RBI Highlights Success of New Initiatives in Q1 Earnings Call

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TORONTO — Restaurant Brands International Inc. (RBI) has reported financial results for the first quarter ended March 31, 2019.

“Overall, we had another good quarter, with 6.4-per-cent consolidated systemwide sales growth, reaching nearly 26,000 restaurants worldwide. Our systemwide sales growth was led by Burger King at more than eight per cent, Tim Hortons at about 0.5 per cent and Popeyes at nearly seven per cent,” said Jose Cil, CEO, RBI, upon opening the earnings call. “Our results in the quarter were highlighted by solid global same-store sales results at Burger King, continued strength in restaurant expansion and pipeline development at both Burger King and Popeyes and positive results across the ‘Winning Together’ initiatives we’ve implemented at Tim Hortons over the past year, including the exciting launch of our new Tims Rewards program at the end of the quarter.”

During the quarter, Tim Hortons experienced a slight downturn in comparable sales (0.6 per cent globally and 0.4 per cent in Canada). Cil noted that through the quarter, the brand’s initiatives targeted at driving long-term sustainable sales growth performed well, with all-day breakfast driving increased sales and traffic. “However, there were two distinct factors that offset this performance and resulted in our sales growth being slightly negative for the quarter. The first factor was severe weather across Canada throughout the quarter, which resulted in a drag on comparable sales growth of approximately one per cent in Q1,” he explained. “The second factor was a weak Roll-Up-the-Rim campaign.”

RBI had identified a decline in Roll Up the Rim’s effectiveness last year and expanded the timeframe and giveaways for this year’s promotion, but Cil indicated these measure did not create the expected results.

“We still believe the 33-year-old Roll Up the Rim program is a valuable and iconic platform for Tims — it has very high awareness. However, it’s become clear to us that it needs a modern and fresh approach to engage our guests in a stronger way going forward,” said Cil. “The Tims team is working on new plans to drive a successful reboot of the program next year, including seamless digital integration.”

Cil also discussed the performance of Tim Hortons’ new loyalty program, which launched on March 20. He indicated the Tims Rewards program was exceeding expectations. “While it’s still early, after just the first five weeks, approximately, 20 per cent of Canada’s population has used the loyalty program, with almost half of our daily transactions now scanning the loyalty card,” he stated. “We believe, longer-term, this represents a tremendous opportunity to utilize the insights provided by this guest-centric data to better understand our guests’ behaviors, their needs and wants to better market to our guests directly and to better inform our business decisions. We look forward to building our base of guests on the loyalty program over the balance of this year and believe this platform will be a valuable asset that allows us to evolve the brand and drive even more innovation over the coming years.”

Finally, Cil touched on Tim Hortons’ continued international expansion, highlighting recent openings and plans for continued expansion in China.

Turning to Burger King, Cil pointed to the brand’s strength in international markets as driving its increase in sales, with international comparable sales for the quarter up 3.8 per cent compared to 0.4 per cent in the U.S.

Breakfast sales saw a slight decline for the quarter, which the company hopes to remedy through the recent launch of its BK Café subscription platform. “We’re committed to growing our breakfast daypart long term and we believe our new BK Café platform will provide a solid foundation to help drive guest count and sales growth in this important daypart going forward,” Cil added.

Another recent development for the BK brand is the pilot of the plant-based Impossible Whopper, which garnered significant social-media attention. “We’ve been encouraged by the test-market feedback so far and plan to expand to a few more select test markets around the country this summer as we prepare for a national launch later this year,” said Cil.

Integration of technology and expansion of delivery was also noted as a key focus going forward for both Burger King and Popeyes, particularly within the U.S. market. “We are very excited about the future of technology and the relevance of it for all of our brands around the world on many fronts, but particularly for delivery,” said Josh Kobza, COO, RBI. “Our outlook for that is to continue to grow coverage over the coming quarters and years, and probably also to expand the sources from which we take orders over time. We see these channels to be highly incremental and to be profitable to our restaurants.”

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