Restaurant Brands adds new fast-food chain franchise

Listed fast food chain operator Restaurant Brands has acquired rights to operate a fourth brand, adding to its current stable of KFC, Pizza Hut and Starbucks Coffee businesses.

Restaurant Brands will be building and operating the CKE owned Carl’s Jr chain of restaurants in the country, regardless of falls in sales through its other three fast food operations.

As a new entrant in a crowded burger market, Forsyth Barr sees the Carl's Jr chain's potential as up to twice Starbucks or Pizza Hut sales, but still much smaller than KFC, Forsyth Barr analyst Guy Hallwright says.

The broker has not changed its profit forecasts as a result, although revenue forecasts have been reduced by $500,000 in FY12 (Starbucks) and increased it by $1.2 million in FY13 (Carl's Jr). Valuation is up 1c to $2.30.

Specific financial details were not made available regarding the agreement with CKE and company executives Russel Creedy (CEO) and Grant Ellis (CFO) were not available for immediate comment.

Sales in the third quarter for Restaurant Brands fell 3.1% to $71.9 million reflecting store closures in Christchurch following the earthquake and the sale of Pizza Hut outlets.

KFC however lifted sales in the 12 weeks ended December 5 by 0.9% to $55.1 million, making it the company’s strongest performer, though same-store sales fell 1.6%.

Pizza Hut, which had 11 stores sold to independent franchisees and three others closed by the company, had seen a drop of 17% to $10.7 million while same-store sales also declined 1.6%.

Starbucks Coffee sales fell 9.5% to $6.1 million, most likely caused by three outlets being closed at the end of their leases and a further three in Christchurch due to earthquake damages.

Restaurant Brands had a total of 195 stores at the end of the final 2011 quarter, down from 211 one year earlier. Starbucks outlets fell from 38 stores to 35, Pizza Hut from 85 to 71 and KFC rising from 88 to 89 stores.

Restaurant Brands shares [NZX:RBD] were down 0.48% to $2.08 in early afternoon trading. The stock is down 19% this year.

There are already two Carl's Jr restaurants in Auckland, operated by former-All Black Michael Jones who has the rights to develop a limited number of the stores in the city.

The Carl’s Jr brand, owned by US-based CKE Restaurants, claims to offer unique service attributes focusing on ‘partial table service’ with a ‘made-to-order’ menu, all-you-can-drink beverage bars and a strong breakfast offering.