(Bloomberg) -- Restaurant Brands International Inc.’s sales grew less than anticipated in the second quarter, the latest sign of consumer malaise hitting restaurants.
The company missed estimates for sales growth at restaurants open more than 13 months, as a stronger-than-foreseen showing for Tim Hortons’ Canada business couldn’t offset unexpected weakness in the rest of the operation. System-wide sales, which also include newer restaurants, was also just short of expectations.
Restaurant Brands’ U.S.-listed shares rose 1.7 per cent in New York at 10:16 a.m. Investors were likely prepared for soft results, with competitors earlier reporting a sales slowdown on the back of weak demand. An increase in same-store sales for the company’s business outside of North America defied industry trends, TD Cowen analyst Andrew Charles wrote in a note to clients.
Consumers around the world are pulling back from dining out as they cope with elevated prices and less spending money. Chains have responded with a series of deals, including Burger King’s $5 meal in the U.S., which it launched ahead of rival McDonald’s Corp. in a fight for market share.
Restaurant Brands said Burger King will extend the meal deal until October. The bundle has attracted women as well as lower- and middle-income customers, Chief Financial Officer Sami Siddiqui said on a call with analysts.
Further evidence of diner cautiousness was seen at Papa John’s International Inc., which also posted North America same-store sales that fell short of expectations. Chief Financial Officer Ravi Thanawala called out a “highly promotional” backdrop among quick-service chains and a “more value-conscious consumer” in a statement. Shares rose 2.6 per cent at 10:16 a.m. in New York as the chain vowed to offer more affordable products in addition to its higher-end lineup.
Sales at Burger King in the U.S. were about flat compared with the prior year, despite ongoing efforts to remodel locations, ramp up advertising and reduce customer complaints. Still, the chain outpaced McDonald’s, whose American business declined just under one per cent in the second quarter.
Restaurant Brands’ earnings per share excluding some items were roughly in line with expectations, with Chief Executive Officer Josh Kobza saying the company is focused on “cost discipline.”
The company said it expects system-wide sales growth of around six per cent in 2024, which is below its goal of about eight per cent on average through 2028. It still anticipates adjusted operating income of about eight per cent.
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