Restaurant Brands' (QSR) Brands, Coca-Cola Extend Partnership
Restaurant Brands International Inc.’s QSR four quick-service brands, Burger King, Popeyes, Firehouse Subs and Tim Hortons, have extended their long-standing partnership with The Coca-Cola Company KO in the US till 2033.
Per the agreement, Coca-Cola will invest as well as support the marketing activities of all four restaurant brands. This approach will help QSR to drive customer traffic in the country and increase profitability in franchisees.
Restaurant Brands is optimistic about this renewal as it believes this will aid in widening its market share in the US.
Accretive Investments Driving Growth
Restaurant Brands is focusing on increasing its brands’ profitability through operational enhancements. In order to fuel this initiative, the company is engaging in various investments that will increase its profitability prospects.
To boost guest experience, advance sales and increase franchisee profitability in the US, Restaurant Brands’ iconic brand, Burger King, launched its Reclaim the Flame plan. Under this plan, it will invest $400 million including $150 million in advertising and digital investments under Fuel the Flame, and $250 million under Royal Reset investment involving restaurant technology, kitchen equipment, building enhancements along with high-quality remodels and relocations.
During second-quarter 2023, management deployed $9 million toward the $50 million short-term refresh component (of the Royal Reset program) to boost technology and enhance customer experience. It also utilized about $12 million with respect to Fuel to Flame advertising and digital investments. These initiatives along with operational enhancements paved the path for traffic improvement in the second quarter.
Moving ahead, the company emphasizes streamlining its products as well as simplifying its menu boards to boost order accuracy and overall customer satisfaction. Also, investments concerning kitchen equipment upgradation (with toasters and fryers) and property improvements (like parking lot repairs and lighting) are likely to be fruitful.
Price Performance
Shares of QSR have gained 10.5% in the past six months, outperforming the Zacks Retail - Restaurants industry’s 2.5% growth. The uptrend is attributable to solid global comparable sales, unit growth, and a healthy balance of traffic and check. Its focus on loyalty program, menu innovation and expansion initiatives bode well.
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Going forward, QSR intends to focus on operational enhancements (through kitchen upgradation and technological investments) to drive growth. Earnings estimate for 2023 has moved north in the past 30 days, depicting analysts’ optimism about the stock’s growth potential.
Zacks Rank
Restaurant Brands currently carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks from the Retail-Wholesale sector are Amazon.com, Inc. AMZN and BJ's Restaurants, Inc. BJRI.
Amazon currently sports a Zacks Rank #1 (Strong Buy). AMZN delivered a trailing four-quarter earnings surprise of 41%, on average. The stock has risen 12.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AMZN’s 2023 sales and earnings per share (EPS) indicates growth of 11.1% and 214.1%, respectively, from the prior-year reported levels.
BJ's Restaurants presently flaunts a Zacks Rank of 1. BJRI delivered a trailing four-quarter earnings surprise of 121.2%, on average. The stock has improved 3.2% in the past year.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS implies rises of 5.6% and 435.3%, respectively, from the year-ago reported numbers.
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Restaurant Brands International Inc. (QSR) : Free Stock Analysis Report
