OAKVILLE, ONT. — Timbits are tumbling into more American markets. The signature donut bites at Canadian coffee chain Tim Hortons are set to reach new U.S. consumers as Restaurant Brands International Inc., the parent company of Tim Hortons and Burger King, looks to expand the global presence of both businesses.
For the third quarter ended Sept. 30, Restaurant Brands International had net income of $182.9 million, equal to 25c per share on the common stock, up 9% from net income on a pro forma basis of $167.7 million, or 23c per share, for the prior-year period. Total revenues declined 8.3% to $1,019.7 million from year-ago pro forma revenues of $1,113 million, due to the negative impact of foreign currency exchange. The pro forma amounts reflect consolidated financial information as if the merger between Tim Hortons and Burger King Worldwide had occurred at the beginning of 2014.
System-wide sales for both brands grew on strong same-store results and net restaurant growth.
|Daniel Schwartz, c.e.o. of Restaurant Brands International|
“We’re making good progress toward our goal to bring Tim Hortons to guests all around the world,” said Daniel Schwartz, chief executive officer of Restaurant Brands International, during an Oct. 27 earnings call with financial analysts. “Consistent with what we’ve said in prior quarters, we want to grow our market share in Canada while meaningfully accelerating the pace of expansion in the U.S. and around the world.”
During the quarter, Tim Hortons’ system-wide sales rose 8.2% in constant currency, driven by net restaurant growth of 255 in the trailing twelve-month period and third-quarter comparable sales growth of 5.3%. The launch of premium breakfast and lunch wraps and strength in beverages contributed to Tim Hortons’ positive results.
Since the creation of Restaurant Brands International last December, the company announced its first development agreement for Tim Hortons in the United States. Under the terms, its partners plan to open more than 150 Tim Hortons restaurants over the next 10 years in the Cincinnati area.
“The deal underscores two key points for us,” Mr. Schwartz said. “First, it speaks to our commitment to expand Tim’s presence in the U.S., and second, it highlights the franchisee-led expansion model we intend to the U.S. to increase our pace of development...
“To grow our presence globally with Tim’s we’ll continue to work with our existing partners as well as new partners to expand all around the world similar to how we’ve scaled our Burger King brand over the last few years.”
System-wide sales at Burger King for the quarter grew 11% in constant currency, driven by net restaurant growth of 709 units in the trailing twelve-month period and third-quarter comparable sales growth of 6.2%. Burger King’s performance was driven in part by successful new products, including Fiery Chicken Fries and the Extra Long Jalapeño Cheeseburger.
“Scaling our Burger King brand globally continues to be a key focus for our international strategy, and we’ve accelerated the pace of development over the last several years via the master franchise joint venture and development agreement model,” Mr. Schwartz said. “As of Sept. 30, there were over 14,600 Burger King restaurants in approximately 100 countries and territories, and since the beginning of 2011 we’ve added over 2,000 restaurants creating tens of thousands of jobs along the way.”
A recent example of the company’s expansion plans is Burger King France’s proposed acquisition of Quick Group, the owner of the Quick fast-food chain in France, Belgium and Luxemburg. Under the proposed terms, the master franchise joint venture would convert Quick restaurants in France to Burger King restaurants over time.“Our growth and profitability this year has set a strong foundation for our first year as Restaurant Brands International,” Mr. Schwartz said. “The strong results we’ve achieved are a result of our continued focus on the two most important drivers of this business, guest satisfaction and franchisee profitability. And that’s what we plan to focus on for the long term.”