Burger King’s sales fell last quarter despite advertising cheaper menus as inflation-hit customers continued to eat out less, parent company Restaurant Brands said Thursday.
The Toronto-based conglomerate – whose brands also include Tim Hortons, Papa John’s and Popeyes – said the Whopper maker’s sales fell 0.1 percent in its stores and warned of weaker sales for the rest of the year.
“We clearly saw lower than expected sales in the second quarter across all of our businesses and it is not yet clear when we will see a strengthening of the category,” Chief Executive Officer J Patrick Doyle said in a conference call following the results release.
Burger King revived its $5 menu in early June, just before rival McDonald’s launched a similar offer to attract cash-strapped customers struggling with stubborn inflation.
The company extended the offer until October and management signaled that the low-cost menu was well received by low- and middle-income consumers.
However, Burger King was able to prevail against McDonald’s, whose business in America fell by almost 1 percent in the second quarter.
“The results look better compared to competitors in the category (such as Wendy’s, McDonald’s and Yum Brands) as quick-service restaurants continue to significantly underperform fast-casual restaurants in second-quarter earnings so far,” said Sean Dunlop, analyst at Morningstar.
Burger King announced a turnaround plan for 2022 to revive its business, which includes investing $400 million in redesigning stores and modernizing technology to improve service.
Restaurant Brands CEO Josh Kobza said Thursday that the company has balanced “judged investments” with “cost discipline” to meet “near-term consumer pressures.”
In April, Burger King announced it would invest an additional $300 million in its turnaround plan. The company also completed the acquisition of Carrols Restaurant Group, now its largest franchisee in the United States.
“We believe RBI is pursuing the right strategy to help Burger King gain market share through menu innovation, improved operations and a focus on value without overdoing it,” TD Cowen analyst Andrew Charles said in a note.
Restaurant Brands reported overall revenue growth of $2.08 billion, beating estimates of $2.02 billion.
The boost came from Tim Hortons, where demand remained stable. The Canadian coffee doughnut chain’s sales rose 4.6 percent in stores, beating LSEG analysts’ expectations of 4.3 percent.
Tim Hortons generated nearly half of Restaurant Brands’ total revenue in the second quarter.
With post wires
