Burger King may have gone to the well too often. US/Canada same-store sales were negative (-0.5%) as Cheetos Chicken Fries—playing off its Chicken Fries and Mac ‘n Cheetos items—failed to draw a crowd.
Daniel Schwartz, CEO of Restaurant Brands International Inc. (RBI), cited undeniable “industry softness” for the decline, an explanation that loses some persuasiveness when you consider that RBI’s other QSR brand, Tim Hortons, had positive same-store sales (+1.7% in Canada and +4.5%).
Since no analyst thought to ask Schwartz how much Burger King’s menu pricing had risen in the past year, it’s impossible to tell just how bad a quarter it was for the chain in its largest market.
Schwartz noted that Burger King has returned to its core menu and to premium pricing with the recently introduced Bacon King burger, priced at a hefty $5.99 for the sandwich alone. He also made a brief, tantalizing suggestion that the brand is exploring “another channel” for interaction with customers. Could RBI be looking at a deal to sell Chicken Fries at supermarkets?
Tim Hortons has eschewed the sort of menu gimmickry on which Burger King has relied this year. Focusing on building lunch sales (on top of already strong breakfast business) with items such as grilled wraps and Potato Wedges. Recent menu additions include a Southwest Pulled Pork panini/wrap and a Maple Farmer’s Breakfast sandwich/wrap.
Burger King fared much better overseas, especially in its Latin America Caribbean region, where comp sales rose 9.5%. The Europe/Middle East/Africa region saw a 2.6% gain (thanks to growth in Turkey and Russia); comp sales rose 5.3% in the Asia/Pacific region.
Systemwide, Burger King’s unit count increased by 143, including a gain of 16 stores in the U.S. Its Tim Hortons brand had a net reduction of one store in the U.S. with a gain of 25 in Canada.