Digital-sales growth at Restaurant Brands International Inc.’s concepts continued in the first quarter as the company also pulled back from Russia because of its invasion of Ukraine, executives said Tuesday.
The Toronto-based parent to Burger King, Tim Hortons, Popeyes Louisiana Kitchen and Firehouse Subs, said digital initiatives contributed to gains at all its brands, but especially at Tim Hortons Canada.
José Cil, RBI CEO, told analysts on a first-quarter earnings call, “We saw a sequential improvement in the contribution of digital sales to overall sales across all brands in their home markets, including Tim Hortons Canada reaching over 36% of systemwide sales.”
Joshua Kobza, RBI’s chief operating officer, added that in addition to the sizable increase in momentum at Tim Hortons Canada, the company saw digital sales in their home markets generate during the quarter 9% of sales at Burger King, 18% at Popeyes and 30% at Firehouse Subs, which it acquired in December.
“We view digital as important tools to create more convenient, seamless guest experience, increased engagement, and brand affinity and ultimately drive sales,” Kobza said.
“We attribute this improvement to a combination of factors including growth in delivery and increase in mobile order and pay continued traction from loyalty and well executed digital campaigns,” he said.
The Burger King parent also provided more insight into the impact of its announced closures in Russia as a result of that country’s invasion of neighboring Ukrain
“We had 820 fully franchised Burger King restaurants at the end of 2021, that represented about 2% of the systemwide sales” in 2021, said Matthew Dunnigan, RBI’s chief financial officer.
“During the first quarter, Russia had a roughly $12 million impact on our year-over-year adjusted EBITDA and we anticipate a fairly even impact across the year,” Dunnigan said. “In addition, from a development standpoint, over the last five years, Russia has averaged about 80 net new restaurants a year. Despite the loss of this contribution, the strength and diversification by global partners across many growth markets keeps us well positioned to accelerate overall net restaurant growth in 2022.”
Burger King said it entered into a master franchise joint venture arrangement in Russia 10 years ago, similar to its approach in a number of other global markets.
“We own a minority stake (15%) in the joint venture and none of the other owners have a majority share,” the company said in a statement. “During the first quarter, we shared a number of actions that we have taken to date as a result of the tragic events related to Russia’s military invasion of Ukraine. We suspended all corporate support for the Russian market, including operations, marketing, and supply chain support in addition to refusing approvals for new investment and expansion.”
Burger King is RBI’s only brand with restaurants in Russia. “In 2021, these restaurants represented 2% of total systemwide sales, 2.9% of total restaurant count excluding Firehouse Subs, 4.5% of total net restaurant growth, 0.6% of total revenue, and 1.7% of consolidated adjusted EBITDA,” the company said.
For the first quarter ended March 31, RBI reported net income of $270 million, or 59 cents a share, from $271 million, or 58 cents a share, in the same quarter last year. Revenues were $1.451 billion in the quarter compared to $1.28 billion in the prior-year period.
Global same-store sales systemwide were up 8% with increases of 8.4% at Tim Hortons, 10.3% at Burger King (flat in the U.S.) and 4.2% at Firehouse Subs (up 4.5% in the U.S.). Same-store sales were down 3% at Popeyes (down 4.6% in the U.S.).
As of March 31, Restaurant Brands International had 29,576 restaurants in more than 100 countries, including 19,266 Burger Kings, 5,320 Tim Hortons, 3,771 Popeyes and 1,219 Firehouse Subs.
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