Restaurant Brands Comps Improve Despite Coronavirus Woes

Restaurant Brands International Inc. QSR recently provided business update in the view of the coronavirus pandemic. The company has been witnessing improving sales trends at Tim Hortons, Burger King and Popeye’s Louisiana Kitchen, of late.

The company announced that as of the third full week of May, Popeyes US comparable sales were in positive low forties, up from flat in the second half of March. Moreover, as of the third full week of May, Tim Hortons Canada comparable sales were in negative mid-twenties, compared with negative mid-forties in the second half of March. Over the same time frame, Burger King US comparable sales were in negative mid-single digits, compared with the negative low-thirties in the second half of March.

Restaurant Brands’ comparable sales are benefiting from robust digital platform, increase in home delivery and growth in group orders. The company has been focusing on expansion of delivery via digital platform amid the pandemic. Two years ago, the company had just couple of hundred restaurants in North America on delivery. However, currently, the company has more than 9,000 active restaurants across its three brands with most offering delivery via the company’s digital platforms. At Tim Hortons in Canada, the company stared providing delivery from additional 800 restaurants in the past two months. During the first-quarter 2020 conference call, the company announced that delivery sales increased by more than six times compared with their pre-crisis levels.

Other Updates

Management stated that as of third full week of May, almost all restaurants are open in the domestic market. Further, nearly 60% of the company’s restaurants are open in Europe, Middle East and Africa. Moreover, roughly 85% and 50% of the company’s restaurant are open in Asia Pacific and Latin America, respectively.

Due to the pandemic, the company’s shares have fallen 14.9% year to date, compared with the industry’s decline of 7.6%.

Restaurant Brands currently has a Zacks Rank #3 (Hold).

Key Picks

Better-ranked stocks worth considering in the same space include Domino's Pizza, Inc. DPZ, Wingstop Inc. WING and Yum China Holdings, Inc. YUMC. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Domino's Pizza, Wingstop and Yum China have an impressive long-term earnings growth rate of 12.5%, 11% and 9.5%, respectively.

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