Will Adding New Restaurants Push The Growth For Restaurant Brands International?

by Trefis Team
Restaurant Brands International Inc.
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Restaurant Brands International (NYSE: QSR), one of the world’s largest quick service restaurant companies, is set to announce its Q1 2019 results on April 29 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $1.4 billion in Q1 2019, which would be an increase of 11.7% on a year-on-year basis. The increase is mainly expected with the continuous addition of  restaurants in all 3 segments. Market expectation is for the company to report earnings of $0.75 per share in Q1 2019, higher than $0.60 per share in the year-ago period as the company is expected to continue its growth.


We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Restaurant Brands International’s Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full Year 2019? In addition, here is more Consumer Discretionary data.

Key Factors Affecting Earnings:

Revenue expected to continue growth:

  • Restaurant Brands’ Total Revenue has continuously increased over the quarters. It has grown from $1 billion in Q1 2017 to $1.4 billion in Q4 2018.
  • The increase is primarily due to the continuous additions of new restaurants. Burger King added more than 1,000 in 2017 and 2018. Tim Hortons added an average of more than 100 restaurants annually in 2017 and 2018. While, Popeyes Louisiana Kitchen added 210 restaurants in 2018.
  • Trefis estimates the growth to continue in Q1 2019 with Burger King restaurants leading the growth.


Trend in Expenses:

  • The Total Expenses have moved in tandem with the Total Revenue except for Q4 2018 due to a tax benefit received by the company.
  • Cost of Sales on company restaurants has remained in the range of 76-78% of Company restaurant revenues in the last two years and is expected to continue in the same manner.
  • Franchise and property has seen a steady decrease along with increasing revenue from the segment. This has pushed down the expense margin of Franchise Expenses to Franchise revenue from nearly 21% in 2017 to 14% in 2018. We expect the same to remain flat in Q1 2019.
  • In 2018 the Selling, General and administrative expenses have gone up nearly three times compared to the same period in previous quarter, primarily due to the inclusion of advertising fund expenses from the application of ASC 606.


Full Year Outlook:

  • For the full year, we expect gross revenue to increase by 7% to $5.7 billion in 2019.
  • Growth is expected to be pushed by continuous addition of restaurants. Trefis estimates 1400+ new restaurants by the end of 2019 (all segments).
  • Highest revenue contribution is expected from Tim Hortons segment at $3.5 billion.
  • EBITDA margin is expected to increase back to 2017 level i.e. around 42%.


Trefis has a price estimate of $68 per share for Restaurant Brands International’s stock. The value is backed on the expectation of growth from all three segments of the company.


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