Restaurant Brands International (NYSE:QSR)
QSR delivered another strong quarter of earnings, consistent with our belief that the company will produce a high rate of earnings growth over the coming years. QSR continues to deliver strong improvement in Burger King (BKW) U.S. same-store sales (SSS) growth. This quarter SSS grew 5% which is at the top of the QSR industry once again. This is also QSR’s eighth consecutive quarter of positive comps. New product innovations, improved service, and the increasingly remodeled store footprint are contributing to increased growth.
Despite its industry-leading SSS growth in recent quarters, BKW still operates at sales-per-store that are well below its peers, Wendy’s and McDonalds. Closing this gap will provide QSR with an additional significant driver of earnings growth over the coming years.
Tim Hortons’ (THI) overhead cost declined by nearly 40% this quarter, accelerating the rate of cost reduction achieved in prior quarters. Importantly, QSR is improving the brand’s operating efficiency while maintaining THI’s high level of SSS growth and increasing unit count.
Strong sales improvement at BKW’s U.S. business, and operational efficiencies at THI were two important factors, when combined with strong restaurant unit growth, that allowed QSR to grow EBITDA by 6% and EPS by 33%, in spite of the strengthening U.S. dollar, which negatively impacted results by more than 12%.
From Bill Ackman (Trades, Portfolio)'s Pershing Square Holdings third quarter 2015 letter to shareholders.
