TORONTO — Popeyes Louisiana Kitchen is leveraging key learnings and product innovation from its chicken sandwich to add a complementary category to its menu. The Restaurant Brands International, Inc. (RBI) subsidiary in late July launched a new chicken nuggets platform.
“Nuggets are already proving to be incremental in our market tests,” said Jose. E. Cil, chief executive officer of RBI, in a July 30 call with analysts to discuss second-quarter results. “They have attracted guests in an attractive demographic, and that’s kids and families; and in an underutilized daypart, the afternoon; and in a previously untapped occasion, and that’s snacking.”
The company is aiming to build on the success of Popeyes’ chicken sandwich, a key growth driver for the brand. The popular menu item helped Popeyes deliver $1.37 billion in sales in the second quarter ended June 30, up 10% from $1.25 billion a year ago and 40% from $1.01 billion in 2019.
“While a lot of our success over the past 18 months can be attributed to the overwhelming guest response to our chicken sandwich, a core product in a core category that we took our time to innovate, we're not standing still and are focused on what's next,” Mr. Cil said.
Net income at Toronto-based RBI in the second quarter was $358 million, equal to 77¢ per share on the common stock, up 57% from $154 million, or 33¢ per share, in the same period a year ago. On a two-year basis, net income rose 8%. Total revenues of $1.44 billion were up 27% from $1.05 billion a year ago and 3% from $1.4 billion two years ago.
Systemwide sales were $8.9 billion, up 32% year-over-year and 4% from 2019. Digital sales rose 60% in the quarter, nearly doubling at Tim Hortons and growing approximately 20% at Burger King and Popeyes.
Sales at Burger King were $5.88 billion, up 30% from $4.13 billion a year ago and 3% from $5.72 billion in 2019. While recent innovations like the Impossible Whopper, a new dollar menu and cleaner ingredients helped Burger King get back to growing against pre-COVID levels, the chain’s potential has been limited by a lack of focus, Mr. Cil said.
“We're not performing at the level that we expect from ourselves or aspire to,” he said. “First and foremost, we're focused on driving innovation in our core menu and accelerating daypart and category extensions that will become core to our full-time menu.”
He cited Burger King’s new hand-breaded chicken sandwich as an example. The offering delivered healthy volumes across the United States and has expanded the brand’s demographic, attracting new guests with higher incomes and more spending power.
“While we are pleased with our recent progress around menu innovation… significant opportunities remain in key categories and dayparts, such as breakfast,” Mr. Cil said. “You'll be seeing us doing a lot more focused work in the coming months to develop highly incremental parts of our menu offering.”
Traffic and sales improved at Tim Hortons even as most Canadian consumers continued to face strict lockdown measures throughout the quarter. Sales at Tim Hortons were $1.72 billion, up 36% from the prior year but down 5% from 2019.
The restaurant chain continued to gain ground in breakfast following a first-quarter menu refresh. It also benefited from recent beverage launches, including new cold brew coffee.
“We saw a recovery in our morning daypart despite continued mobility restrictions, while also gaining share in both breakfast sandwiches and the morning daypart overall,” Mr. Cil said. “Our cold brew launch drove both incremental traffic and sales and increased our iced coffee market share.”