TORONTO — Restaurant Brands International, Inc. in the recent quarter benefited from strong performance across its Tim Hortons Canada and Burger King international businesses, improvements at Burger King, Popeyes and Firehouse Subs in the United States, continued growth in digital sales and progress in new restaurant development.
Net income for the third quarter ended Sept. 30 was $530 million, or $1.17 per diluted share, up from $329 million, or 70¢, in the prior-year period. The increase was due to income tax benefit in the current year compared to an income tax expense in the prior year, increases in segment income in the Tim Hortons and Popeyes segments, the inclusion of Firehouse Subs segment income, a favorable change from other operating expenses and the non-recurrence of a loss on early extinguishment of debt. Offsetting these factors were unfavorable foreign exchange movements, a decrease in Burger King segment income, an increase in share-based compensation and non-cash incentive compensation expense, corporate restructuring and tax advisory fees, and higher interest expense.
Total revenues advanced 16% to $1.7 billion from $1.5 billion.
“During the third quarter, we grew consolidated year-over-year comparable sales by 9%, driven by 11% comparable sales at Tim Hortons Canada, 15% comparable sales in our Burger King international business and sequential improvements at Burger King, Popeyes and Firehouse Subs home markets,” said José E. Cil, chief executive officer, during a Nov. 3 earnings call. quarter. “At Burger King US, we saw 4% comparable sales and continued to narrow the sales gap to peers. Our digital channels also continued to contribute to our sales growth this quarter with global digital sales up 26% year-over-year to nearly $3.4 billion, capturing one-third of consolidated system-wide sales.
“We also made solid development progress during the third quarter with Popeyes once again a standout and well positioned for another strong year. As we look ahead, we're confident in our long-term pipeline and expect to see our development mix strengthen bringing Tim Hortons and Popeyes to more and more markets around the world, while also ramping Burger King back to historical levels over time.”
During the quarter, Burger King in the United States grew comparable sales with its value platform, the launch of a crispy chicken sandwich, strategic pricing initiatives and positive contribution from digital channels, Mr. Cil said.
Price increases and menu innovation helped Tim Hortons deliver comparable sales growth of 10% over the prior year. Popeyes’ performance was bolstered by restaurant expansion in North America and in several global markets.
“Since 2017, we've added over 650 net new units to our existing home market footprint while leveraging our development expertise and master franchise model to bring nearly 400 new restaurants to international markets,” Mr. Cil said of Popeyes. “Meanwhile, the team is also preparing to bring Popeyes to major chicken QSR markets like Indonesia, South Korea and France in the months ahead. Our development momentum resulted in net restaurant growth of 9% and coupled with comparable sales of 3%, including 1% comparable sales in the U.S., led to system-wide sales growth of 12% for the third quarter.”
Firehouse Subs, which Restaurant Brands acquired in 2021, posted relatively flat comparable sales while lapping strong prior-year comparable sales, Mr. Cil said.
“The brand continued to generate roughly one-third of its sales through digital channels this quarter, aided by successful initiatives such as rewards week, which included seven days of exclusive offers and points for our Firehouse rewards members,” he said. “This was just one of the creative initiatives during the quarter to increase digital engagement while delivering the high quality and flavorful products our guests know and love.”
In September, Restaurant Brands unveiled a plan to improve performance at Burger King restaurants in the United States, committing to make a $400 million corporate investment over the next two years to support advertising, remodels, technology and digital improvements with the goals to accelerate sales growth and strengthen long-term franchisee profitability.“We kicked this off in October, bringing our brand purpose to life with a new campaign that repositions the brand and elevates our core brand equity, ‘have it your way,’ through the introduction of a modernized ‘you rule’ tagline,” Mr. Cil said.