Restaurant Brands 4Q sales growth accelerates as it benefits from new Carl’s Jr. burger chain

Russel Creedy, CEO at Restaurant Brands
Restaurant Brands 12-month price history (NZX.com)

Restaurant Brands New Zealand [NZX: RBD], the nation's largest fast food operator, said fourth quarter sales rose at a faster pace as it benefited from its new Carl's Jr. burger chain.

Sales rose 6.4 percent to $77.6 million in the 12 weeks ended Feb. 24, up from a 4.5 percent pace in the year earlier quarter, the Auckland-based company said in a statement. Annual sales rose 5.6 percent to $329 million, compared with a 1.2 percent pace the year earlier. That's ahead of the $326 million mean forecast of analysts polled by Reuters.

Restaurant Brands is tweaking its store mix in an effort to boost future earnings. The company is selling its regional and lower volume Pizza Hut stores to independent franchisees, closing unprofitable Starbucks Coffee outlets and has added burger chain Carl's Jr to better compete with rivals McDonald's Restaurants (NZ) and Burger King Corp.

Shares in Restaurant Brands advanced 1.8 percent to $2.85 and have slipped 0.4 percent so far this year. The stock has an average 'hold' rating according to analysts polled by Reuters.

Sales at fried chicken chain KFC continued to dominate sales, accounting for 73 percent of revenue in the fourth quarter. KFC sales rose 5 percent to $56.9 million, up from 1.8 percent sales growth in the year earlier period, as it added one store taking the total to 90 and benefited from a new menu, Christmas promotional activity and the release of the Real Kahuna Burger.

The Pizza Hut chain contributed 1.2 percent less revenue of $10.8 million in the fourth quarter, lagging a 6.9 percent gain in the year earlier period, as it operated with six fewer stores bringing the total to 51. Excluding the store changes, same-store sales rose 8.9 percent as it benefited from value offers and the promotion of its Moroccan Pizza range.

Sales at the company's Starbucks chain increased 2.7 percent to $6.2 million despite having two fewer stores taking the total to 27. Excluding the store changes, sales rose 7.6 percent after the company improved its value and improved the customer experience of its stores.

The company's newest chain, Carl's Jr, which opened in November 2012, benefited from a rollout of new stores as sales rose 108 percent to $3.7 million. The company had eight stores during the latest quarter, compared with just two in the year earlier period. Excluding store changes, same-store sales slipped 59 percent as the chain rolled over strong opening sales the year earlier.

Restaurant Brands didn't provide an update on its earnings outlook. The company, which reports full year earnings on April 10, said in October that improved trading in the second half of the financial year would see full-year earnings of between $18 million and $19 million, up from $17.7 million a year earlier. Analysts polled by Reuters expect full-year net income of $18.8 million.

(BusinessDesk)

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