(Representative image)Restaurant Brands International beat Wall Street’s second-quarter revenue expectations on Thursday, benefiting from a restructuring of its Burger King chain and stable demand at its Tim Hortons coffee outlets.
Burger King’s turnaround plan, first announced for 2022, called for an initial investment of $400 million to remodel stores and upgrade equipment to improve the customer experience and attract younger customers. In April, an additional $300 million was committed to the effort.
The company also completed the acquisition of the chain’s largest U.S. franchisee, Carrols Restaurant Group, during the reporting period.
Fast-food chains like Yum Brands and coffee giant Starbucks are turning to technology to cut costs in their stores and protect their profits when demand stagnates.
Persistent inflation and high borrowing costs are forcing cash-strapped customers to eat out less often, creating fierce competition among fast-food chains as they rush to offer discounts and special offers to boost prices.
Burger King also benefited from the revival of its $5 menu shortly before a similar launch by rival McDonald’s, as well as from investments in its stores, equipment and advertising as part of a turnaround plan.
According to Placer.ai data, Burger King’s average customer traffic per store increased 4.3% during the quarter, compared to a 1% increase a year earlier.
In the second quarter, Burger King’s total revenue increased to $364 million from $327 million a year earlier.
According to LSEG data, the company reported revenue of $2.08 billion, compared to analysts’ average estimate of $2.02 billion.
Excluding special items, Restaurant Brands reported earnings per share of 86 cents, in line with estimates.
To attract price-conscious customers, Indian KFC operator Devyani International offered discounts and special offers such as chicken rolls for 99 Indian rupees at its KFC outlets. The T20 Cricket World Cup and the associated school holidays also contributed to the increase in sales. India’s quick service restaurant (QSR) chains are grappling with sluggish demand and rising costs amid inflationary pressures. The country’s retail inflation hovered around 5 percent throughout the quarter due to increased food prices.
Yum Brands beat second-quarter earnings expectations as Taco Bell’s strong U.S. business and cost controls helped offset revenue losses due to weak demand at KFC and boycotts related to the Middle East conflict. The company’s shares rose 3 percent on Tuesday, even though the company reported a larger-than-expected decline in revenue due to lower-income consumers spending less on restaurant dining.
