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Burger King, Tim’s owner says 2016 off to ‘great start’

(Dave Bedard photo)

Reuters — Restaurant Brands International said it was off to a “great start” this year, after new product launches at its Burger King and Tim Hortons chains in 2015 helped boost sales in a highly competitive market.

Shares of the Ontario-based company, which reported a better-than-expected quarterly profit on Tuesday, rose as much as nine per cent to $48.24 on the Toronto Stock Exchange.

The company also raised its quarterly dividend by one cent, to 14 cents per share.

“Restaurant sales can still be much greater and 2016 is already off to a good start,” CEO Daniel Schwartz said on a post-earnings call, adding that the company was “pretty excited” about the addition of grilled hot dogs to its menu.

Burger King said last week hot dogs would permanently feature on its menu, signaling that it was going back to its fast-food roots after attempting to tempt diners with salads and healthier offerings.

Competitors such as McDonald’s and Wendy’s have also been adding new items to lure customers back. McDonald’s has a new all-day breakfast offer, while Wendy’s latest promotions include a “4 for $4” meal.

“Menu innovation has not been the only key to growth at Burger King: value for money has also played a large part,” said Neil Saunders, CEO of research firm Conlumino.

Burger King’s new promotions include a new “2 for $5” sandwich deal, and an offer where customers can get 10 chicken nuggets for $1.49.

Sales at established Burger King restaurants rose 3.9 per cent, excluding currency impact, in the fourth quarter ended Dec. 31, helped by limited-time offers such as a pitch-black burger that the company dished out for Halloween.

The re-introduction of chicken fries as a permanent menu item last March has also helped the chain. Burger King has since innovated on the item, introducing chicken fries dusted in buffalo wings-style spices, and other flavours.

Sales at the Tim Hortons coffee and doughnut chain also rose, due to strong demand for beverages, a new line-up of steak paninis, grilled lunch wraps and Nutella pockets, which the company introduced last April.

Comparable sales at the chain rose 6.3 per cent, excluding currency impact. Analysts had estimated comparable sales growth of 3.9 per cent for Tim Hortons and 3.8 per cent for Burger King, according to Consensus Metrix.

Adjusted profit was 35 cents per share, above analysts’ average estimate of 29 cents, according to Thomson Reuters I/B/E/S.

Reporting for Reuters by Anet Josline Pinto in Bangalore.

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