Burger King Leads The Way To Another Profitable Quarter At Restaurant Brands International

Reporting its fourth quarter and full year earnings on 13th February 2017, Restaurant Brands International ( QSR ) witnessed a rise in both its revenues (+5% y-o-y) and earnings per share (+100% y-o-y). The company beat analysts expectations for both revenue and earnings in the quarter. While the increase in revenues was supported primarily by the growth seen at Burger King, it was slightly offset by the softness seen in Canada and internationally at Tim Hortons. In terms of bottom line, earnings were driven by the continued fiscal discipline practiced by the management of the company. Furthermore, the company's stock price was seen on a steep upwards trajectory post the earnings release.


The growth in the top line at RBI primarily came from Burger King (+11.2% y-o-y), although Tim Hortons also saw a nominal rise in revenues (+2.9% y-o-y). This is noteworthy, given the challenging environment for the quick service restaurants. Talking first about TH, the growth in the fourth quarter was lukewarm, with Canada and international markets seeing weakness. Canada saw a -0.2% decline in comps likely due to harsher weather conditions, while internationally, the comps were down -0.4%. This decline was more than offset by the company's performance in the U.S., which saw comps up +3.6%, due to strength in coffee, cold beverages and breakfast items. Going forward, the company hopes to keep up with its expansion strategy. To this end, RBI will pursue its three master franchise joint venture for TH in Philippines, Great Britain, and Mexico, while it also expands its presence in Indianapolis and Minneapolis, U.S.


Burger King, despite turmoil in the QSR segment, particularly in the U.S., witnessed a 2.8% y-o-y increase in comps, translating into revenue growth of 11.2%. The primary regions contributing towards the comps were Asia Pacific and China (APAC), Latin America, and Caribbean (LAC), slightly offset by softness in the Europe, Middle East and Africa (EMEA), U.S., and Canada. The APAC region saw comps growth of 4.4% driven by China, India, and Korea, while LAC was as high as 10.1% y-o-y due to growth momentum in Brazil and Argentina. As the company heads into 2017, it expects to re-image its restaurants in the U.S., continue restaurant expansion in APAC and LAC, while showcasing product innovation through new launches.


Furthermore, famous for its strict fiscal discipline, 3G Capital, didn't disappoint on the cost side. RBI managed to restrict and contain its expenses on all cost heads, resulting in a 7.2% y-o-y decline in operating costs in the fourth quarter. This, in turn, translated into a 8 percentage point increase in the company's adjusted operating margin, which was up to 40%.

On a related note, according to Reuters, Restaurant Brands International has approached Popeyes Louisiana Kitchen about a takeover offer . This has resulted in Popeyes' stock price touching a life-time high. The target Popeyes is famous for its Louisiana-style fried chicken and buttermilk biscuits, and has been seen annexing precious market share in the U.S. and putting up a fight to players like KFC. Popeyes is likely to benefit from such an acquisition by getting more visibility and expansion opportunities in the international markets.

Have more questions on Restaurant Brands International ( QSR )? See the links below:

  • Can Tim Hortons Challenge Starbucks' And Dunkin' Brands' Duopoly In The U.S.?
  • Why Have We Revised Our Price Estimate Of Restaurant Brand International Upwards To $42 Per Share?
  • Restaurant Brands International Stays Confident Amid Tepid Q2'16 Sales And Fears Of Restaurant Industry Slump
  • Restaurant Brands International Q2 FY'16 Earnings Preview: Emphasis On Expansion To Be The Growth Strategy
  • Franchised Restaurants To Contribute More Revenues Than That Of Company-Operated Restaurants For Restaurant Brands International By The Next 3 Years
  • How Has Restaurant Brands International's Revenue And EBITDA Composition Changed Over 2011-2015?
  • By What Percentage Have Restaurant Brands International's Revenues And EBITDA Grown Over The Last Five Years?
  • Where Will Restaurant Brands International's Revenue And EBITDA Growth Come From Over The Next Three Years?
  • Restaurant Brands International Q1 FY'16 Earnings Preview: Breakfast Market To Drive Comp Sales
  • What Is Restaurant Brands International's Revenue & EBITDA Breakdown? (Updated After Q1 2016)
  • What's Restaurant Brands International's Fundamental Value Based On Expected 2016 Results?


1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Restaurant Brands International

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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