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Financing

Burger King’s sales recovery takes a hit

The brand’s same-store sales slowed in the second quarter as its value offers lost momentum and its marketing strategies did not make up for the loss.
Burger King sales
Photograph: Shutterstock

Burger King’s pandemic recovery took a hit in the third quarter, as same-store sales fell 1.6%, parent company Restaurant Brands said Monday.  

The decline represented a dramatic slowdown from the second quarter, suggesting that the Miami-based burger brand has lost some ground to competitors as it worked to shift its business following leadership changes there.

The company blamed its weakened performance on its value offers. Jose Cil, CEO of parent company Restaurant Brands International, said that the chain’s $1 Your Way menu and its 2-for-$6 offer didn’t perform as well as value offers a year ago. Burger King also said it shifted away from paper coupons, which it relied on for sales more than other brands.

Burger King’s marketing strategies, including its Ch’Kng chicken sandwich and its Real Meals, didn’t make up for the loss of value sales.

“Clearly we’re navigating a transition in the U.S.,” Cil said.

Burger King has closed about 250 domestic restaurants since the start of the pandemic. It also changed its leadership as Tom Curtis was named president of the brand in the U.S. and Canada in August, replacing Chris Finazzo, who stepped down in July.

The move was an indication that the brand was shifting its focus to operations. Curtis was an operations executive with Domino’s who came to Burger King earlier this year.

The brand’s same-store sales have clearly lost traction. On a two-year cumulative basis, the chain’s same-store sales were down about 5%, a steep slowdown from the 1.8% two-year increase in the second quarter.

The brand has lost some ground with its top competitors McDonald’s and Wendy’s as well as smaller chains like Jack in the Box. Cil said that Burger King is “aware of the gap and are building an actionable, long-term plan to address it.”

Burger King is not the only brand dealing with some lost momentum. Sister chain Popeyes, combatting a sudden rush of fast-food brands into the chicken sandwich space, said same-store sales declined 4.5%. Yet the brand is still up 14% over 2019 numbers.

Tim Hortons, meanwhile, has continued its recovery in Canada as the country opens. The coffee-and-doughnut chain’s same-store sales rose 9.5% in the third quarter, still down from 2019, yet the market north of the border has been slower to recover.

The brands’ respective international businesses all picked up steam in the third quarter. Tim Hortons’ same-store sales outside of Canada rose 19.7% in the period, for instance, and Burger King’s international sales rose more than 25% while at Popeyes they grew 28%.

RBI also said that its unit development pipeline is on track to help the company return to stronger restaurant growth this year.

Revenues at RBI rose 12% to $1.5 billion in the quarter from $1.34 billion a year ago. Net income was $221 million, or 71 cents per share, up 52% from the same period a year ago.

 

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