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For Q1 2020 The company saw a positive growth in system-wide sales for Popeyes Louisiana Kitchen (PLK) by 7% y-o-y and Burger King (BK) by 1.8% y-o-y. While, system-wide sales fell for Tim Hortons (TM) by 4.9% y-o-y. Overall the system-wide sales were up 1.4% y-o-y. Revenue was recorded at $1.26 billion, up 2.9% y-o-y, while diluted earnings were recorded at $0.55 up from $0.48 from the previous period.
The company in a release in the second half of January 2020 announced leadership changes to help move the company in the right direction. Daniel Schwartz was promoted to Executive chairman after serving as a CFO and CEO for the last eight years, while Jose Cil was promoted to CEO after being with Burger King for 18 years. Also, Josh Kobza was promoted to COO of RBI to oversee the global development, technology, and operational teams responsible for supporting the growth of RBI's brands.
QSR stock has suffered as states and countries are on lockdown. People are not meeting friends and colleagues or going out with family for breakfast, drinks, lunch, or dinner. Restaurants and food outlets are operating in the take-out-only mode, and many are closed. Besides lower demand, the supply chain across the world is suffering, which has also weighed on sales.
Restaurant Brands International is a Canadian Fast Food chain and serves as a parent company for Tim Hortons and Burger King. The company owns and franchises its restaurants all over the world. As of December 31, 2017, Burger King had 16,767 stores, Popeye's Louisiana Kitchen had 2,892 restaurants whereas Tim Hortons had 4,748 restaurants.
Burger King’s restaurants fall into the quick service restaurants category that features flame-grilled hamburgers, fish and chicken combos, french fries, soft drinks, and other affordable food items. Burger King restaurants appeal to a wide range of consumers, with multiple dayparts and product platforms appealing to varied customer groups.
Tim Hortons restaurants are quick-service restaurants with a menu that includes premium blend coffee, tea, espresso-based hot and cold specialty drinks, fresh baked goods, including donuts, bagels, cookies and pastries, grilled paninis, classic sandwiches, wraps, soups, and more.
Popeyes Louisiana Kitchen is a chain of quick-service restaurants that distinguish themselves with a unique “Louisiana” style menu that features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. Popeyes is a highly differentiated QSR brand with a passion for its Louisiana heritage and flavorful, authentic food. Restaurant Brands International acquired Popeyes Louisiana Kitchen (PLK) in March 2017.
The fast-food chain competes with McDonald’s and Wendy’s in the Fast Food Hamburger Restaurant (FFHR) category.
Company-operated restaurants are low margin businesses (~10-15% operating margin) as compared to franchised restaurants (~70% operating margin). The difference in margins is mainly because of the extra costs involved with company-operated restaurants, such as employees and operational costs, which are absent from franchised restaurants.
As Restaurant Brands International looks to become a 100% franchised model, it will mean lower revenues but higher margins for the company.
The fast-food industry faces strong competition from “Fast Casual Restaurants.” Restaurants such as Chipotle Mexican Grill and Panera Bread are more likely to appeal to health-conscious customers. They claim to offer fresher, healthier, and better quality food.
More than 50% of Burger King restaurants are in the U.S. This figure is expected to remain stagnant in the next few years, owing to saturation of the fast-food industry in the country.
Burger King has entered into joint venture agreements in various parts of the world to expand its business. In countries like China, Russia, Australia, Colombia, and South Africa, the company is set to open numerous new restaurants without deploying its own capital. Going forward, most of the expansion will come from international markets where the company is expected to earn only royalties. Thus, the growth of the company in the next few years depends on its performance in the international markets.