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Lower appetite for Burger King, staff crunch hit Restaurant Brands’ sales

burger king us restaurant

Burger King and Tim Hortons are struggling with a staffing crunch and the Delta variant keeping coffee-loving office workers at home, causing parent Restaurant Brands International Inc (QSR.TO), to miss estimates for quarterly revenue on Monday.

US-listed shares shed 4.4 per cent as same-store sales at its Burger King, Tim Hortons and Popeyes chains came in below expectations in the third quarter.

Restaurant Brands also faced stiff competition from McDonald’s Corp (MCD.N) and Wendy’s Co (WEN.O) doubling down on marketing and launching new menu items.

Wendy’s launched a new ‘Big Bacon Cheddar Cheeseburger’ and reformulated its french fries to keep them crispy for longer earlier this year, while McDonald’s collaborated with boy band BTS and rapper Saweetie to draw customers.

“We saw a continued gap relative to our peers. We’re keenly aware of this gap,” Chief Executive Jose Cil told analysts while discussing Burger King’s results. “We also see clear opportunities across operations, digital, menu and image that can work together to reclaim market share.”

Analysts said marketing behind some Burger King products had been lackluster, with the brand singled out as the biggest drag on Restaurant Brands’ performance.

But some analysts said Burger King can see a revival, like Domino’s Pizza Inc (DPZ.N) did around 2010, if its new operating chief and president overhaul marketing.

Restaurant Brands, whose hand-breaded chicken sandwich is considered a labor-intensive product, has also struggled to adequately staff its restaurants, particularly for night shifts at its Popeyes chain.

The company had to reduce operating hours and limit service modes at select restaurants, and CEO Cil said it would take time for the staffing situation to improve.

Many hourly workers have turned to higher-paying jobs in warehouses and other businesses.

Total revenue rose 11.8 per cent to $1.50 billion, missing estimates of $1.53 billion. Adjusted per-share earnings was 76 cents, versus Refinitiv IBES estimate of 74 cents.

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