Restaurant Brands International (NYSE:QSR)
QSR delivered another strong quarter of earnings. The company’s Burger King (BKW) division achieved substantial improvement in same store sales (SSS) in the U.S. SSS grew an industry-leading 8% during the quarter, the best result that BKW has delivered in nearly a decade. The company attributes its growth to a combination of factors, including recently remodeled stores, strong limited-time product offerings, an enhanced value menu, and improved service times.
This is BKW’s second consecutive quarter of industry-leading SSS growth, which suggests that BKW is beginning to close the revenue gap with its peers, a gap which has persisted for more than a decade. BKW generates $1.3 million in revenue per store compared to $1.5 million for Wendy’s and $2.4 million for McDonalds. Closing this revenue gap will be a significant driver of earnings growth over the coming years.
The significant reduction in Tim Hortons’ cost structure is an important highlight of QSR’s recent results. Although QSR has owned Tim Hortons for only two quarters, it has decreased overhead by more than 30% and begun to reduce its core operating expenses. Importantly, QSR is improving the brand’s operating efficiency while enhancing its strong growth profile.
Strong sales improvements at BKW’s U.S. business and operational efficiencies at Tim Hortons, combined with strong unit growth, enabled QSR to increase quarterly earnings per share by 27%, despite the strengthening of the U.S. dollar, which negatively impacted results by more than 10%.
From Pershing Square's semi-annual 2015 report.
