Revenues totaled $1,234.2 million, up 11% from $1,111.4 million.

During the quarter, comparable sales increased 0.1% at Tim Hortons and 4.6% at Burger King, while Popeyes comparable sales fell 1.3% in the quarter.

Popeyes Shrimp Tackle Box
Popeyes' system-wide sales grew by 5.1% for 2017.
 

"In the U.S., heightened competitive activity, with a particular focus on value discounting, continued into the fourth quarter," Mr. Schwartz said of Popeyes' performance. "Though we still have work to do, U.S. comparable sales have improved sequentially in the fourth quarter, and we've been testing a number of marketing initiatives in recent months that, we believe, will help us build on that momentum for improved results this year."

Meanwhile, Burger King benefited from "a balanced approach to menu initiatives across price points and products," Mr. Schwartz said.

"We continue to innovate around our Bacon King and our Crispy Chicken sandwich, two platforms that performed particularly well in 2017," he said. "We also had several successful value promotions during the quarter that contributed positively to our results, and we believe that maintaining this balanced menu offering to provide our guests with products that they love at great prices will continue to drive further sales growth over the long run."

Burger King sandwiches
Burger King continues to innovate around its Bacon King and Crispy Chicken sandwiches.
 

The company also announced changes to its leadership team. Joshua Kobza, previously chief financial officer since 2013, has been named to the new role of chief technology and development officer. Succeeding him in the c.f.o. role is Matthew Dunnigan, who has served as treasurer since joining the company in 2014.

"As technological developments continue to evolve at a rapid pace, we're taking steps to put an even greater focus on technology here," Mr. Schwartz said of Mr. Kobza's new position. 
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