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After seven consecutive quarters of declining same-store sales due to menu challenges and competitive pressures, Restaurant Brands-owned Tim Horton’s finally appears to be turning the corner.
Second quarter global comparable store sales for Tim Horton’s, which operates nearly 5,100 restaurants primarily in Canada and which were purchased by Restaurant Brands (QSR) in 2014 for $ 11.4 billion, increased by 27.6 billion. %. The coffee and donut chain had the best selling performance within a portfolio of restaurant brands that also includes Burger King and Popeyes.
“We have invested a lot in food and beverage quality. We have launched fresh cracked eggs. We have also launched our cold beer, quenchers and new filled donuts,” said Jose Cil, CEO of Restaurant Brands , on Yahoo Finance. Live, evoking the dawning turnaround. The company has also seen an influx of digital orders into the chain thanks to a new loyalty program.
Cil added, “We are seeing improvements across breakfast and beverages, giving us confidence that we are on track to get the business back on track on a growth trajectory. “
In a demonstration of this confidence in the brand’s outlook, Cil told analysts on a conference call that Tim Horton will open 200 locations in China this year. The company will also add digital drive-thru menu boards to all Tim Horton locations across Canada by the end of the year.
“A key part of our positive thesis has been an underrated resurgence of Tim Horton’s core business in Canada, based on long-term, sustainable drivers that should translate into share gains and better flow prospects. of cash for restaurant brands, ”the Wells Fargo analyst said. Jon Tower.
Tower reiterated its buy note on restaurant brands and raised the price target to $ 94 from $ 90.
Meanwhile, second-quarter global comparable store sales at Burger King rose 18.2%. Popeyes’ worldwide same-store sales fell 0.3%.
Here is how Restaurant Brands performed against Wall Street estimates for the second quarter.
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Net sales: $ 1.44 billion versus $ 1.37 billion
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Adjusted operating profits: $ 577 million versus $ 526.2 million
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Adjusted diluted EPS: 77 cents against 61 cents
Restaurant Brands shares are up 12% year-to-date, underperforming the S&P 500’s 17% gain.
Other analysts liked what they saw from Restaurant Brands’ second quarter, especially Tim Horton’s.
“[There is] the light at the end of the tunnel for Tim’s, ”said Alexander Slagle, analyst at Jefferies. [are] are starting to bear fruit, breakfast sees market share gains (including coffee) driven by the success of product innovation (quality of ingredients, fresh cracked eggs, drinks) and the lunch part of the day is back in pre-C[OVID]19 volumes, aided by the traction on the Craveables platform. “
Slagle reiterated his Hold rating on Restaurant Brands shares, but raised the price target to $ 74 from $ 70.
Brian Sozzi is an editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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