(Toronto) Restaurant Brands International (RBI), the parent company of Tim Hortons and Burger King, among others, reports that its fourth quarter net income more than doubled compared to the corresponding period last year.
However, the company warns of a “softening” in China, where it says it and its partners will have to spend more for all of the company’s brands to continue to grow.
The company, which publishes its results in US dollars, says its net profit totaled US$726 million, or US$1.60 per diluted share. The result is up sharply from US$336 million, or US$0.74 per diluted share, in the last three months of 2022.
On an adjusted basis, Restaurant Brands says it earned US$0.75 per diluted share in its most recent quarter, up from US$0.72 per diluted share a year earlier.
In one year, revenues increased from US1.69 billion to US1.82 billion.
The Toronto-based company explains the increase in the fourth quarter of 2023 by a larger tax benefit and higher operating revenues, partially offset by higher interest costs.
However, company executives also took advantage of the earnings release to moderate expectations, particularly regarding China. RBI previously expected net restaurant growth – a metric that takes into account both the opening and closing of establishments – to increase by at least 5% between 2023 and 2024.
“A key factor in achieving this level of growth was our expectation that our development in China would accelerate in 2024 compared to 2023 levels,” the company’s CEO, Joshua Kobza, told analysts.
“We now believe this outlook is less certain and have updated our outlook to reflect a lower level of net unit additions in China this year,” he added.
The company expects consolidated global restaurant net growth of around 4% this year before that figure accelerates in 2025.
The forecast comes as consumer spending in China has been weak in recent months, contributing to a slowing economy.
Still confident about China
But this does not dissuade RBI from the importance of the Chinese market.
“We are convinced that China represents an attractive growth market for our brands,” said Mr. Kobza.
“Given the incredible geographic scope and population of the market, success requires a serious long-term financial commitment from our partners, a long-term horizon and a commitment to growing the brand in the face of fierce competition “, he explained.
Burger King China has nearly 1,600 restaurants in China and is profitable, but “we will have to continue our growth to compete effectively with the biggest players in this market,” Kobza said.
TH International Limited, which operates Tim Hortons cafes and Popeyes restaurants in China, will need to “commit more capital to grow this business in an exciting way and we believe it is essential that they do so,” he said. said.
“We are working with them both to lay the foundations needed to meet the growth aspirations we know we are capable of.” »
Tim Hortons said in 2018 that it planned to open 1,500 stores in Asia over the next decade.
However, the brand is still trying to find its place. Although it has large-scale locations, hundreds of other Tim Hortons restaurants are smaller locations, which are not counted in RBI’s net restaurant growth.
“The partner saw an opportunity to build the brand very quickly in a dense way,” said the senior manager of corporate services, Duncan Fulton, in an interview.
“So that’s something that we and they are going to be looking at over the next few years,” he added.
In the afternoon, in the sights of Tim Hortons
Tim Hortons will also spend 2024 celebrating its 60the birthday, an occasion which he took advantage of to bring back some of his original donuts, including the “Hollandaise”.
The restaurant chain will also look to increase sales in the afternoon and evening, when it generally performs better early in the morning or during coffee breaks.
Tim Hortons says fourth-quarter afternoon food sales growth was up 7% from last year, giving the company a 9% market share.
Sales during this part of the day will face increased competition in the coming year as U.S. burger giant Shake Shack and sandwich brands Jersey Mike’s and Jimmy John’s enter the Canadian market.
“We’re really focused on the opportunities we have as a brand here in Canada,” said Tim Hortons Canada and United States president Axel Schwan when asked if he was concerned about such expansions.