Yahoo Finance Tim Hortons parent doubles earnings on stronger sales
Rising sales at Tim Hortons helped fuel an increase in both fourth-quarter system-wide sales and franchisee profits at parent company Restaurant Brands International Inc.
The restaurant franchisor recorded a nearly six per cent increase in consolidated comparable sales for the quarter ended Dec. 31, 2023, which it said was led by growth of more than eight per cent at Tim Hortons Canada and more than six per cent at its U.S. Burger King operations.
Chief executive Josh Kobza said traffic was solid overall in the quarter, with Tim Hortons Canada seeing an increase and Burger King traffic turning positive for the first time since the second quarter of 2021.
“We have started 2024 with a foundation of strong operational performance and I’m thankful to all our teams, franchisees and their team members who work so hard to make us successful,” Kobza said.
Consolidated total revenues for the fourth quarter was US$1.82 billion, compared to US$1.689 billion in the fourth quarter a year ago.
Net income for the quarter more than doubled to US$726 million from US$336 million and diluted earnings per share jumped to $1.60 from $0.74 over the same time frame.
The Feb. 13 earnings report was the first time Restaurant Brands reported under five segments, namely its brands Tim Hortons, Burger King, Popeyes Louisiana Kitchen, Firehouse Subs and International, with the latter including all operations of each of its brands outside the U.S. and Canada.
The results were also the first since it transitioned to using adjusted operating income instead of adjusted earnings before interest, tax and depreciation.
“This shift fully aligns with how we are now managing the business and provides each of our five business unit leaders with even greater autonomy over their strategic decisions and greater accountability to deliver strong returns,” Kobza said during Tuesday’s earnings call.
CIBC Capital Markets analyst John Zamparo said the company’s relationships with franchisees appear to be improving due to improved store-level profitability.
Almost exactly a year ago, following Kobza’s appointment as its new chief executive, Restaurant Brands announced that it would start to publicly release average earnings for its brands going forward in a bid to visibly measure the success of its franchisees.
That change came as a group of Tim Hortons’ franchisees decided to go public with complaints over cost increases for inputs such as coffee and sandwich ingredients that they are forced to purchase from head office. A spokesperson for RBI said there was no connection between the new disclosures and the group’s public complaints.
Restaurant Brands also released its 2023 full-year results on Tuesday, reporting a 30 per cent year-over-year increase in average home market franchisee profitability, as well over 12 per cent in global system-wide sales growth for 2023.
• Email: dpaglinawan@postmedia.com
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