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Popeyes and Burger King have rapidly expanded delivery

And sister brand Tim Hortons had its best same-store-sales performance in more than two years thanks to an improved image in Canada.
Photograph: Jonathan Maze

Popeyes Louisiana Kitchen and sister chain Burger King have both quietly expanded delivery to thousands of restaurants in the U.S. and the world as they seek to build digital sales and catch up to their competitors.

Popeyes has delivery in 1,100 locations in the U.S., nearly half of the chicken chain’s domestic locations.

Burger King, meanwhile, has delivery in 3,000 of its more than 7,000 U.S. restaurants and 7,000 of its nearly 18,000 global locations, parent company Restaurant Brands International (RBI) said Monday.

RBI’s third chain, Tim Hortons, reported its strongest same-store sales growth in 10 quarters in the last three months of 2018—up 1.9%—due largely to improved growth in Canada, where same-store sales rose 2.2%.

And all three brands boasted strong global unit growth last year: Total units in the three brands rose 5.5% last year, to nearly 26,000 restaurants. Systemwide sales for the three quick-service brands rose 7.4% last year thanks mostly to the company’s aggressive unit growth.

“We have significant long-term growth prospects over many, many years to come,” RBI Co-Chairman Daniel Schwartz said on the company’s earnings call. Toronto-based RBI’s stock rose less than 2% on Monday.

Burger King

While much of Burger King’s growth in recent years has come in international markets, the chain did add 100 net new units in the U.S. in 2018, “the best performance in a long time,” RBI CEO Jose Cil said on the earnings call, noting that the chain still has a lot of “white space” around the world and in its home market.

Burger King’s same-store sales rose less than 1% in the U.S. in the last three months of 2018, but executives said that was an improvement over the chain’s third-quarter performance.

The company generated attention late in the year with its “Whopper Detour” promotion, offering customers a 99-cent Whopper if it was ordered through the chain’s mobile app from a McDonald’s parking lot. The promotion generated 1.5 million app downloads.

The chain is also focused on a new generation of remodels. It introduced last year its “Burger King of Tomorrow,” which features kiosks and outdoor digital menu boards. The company plans to “aggressively” roll out the remodel across the country.

Popeyes

Executives at the chicken chain, which RBI acquired in 2017, are especially excited about the future of delivery.

The service is “particularly incremental for the Popeyes business,” Schwartz said, and the company believes it can be a “more meaningful portion of sales in the U.S.”

Burger King and Popeyes began testing delivery last year, not long after RBI committed to boosting its digital footprint by putting now-Chief Operating Officer Josh Kobza in charge of the company’s digital strategy.

Fast-food chains throughout the U.S. have been aggressively expanding delivery, including top rivals for both Popeyes and Burger King. McDonald’s has delivery in more than half of its 14,000 U.S. locations, and Yum Brands-owned KFC is expanding delivery with Grubhub.

Popeyes has accelerated its overall growth in its first full year under RBI ownership. Unit count grew by 7.3% to 3,102, and systemwide sales rose nearly 9% in 2018.

But the chain’s same-store sales slowed in the fourth quarter, declining 0.1%, which the company blamed on “less impactful limited-time offers and softness” in family meal programs.

The chain did offer a $20 holiday meal in December that improved results toward the end of the year.

Tim Hortons

Executives credited a handful of initiatives for improved sales at Tim Hortons. The initiatives included a new kids meal, Timmies Minis, which has helped generate incremental sales. The chain also said that its launch of Breakfast Anytime helped lift sales and profitability.

The chain also said that it improved its image in Canada. The chain had seen its image there diminish recently amid a franchisee dispute.

But the company has worked to change its message there. “We improved the narrative of the business and significantly improved our brand positioning,” Schwartz said.

And Tim Hortons President Alex Macedo has worked to improve the brand's relationship with franchisees, seeking more input from operators and communicating the brand’s plans with them.

The chain is also banking on an improved look for its restaurants. The chain’s Canadian market remodeled 400 locations, about a 10th of the chain’s nearly 4,000 locations. The chain expects to renovate restaurants as they are due for remodels, based on the company’s franchise agreement.

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