"Why Investors Are Eating Up Restaurant Brands International
Key Points
Restaurant Brands International has been one of the hottest large cap names on the NYSE.
The company has the kind of multi-channel growth you’d like to see as an investor.
J. Patrick Doyle, former Domino's Pizza CEO, was recentl"
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"y announced as the company's new executive chairman.
Wall Street has been raising its earnings estimates for the current quarter and 2023.
Why Investors Are Eating Up Restaurant Brands International
This summer, few investors were ordering shares of fast food chain operator Restaurant Brands International Inc. (NYSE: QSR). With gasoline prices soaring, fewer road trips meant fewer stops at Burger King, Tim Hortons, Popeyes, and Firehouse Subs.
Toss in a side of increased food and labor costs and the company’s earnings suffered. By June 2022, french fries and chicken strips weren’t the only things getting dipped as the stock dipped below $50.
Since then, Restaurant Brands International has been one of the hottest large-cap names on the NYSE. A better-than-expected third quarter performance and a super-sized leadership announcement have traders bidding the stock back up toward its post-pandemic peak.
With a few trading days left, this month’s volume is already at its highest level in two and a half years. And with many Americans cutting back on expensive sit-down meals, fast food businesses like Restaurant Brands International may continue to be appealing to consumers and investors alike.
How Did Restaurant Brands International Do in Q3?
Earlier this month, Restaurant Brands International posted adjusted earnings per share (EPS) of $0.96 which crushed the consensus estimate of $0.80. The 23% year-over-year improvement marked the company’s best profit growth of 2022 and helped alleviate concerns about cost inflation.
The result was driven by higher same-store sales at all restaurants except the recently acquired Firehouse Subs. Overall revenue growth of 15% reflected increased demand for takeout, drive-thru and delivery — exactly the kind of multi-channel growth you’d like to see as an investor.
Growth was particularly strong at Burger King where the Royal Perks loyalty program attracted eaters with free food and upsizes. Loosened restrictions at the Canadian border also helped boost Burger King and Tim Hortons sales. The two restaurants are often housed under one roof along key travel corridors.
Even with higher menu prices, consumers appear to be finding relative value at Burger King, Popeyes and Tim Horton’s. And with gas prices elevated and many people working from home these days, fast food deliveries are up significantly this year.
What Leadership Change Did Restaurant Brands Announce?
On November 16th, Restaurant Brands International announced that J. Patrick Doyle will be the company’s new executive chairman. This was perceived as a big deal because Mr. Doyle is the former CEO of Domino’s Pizza where he had a solid track rec