Burger King owner Restaurant Brands International said higher expenses squeezed profit margins during the second quarter — leaving investors with mixed signals about the company’s performance.
The parent company behind popular chains including Tim Hortons, Popeyes and Firehouse Subs said it generated total revenue of $2.41 billion for the three-month period that ended in June, above analysts’ estimates of $2.32 billion, according to data compiled by LSEG.
US quarterly same-store sales from Burger King, the company’s second biggest revenue generator, rose 1.5%, after rising just only 0.1% a year ago.
Value-meal deals starting at $5, also introduced by major fast-food chains Yum Brands and McDonald’sas consumer spending declined, boosted foot traffic at Burger King.
Comparable sales in Restaurant Brands international segments rose 4.2%, compared with a 2.6% rise a year ago.
But things looked less rosy when it came to profit. The company made $189 million for shareholders this quarter, down from $280 million at the same time last year.
Earnings per share dropped to 58 cents, compared to 88 cents a year ago.
The Post has sought comment from Restaurant Brands.
Earnings declined despite several positive metrics that suggest underlying business strength.
Tim Hortons locations in Canada performed particularly well, posting comparable sales growth of 3.6% while international Burger King restaurants achieved an even stronger 4.1% increase.
The Canadian chain has enjoyed a successful partnership with actor and business mogul Ryan Reynolds, whose “Ryan’s Scrambled Eggs Loaded Breakfast” has proven to be popular with consumers north of the border.
Total sales across Restaurant Brands properties rose 5.3%. Sales outside North America were especially strong, jumping 9.8%.
The company’s adjusted operating income provided another bright spot, climbing to $668 million from $632 million in the prior year period — a nearly 6% rise.
This improvement indicates that while overall profitability faced headwinds, the core restaurant operations generated higher earnings before accounting for various one-time charges and adjustments.
Company leaders said the boost in performance came from smarter marketing, smoother operations and stronger teamwork with franchise owners — especially overseas, where growth has been the strongest.
But even with more customers and higher spending, profits still dropped because the cost of running the business grew faster than sales.
Restaurant Brands says it’s still confident about where the company is headed, even though its latest earnings were a mix of good and bad news.
It expects to grow profits by at least 8% this year. Company executives believe current challenges such as rising costs are short-term problems, not long-term ones.
Like many fast food companies, Restaurant Brands is dealing with higher wages, more expensive supplies and tougher competition.
