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Why Restaurant Brands’ Revenue Fell Short of Analysts’ Estimate

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Second-quarter performance

In the second quarter, Restaurant Brands International (QSR) saw revenue of $1.34 billion, falling short of analysts’ estimate of $1.38 billion due to lower-than-expected SSSG (same-store sales growth) at Tim Hortons and Burger King. The company’s new accounting standards, adopted on January 1, added advertising fund contributions to its total revenue. Excluding advertising fund contributions, the company’s revenue stood at $1.14 billion, which represents 1.0% YoY (year-over-year) growth from $1.13 billion.

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Revenue growth across brands

Tim Hortons posted revenue of $823 million in Q2 2018. Under its former accounting standards, its revenue stood at $770.3 million, which represents a 0.3% fall YoY from $772.3 million. The brand’s revenue fell due to a decline in supply chain revenue, offset by currency translation.

Burger King posted revenue of $418.1 million, or $306.2 million under its former accounting standards, representing 4.3% growth YoY from $293.7 million. The revenue growth was driven by an increase in franchise revenue due to 1.8% SSSG and the net addition of 1,022 restaurants.

Popeyes posted revenue of $102.3 million, or $67.8 million under its former accounting standards, representing 1.6% growth YoY. The revenue was driven by franchise revenue rising due to 2.9% SSSG and the net addition of 207 restaurants.

Peer comparison

In the second quarter, McDonald’s (MCD) revenue fell 11.5%, while analysts are expecting Jack in the Box (JACK), and Wendy’s (WEN) to post revenue growth of -48.3% and 27.1%, respectively. Next, we’ll look at Restaurant Brands’ SSSG in the second quarter.

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