QSR (QSR, Financial) delivered strong earnings growth in the first quarter as the company maintained a high level of net unit growth and continued to achieve cost and capital efficiencies at Tim Hortons. Same-store sales growth decelerated from the pace of previous quarters and was roughly flat with prior year levels at both Burger King and Tim Hortons. QSR launched several new products during the second quarter including espresso-based drinks at Tim Hortons and the Steakhouse King hamburger at Burger King. These new offerings should help drive improved same-store sales results in future quarters.
QSR achieved net unit growth of 5% at both concepts and continued to enter into development agreements in new markets. QSR made additional progress improving Tim Hortons’ cost structure as it increased margins in the distribution businesses by nearly 300 basis points and further reduced the company’s capital requirements. As a result of the net unit growth and further cost efficiencies, organic EBITDA grew 7% and EPS grew nearly 20%.
QSR completed the acquisition of Popeyes Louisiana Kitchen at the end of March. We believe that QSR can meaningfully improve Popeye’s cost structure and can dramatically accelerate its unit growth, which will further enhance the company’s future growth profile.
From Bill Ackman (Trades, Portfolio)'s first quarter 2017 shareholder letter.
