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How Fast Food Restaurants Performed in 2Q17

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Part 2
How Fast Food Restaurants Performed in 2Q17 PART 2 OF 9

Restaurant Brands International Sees More Revenue Growth than Peers

2Q17 revenue growth

Restaurant Brands International (QSR) has outperformed its peers with revenue growth of 8.9%. In 2Q17, Restaurant Brands International posted revenues of $1.13 billion compared to $1.04 billion in 2Q16.

Restaurant Brands International Sees More Revenue Growth than Peers

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Revenue drivers

QSR’s revenue growth was driven by the acquisition of Popeyes Louisiana Kitchen, the addition of new restaurants, and positive SSSG (same-store sales growth). QSR acquired Popeyes Louisiana Kitchen in February 2017 for $1.8 billion. During the quarter, the revenue from the supply chain and sales from company-owned restaurants rose 7.8%, while the revenue from franchised restaurants rose 10.2%.

QSR was followed by Jack in the Box (JACK) with a revenue decline of 3.0%. The fall in Jack in the Box brand’s revenue lowered the company’s revenue in 2Q17. The refranchising of Jack in the Box brand’s company-owned restaurants and negative SSSG lowered the company’s revenue. However, some of the declines were offset by Qdoba’s revenue growth of 7.0%.

JACK was followed by McDonald’s with a revenue decline of 3.4%. With the intention of optimising its operations, the company has been refranchising its company-owned restaurants. Compared to 2Q16, the company operated 1,062 fewer company-owned restaurants in 2Q17, which led to a fall in its revenue. However, some of the declines were offset by the addition of franchised restaurants and positive SSSG of 6.6%. We’ll discuss the company’s SSSG in our next article.

During the quarter, Wendy’s (WEN) revenue fell 16.3% due to refranchising of its company-owned restaurants. Compared to 2Q16, the company operated 251 fewer company-owned restaurants. However, some of the declines were offset by the addition of new franchised restaurants and positive SSSG.

Outlook

For the next four quarters, analysts are expecting Restaurant Brands International (QSR) to post revenue growth of 12.5%. During the same period, the revenues of McDonald’s (MCD), Jack in the Box (JACK), and Wendy’s (WEN) are expected to fall 14.8%, 10.2%, and 2.6%, respectively.

Next, we’ll look at the SSSG of fast food restaurants in 2Q17.

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