Taylor Herzlich
Burger King sales slipped last quarter despite touting cheaper menu deals as inflation-weary customers continue to pull back on dining out, parent company Restaurant Brands said Thursday.
The Toronto-based conglomerate — whose brands also include Tim Hortons, Papa John’s and Popeyes — said same-stores sales at the Whopper maker dipped 0.1% and warned of softer sales for the rest of the year.
“We clearly saw softer sales than expected across our businesses in Q2 and it’s not yet clear when we’ll see the category strengthen,” Executive Chairman J Patrick Doyle said on a post-earnings call.
Burger King revived its $5 value meal in early June, just ahead of a similar launch from rival McDonald’s, to attract cash-strapped customers grappling with sticky inflation.
The company extended the offering to October and executives signaled good response from lower- and middle-income consumers for the value meal.
Burger King did manage to edge out McDonald’s, whose American business declined nearly 1% in the second quarter.
“Results look better when juxtaposed against category peers (such as Wendy’s, McDonald’s and Yum Brands), with quick service restaurants continuing to broadly underperform fast casual so far during Q2 earnings,” said Morningstar analyst Sean Dunlop.
Burger King announced a turnaround plan in 2022 meant to revive its business, including an investment of $400 million to remodel stores and upgrade technology to improve service.
Restaurant Brands CEO Josh Kobza said on Thursday that the company has been balancing “thoughtful investments” with “cost discipline” in order to navigate “short-term consumer pressures.”
In April, Burger King announced it was dedicating $300 million more to the revamp plan. It also completed its acquisition of Carrols Restaurant Group – now its largest US franchisee.
“In our view, RBI is pursuing the right strategy to help Burger King gain share via menu innovation…improved operations and a value focus, without going overboard,” said TD Cowen analyst Andrew Charles in a note.
Restaurant Brands did manage to deliver an overall revenue win, raking in $2.08 billion to top estimates of $2.02 billion.
The boost came from its Tim Hortons business, which held onto steady demand. The Canadian coffee-donut chain same-store sales grew 4.6%, beating LSEG analysts’ expectations of 4.3%.
Tim Hortons brought in nearly half of Restaurant Brands’ total revenue in the second quarter.
