U.S. Markets closed

Expansion Efforts to Aid Restaurant Brands (QSR), Traffic Low

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Restaurant Brands International Inc. QSR is likely to benefit from expansion efforts, menu innovation and the loyalty program. Also, focus on re-imaging initiatives bodes well. However, pandemic-induced soft traffic is a concern.

Let us discuss the factors highlighting why investors should retain the stock for the time being.

Factors Driving Growth

Restaurant Brands believes that there is a huge opportunity to grow all its brands around the world by expanding its presence in existing markets as well as entering new markets. To this end, the company continues to evaluate opportunities to ramp up international development of all the three brands by establishing master franchisees with exclusive development rights as well as joint ventures with new and existing franchisees. During second-quarter 2021, the company opened the 400th Burger King store in France in association with its master franchisee, Groupe Bertrand.

The company is confident about the Tim Hortons brand’s long-term growth prospects. It remains committed to deliver on its international growth strategy of expanding the brand worldwide. Moreover, the prospects of the business in Canada look bright. Restaurant Brands announced plans to expand Popeyes in the U.K., India, Mexico and Saudi Arabia. Going forward, the company plans to open 1,000 Popeyes restaurants over the next 10 years.

Restaurant Brands continues to focus on improving services through comprehensive training, better restaurant operations, reimaging efforts and attractive menu options. This will help the company enhance overall guest satisfaction and drive comps. Notably, the company expects to drive traffic by expanding the customer base and continuing to build brand leadership in food quality and taste.

During second-quarter 2021, the company made solid progress with regards to its core products with ingredients. This includes hand-breaded chicken sandwiches from Burger King and nuggets from Popeyes. It benefited from the $1 Your Way Value Menu (Burger King) and Chicken sandwich (Popeyes), resulting in improved traffic at its restaurants.

The company’s loyalty program is gaining popularity. Restaurant Brands stated that following a rapid ramp-up phase, nearly half of the customers pay through Tim's Rewards. During second-quarter 2021, the company launched loyalty programs across all three brands nationally. With significant progress made in terms of user experience and gaining more active users, the company is optimistic about its potential for the respective brands over the long term.

Concerns

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Shares of Restaurant Brands have moved up 1.9% so far this year compared with the industry’s 10.9% growth. The dismal performance was primarily caused by the coronavirus pandemic. During second-quarter 2021, sales in Ontario were negatively impacted by strict lockdowns. Although a majority of dining services are open, traffic is still low compared with pre-pandemic levels. We believe that the Delta variant of coronavirus might hurt traffic and sales in the upcoming periods.

Zacks Rank & Key Picks

Restaurant Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include The Cheesecake Factory Incorporated CAKE, Chipotle Mexican Grill, Inc. CMG and Domino's Pizza, Inc. DPZ. Cheesecake Factory sports a Zacks Rank #1, while Chipotle and Domino's carry a Zacks Rank #2 (Buy).

Cheesecake Factory’s 2021 earnings are expected to surge 268.5%.

Chipotle has a trailing four-quarter earnings surprise of 6.9%, on average.

Domino's has a three-five year earnings per share growth rate of 12%.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report

Domino's Pizza Inc (DPZ) : Free Stock Analysis Report

The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report

Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research