Restaurant Brands International shares jumped more than 4% on Monday after the company reported better-than-expected profits and same-store sales growth at both its Burger King and Tim Hortons chains.
As Financial Post reports, the chains “posted strong sales in the U.S. market, where rival McDonald’s recently faltered after a year of gains fueled by all-day breakfast.”
Total comparable sales at Burger King rose 2.8% in the fourth quarter ended Dec. 31, beating the average analysts’ estimate of a 2.5% rise. Tim Horton’s comp sales were up 0.2%, reflecting in large part a 3.6% increase in the U.S.
The company’s net profit attributable to shareholders more than doubled to $118.4 million, or 50 cents a share, from a year ago. On an adjusted basis, it earned 44 cents per share, compared to the average analysts’ estimate of 42 cents per share.
“We are fortunate that we have two iconic brands and when we look at our priorities it all comes down to driving that,” Restaurant Brands CEO Daniel Schwartz told the Post. “We grew the Burger King brand in the U.S., which was a great accomplishment for us.”
Overall fourth-quarter revenue totaled $1.11 billion, up from $1.06 billion, while systemwide sales rose 2.4% at Tim Hortons and 8.5% at Burger King in constant currency.
According to the Post, Burger King “seems to be reaping the benefits of an unabashed focus on fast food products, from hot dogs to chicken fries” rather than following McDonald’s example of trying to boost business with customizable fare or healthier menu options.
“For people who are not looking to read the fine print on nutrition reports, Burger King’s message is more consistent,” said Ken Wong, marketing professor with Queen’s University’s School of Business in Kingston, Ontario. “They know what they are going to get.”
Restaurant Brands has also been aggressively expanding the chain, opening 735 Burger King outlets worldwide in 2016, compared with 631 in 2015.
Tim Hortons’ U.S. same-store sales rose 4.9% for 2016 as a whole. “It is one of the most exciting brands and we see it growing,” Schwartz said.