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Slumping fast food sales in US, Canada extend to Burger King

8/5/2016

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Burger King’s sales slipped 0.8 per cent at established restaurants in the U.S. and Canada. Image: Shutterstock/Lucian Milasan
OAKVILLE, Ont. – Restaurant Brands International said its profit jumped during the second quarter as Burger King’s sales weakness in the U.S. was offset by strength overseas.

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Consumers have a fast-food habit that's killing Chipotle's business model.

The Ontario company said Burger King’s sales slipped 0.8 per cent at established restaurants in the U.S. and Canada, following disappointing results from other restaurant chains.

“We did see some softness in the industry,” said Daniel Schwartz, CEO of Restaurant Brands.

Schwartz declined to provide a reason for the softness, but other industry executives have cited weakening consumer confidence amid political and global uncertainty. Analysts have also noted that the increasing competition over promotional deals, as well as the growth of smaller, independent players.

Last week, McDonald’s Corp. said its sales rose just 1.8 per cent at established U.S. locations, boosted by higher pricing as excitement over its all-day breakfast menu seemed to die down.
Dunkin’ Donuts said sales edged up just 0.5 per cent, while Taco Bell reported a 1 per cent decline in sales at established locations.

Despite the weakness in the quarter, Schwartz noted that Restaurant Brands has been working on renovating Burger King restaurants and that it expects to drive sales growth over the long term. He noted the company is introducing items such as hot dogs that help bring in customers.

Sales growth in Asia and Latin America helped offset the weakness in the U.S. and Canada, lifting Burger King’s global comparable sales by 0.6 per cent, according to Restaurant Brands. Tim Hortons’ global sales rose 2.7 per cent at established locations.

Restaurant Brands has been expanding the footprint for Burger King and Tim Hortons. The company sees both brands as being underdeveloped on a global basis, given their name recognition. Burger King’s restaurant count increased about 4 per cent to 15,100 locations during the second quarter. Tim Hortons locations increased about 3 per cent to 4,464 stores.

For the quarter ended June 30, the company earned $90.9 million, or 38 cents per share. Adjusted earnings were 41 cents per share. Analysts expected 35 cents per share, according to Zacks Investment Research.

Total revenue was $1.04 billion.

Shares of Restaurant Brands International Inc. have increased 20 per cent since the beginning of the year. The stock has risen nearly 4 per cent in the last 12 months.

Source The Associated Press

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