Strong Burger King sales boost Restaurant Brands' profit

(Reuters) - Restaurant Brands International Inc’s quarterly profit topped analysts’ estimates, helped by strong sales of Burger King’s cheaper-priced menu items and popular Whoppers, sending the company’s shares up more than 8 percent on Monday.

A customer leaves the Tim Hortons coffee shop after purchasing coffee and timbits during its opening in San Pedro Garza Garcia, in Monterrey, Mexico, October 27, 2017. REUTERS/Daniel Becerril

Ontario-based Restaurant Brands said comparable sales at Burger King rose 4.6 percent in the fourth quarter ended Dec. 31. Analysts on average had expected growth of 2.5 percent, according to Consensus Metrix.

Restaurant Brands, which also owns coffee chain Tim Hortons, and other food-chain owners such as McDonald’s Corp, Yum Brands Inc and Dunkin’ Donuts Group Inc have been trying to attract diners with cheaper-priced meals and more breakfast and coffee items in a highly competitive market.

Restaurant Brands has also introduced mobile applications and online ordering to attract more millennials to Tim Hortons and Burger King.

“The digital channel has been and will continue to be a key focus of ours as we grow the Tim’s brand,” Chief Executive Daniel Schwartz said on a call with analysts.

Comparable sales growth at Tim Hortons was 0.1 percent, well short of analysts average estimate of 1.2 percent growth, according to Consensus Metrix.

Tim Hortons has been dealing with the fallout of bad publicity from its reaction to minimum wage increases in the country. Many Tim Hortons franchises cut back on employee perks and benefits when Ontario raised minimum wages by 21 percent to C$14.

“It’s our primary objective, together with our franchise partners around the world, to drive sales growth in order to offset any cost inflation that we may face from year-to-year,” Schwartz said in response to an analyst’s question. He did not give any other details.

Restaurant Brands, which also owns the Popeyes Louisiana Kitchen restaurant chain, said total revenue climbed 11 percent to $1.23 billion in the quarter.

Restaurant Brands said net profit attributable to shareholders more than tripled to $395 million, or $1.59 per share.

Excluding one-time items, it earned 66 cents per share, beating analysts’ average estimate of 57 cents, according to Thomson Reuters I/B/E/S.

The company’s shares hit a high of C$76.96, before easing to trade up 6.3 percent at C$75.56 in late morning trading.

Reporting by Anirban Paul in Bengaluru; Editing by Sai Sachin Ravikumar and Savio D’Souza