Restaurant Brands International has today missed market estimates for quarterly sales as still-high inflation pressured consumer spending at its Burger King chain, signaling that the brand's turnaround efforts were falling short.
Weaker household budgets are forcing some customers to cut back on restaurant food and instead rely on cheaper, home-cooked meals, a trend that has dented traffic across the US restaurant industry over the past few months.
The Popeyes owner's dour sales contrast a strong third-quarter performance from rival McDonald's, which has been doubling down on menu upgrades, promotions and pricing - eroding market share at Burger King and other chains.
Traffic and spending at Burger King's US locations slowed in the quarter, according to brokerage Wells Fargo, even as the brand undertakes a $400m turnaround plan aimed at streamlining menus, attracting younger consumers and improving technology.
"The quarter was a mixed bag - maybe expectations were a little bit too high for Burger King, but they have to figure out a way to compete with the McDonald's of the world," said Sante Faustini III, director of product intelligence at M Science.
The Burger King division's total same-store sales growth of 7.2% missed analysts' estimates of 8.71%, according to LSEG IBES data.
Still, Canada-based Restaurant Brands' adjusted profit of 90 cents per share beat expectations of 86 cents.
"Beef inflation remains a key hot point. But, in general, commodity costs are headed the right way," said Stephens analyst Joshua Long.
Its Canada-focused Tim Hortons chain also recorded comparable sales growth of 6.8%, above estimates of 6.5%, as its coffees and new cold drinks attracted more customers.
Total revenue at the company rose to $1.84 billion for the quarter ended September 30, from $1.73 billion a year earlier. Analysts had estimated $1.87 billion.
