U.S.-listed shares of the company rose more than three per cent after it topped results estimates for the fourth quarter ended Dec. 31, led by soaring online sales and better-than-expected same-store sales growth at Burger King in the U.S. and Tim Hortons in Canada.

Restaurant chains are raising prices because they are paying higher costs for shipping, labour and commodities including chicken, coffee and cooking oils amid COVID-19 related disruptions.

The record inflation levels and staffing disruptions due to the omicron variant dulled profits at McDonald’s and Starbucks.

Burger King’s Whopper — made from a quarter-pound of grilled beef — is an “iconic” product that has “been on this core discount platform for too long,” Restaurant Brands CEO Jose Cil told Reuters in an interview.

The chain, which often caters to lower-income customers, removed the item from its two for $5 deal but could offer limited discounts on the burger in the future (all figures US$).

Burger King also said it would stop selling some less-popular menu items altogether, including sundaes, whipped toppings and chocolate milk.

Cil declined to provide timelines for overall price hikes in 2022.

Toronto-based Restaurant Brands reported total revenue of $1.55 billion, above estimates of $1.52 billion.

But U.S. comparable sales fell at Popeyes, in part because some locations have had to reduce operations by an average of one hour due to staffing shortages.

Popeyes’ sales had been soaring even through much of the pandemic after the 2019 launch of its fried chicken sandwich, which was so popular that most rivals — including McDonald’s and KFC — introduced their own similar product.

Restaurant Brands reported per share earnings of 74 cents in the fourth quarter, topping Refinitiv estimates of 69 cents.

— Reporting for Reuters by Deborah Sophia in Bangalore and Hilary Russ in New York.

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Analysts have said fried chicken sandwich pioneer Popeyes, owned by RBI, has been hurt by McDonald’s and KFC launching similar items, while RBI-owned Burger King has underperformed in recent months on weak demand for its lower-priced menu items.

U.S. comparable sales at Burger King declined 1.6 per cent, and slipped 4.5 per cent at Popeyes in the third quarter ended Sept. 30.

Firehouse Subs, in comparison, reported U.S. same-store sales growth of 20 per cent from pre-pandemic levels between January and October, Restaurant Brands said.

RBI’s U.S.-listed shares rose marginally after it said the deal would immediately add to its earnings once it closes in the coming months. It also said it will fund the acquisition through cash on hand and debt.

“(We) have kept an eye on it (Firehouse Subs) from a distance over the years,” RBI CEO Jose Cil told Reuters.

Jacksonville-based Firehouse’s franchisees own and operate 97 per cent of its 1,200 restaurants across 46 U.S. states, Puerto Rico and, since 2015, Canada.

Firehouse so far has just 48 Canadian stores, all in Ontario, run by franchisee Onfire Restaurants. The chain’s online listing of regions available to new franchisees shows all 10 provinces and three territories as having “no current availability.”

RBI, meanwhile, has about 27,000 stores in over 100 countries.

“There’s a tonne of room for growth here in the U.S. and Canada, and all around the world,” Cil said about Firehouse Subs, which is popular for its “Hook + Ladder” sub.

Firehouse Subs’ loyalty program has 3.5 million subscribers, and is adding around 50,000 more customers per month, said RBI, which earlier this year saw Burger King and Popeyes launch similar programs.

Firehouse Subs CEO Don Fox and finance head Vincent Burchianti will manage its day-to-day operations.

— Reporting for Reuters by Praveen Paramasivam in Bangalore. Includes files from Glacier FarmMedia Network staff.

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“We know Canadians value quality ingredients produced right here in Canada, and we are proud to partner with Tim Hortons to strengthen the connection between our farms and their menu items,” said Roger Pelissero, chair of Egg Farmers of Canada in a statement.

The industry-wide quality insurance program was developed by Eggs Canada and includes on-farm inspections. 

“Tim Hortons is committed to delivering great quality food across our menu and that’s really exemplified by our move to using freshly cracked eggs in our restaurant kitchens,” said Hope Bagozzi, chief marketing officer for Tim Hortons in a statement. “We’re very proud to display the EQA mark that signifies our commitment to supporting Canadian egg farmers and sourcing the very best eggs available for our guests to enjoy.”

Year over year sales at the popular coffee chain dropped by US$150 million. 

A new loyalty program is being launched at a time when normally Canadians would be participating in the Roll Up the Rim promotion event. That program is also being revamped, following weaker than expected results last year.

When it will launch, and what it will look like when it does, are still unclear. 

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This comes after the coffee and breakfast chain cut Beyond Meat’s burgers and sandwiches from its menu in September from all of Canada except the two provinces.

“We may offer plant-based alternatives again in the future, but we have removed it from the menu for now,” said a spokeswoman for Tim Hortons.

The fast-food restaurant chain had introduced the plant-based protein as a limited time offer, the spokeswoman said, adding that “the product was not embraced by our guests as we thought it would be.”

Responding to the removal of its products, Beyond Meat said that it may work with Tim Hortons again in the future.

Tim Hortons said in July it was expanding plant-based meat additions in the Canadian market. There are about 4,800 Tim Hortons restaurants in North America, of which almost 4,000 are in Canada.

The chain launched breakfast sandwiches with the plant-based sausage patty in June and the plant-based burger patty in July.

Plant-based fast food has gained popularity as diners become more conscious of how their food is sourced and its impact on the environment. The trend has given a big boost to Beyond Meat and Impossible Foods, two of the biggest players to launch faux meats.

— Reporting for Reuters by Arunima Kumar in Bangalore and Hilary Russ in New York.

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The coffee-and-donut chain, an arm of Toronto-based Restaurant Brands International and Canada’s biggest fast-food chain by number of outlets, first test-marketed breakfast sandwiches with the U.S. company’s plant-based patties in select stores in May.

Tim’s at the time pledged a “national rollout by the end of the summer” for the sandwiches if the tests “confirm the potential for the platform.”

The chain’s Beyond Meat Breakfast Sandwiches, with Beyond Breakfast Sausage patties, went national in Tim’s nearly 4,000 Canadian outlets in June, followed by a nationwide rollout for Beyond Burgers on Tim’s lunch and dinner menu in July.

This week, however, the chain described its nationwide introductions of Beyond Burgers and Beyond Meat breakfast sandwiches as “a limited time offer.”

“We are always listening to our guests and testing a wide variety of products across the country,” a Tim Hortons representative said via email Wednesday.

“We have particularly seen positive reaction to our Beyond Meat offering in Ontario and B.C., especially in breakfast, and are proud to offer both alternatives in those regions.”

That said, Tim Hortons added it “may explore offering the product again in other provinces at a future date based on ongoing guest feedback.”

The Beyond Meat product line, processed by Los Angeles-based Beyond Meat, is made with plant-based ingredients including pea, mung bean and rice protein, canola oil, coconut oil, potato starch, sunflower lecithin and beet juice, among others.

Nasdaq-traded Beyond Meat’s stock slipped Wednesday to $153.99, down from Tuesday’s closing price of $160.31 and well off its 52-week high of $239.71 (all figures US$).

Tim Hortons is far from the only path of exposure for Beyond Meat in the fast food and casual dining sectors. Beyond Meat’s products are on the menu at chains including A+W, Subway, Del Taco, Carl’s Jr., Dunkin’ and, in another recent test-marketing offer, KFC.

Impossible Foods, another California-based processor in the plant-based meat substitute sector, is working with chains such as Qdoba and Tim Hortons’ RBI sister chain, Burger King.

Another Canadian burger chain, Harvey’s, on Sept. 3 announced a national rollout of a plant-based burger option made by Maple Leaf Foods subsidiary Lightlife. — Glacier FarmMedia Network

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The coffee-and-doughnut chain announced Wednesday it’s now testing three types of breakfast sandwiches at “select” stores in Canada using Los Angeles-based processor Beyond Meat’s breakfast sausage patty.

The chain, owned by Toronto-based Restaurant Brands International, said it could roll out the breakfast sandwich, farmers’ breakfast wrap and a fully vegan breakfast sandwich at its 4,000-odd restaurants across Canada by the end of the summer “if market tests confirm their potential.”

Beyond Meat’s breakfast sausage patty itself is nothing new to the Canadian fast food market. A+W, which added Beyond Meat burgers to its Canadian menu in July last year, followed up in March this year by launching Beyond Meat breakfast sandwiches nationwide.

Tim Hortons’ test launch, however, comes in the wake of Beyond Meat’s initial public offering (IPO) and the May 2 trading launch of the latter company’s shares on the Nasdaq.

Beyond Meat stock, which closed Tuesday at $79.68, spiked to $93 in trading Wednesday following Tim Hortons’ announcement and closed at $86.92 (all figures US$).

“A national launch would allow us to further our mission of making delicious plant-based products more readily accessible to Canadians nationwide,” Beyond Meat CEO Ethan Brown said in Tim Hortons’ release.

Tim Hortons billed the Beyond Meat sandwiches as allowing “vegans and meat lovers alike” to “enjoy the taste and satisfaction of a breakfast classic they know and love, without sacrifice.”

Beyond Meat has also made inroads in the Canadian retail market in recent months, selling its burger patties through grocery chains including Sobeys, Safeway, Save On, Metro, Whole Foods, IGA and Co-op stores, and in the Canadian restaurant market through chains including Earl’s and Quesada.

The U.S. processor has seen some pushback from Canada’s meat sector, however.

Quebec’s Union des producteurs agricoles (UPA) and cattle producer group Producteurs de bovins du Quebec last week said they would approach the Canadian Food Inspection Agency to prohibit the use of the word “meat” in marketing vegetable protein products.

In an opinion piece Friday on UPA’s website, the organization’s chairman Marcel Groleau argued that the Beyond Meats of the world see strong market potential in “polarization” of the food sector. — Glacier FarmMedia Network

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Big fast food chains, including McDonald’s and KFC owner Yum Brands, have been aggressively expanding their international operations to counter slowing growth in the U.S.

Toronto-based Restaurant Brands, the owner of Burger King, Tim Hortons and Popeyes Louisiana Kitchen, has been looking to boost its businesses by deploying various initiatives that range from app-based ordering to loyalty programs for its customers.

The company, which held its first-ever investor day on Wednesday, did not immediately respond to a request for investment details of its expansion program.

Restaurant Brands, which has been hit by a slowdown at its three iconic brands, hopes to grow its coffee, burger and chicken markets by five to six per cent annually over the next five years.

Last month, the company reported a 0.6 per cent drop in comparable sales at Tim Hortons for the quarter ended March 31, while same-store sales at Burger King grew 2.2 per cent, down from 3.8 per cent a year earlier.

The announcement of the ambitious expansion plan comes just months after Jose Cil took the helm at the company, after having headed its Burger King unit.

Rival Yum Brands opened 372 new KFC outlets in 46 countries in the first quarter ended March, while McDonald’s plans on opening roughly 1,200 restaurants worldwide this year.

Tim Hortons, Restaurant Brands’ coffee and doughnut chain, also said it would introduce three new sandwiches using the vegan burger maker Beyond Meat’s plant-based sausages as demand for vegan alternatives grows in the country.

Shares of Restaurant Brands, which have risen nearly 26 per cent this year, were up marginally at $89.67 on the TSX late Friday afternoon.

— Reporting for Reuters by Shradha Singh in Bangalore.

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Restaurant Brands shares rose almost three per cent after the company announced the Tim Hortons move into China in a joint venture with private equity firm Cartesian Capital Group, the chain’s biggest expansion outside the core Canadian market.

The move is part of a two-pronged strategy by Tim Hortons’ new president Alex Macedo, who is trying to cope with mounting competition in the fast-food industry at home while also fixing the chain’s reputation, bruised after some franchise operators alleged that Tim Hortons mismanaged its franchise operations and bullied some restaurant owners.

“One is improving and increasing our leadership in Canada, and the second is taking a little bit of Canada to the world,” Macedo told Reuters in an interview at the parent company’s Oakville, Ont. headquarters.

Tim Hortons will keep its beverage offerings the same in China but will customize its food menu for the local market, Macedo told Reuters. The move into China adds to the chain’s global footprint, after last year’s entry into the Philippines, Britain, Spain and Mexico.

Tim Hortons has operated in the U.S. since 1984 and the United Arab Emirates since 2011. It lists 4,256 locations across Canada, 725 in the U.S., 125 in the Middle East and between five and 20 in the countries it entered last year.

Macedo, who took charge in December, is seeking to stem profit declines and sweeten customer sentiment. A bitter and public feud with a group of unhappy franchisees in Canada and the U.S. pushed public perception of the chain to 50th place in a January survey from fourth a year earlier.

China’s coffee and tea consumption is expected to climb to 750,218 tonnes by 2020, from 693,748 in 2015, according to market and consumer data provider Statista. Shanghai alone has an estimated 6,500 coffee houses, with small chains, independent stores and bakeries battling for a slice of a market that research firm Mintel says could grow to 79 billion yuan (C$15.6 billion) by 2022 from 60 billion yuan last year.

Starbucks has about 3,000 outlets in China now and aims to have 10,000 there within a decade, which would make China a bigger market for the company than the U.S.

“I wouldn’t say (Tim Hortons) has saturated the market in Canada, but they’re mightily close,” said Brian Madden, portfolio manager at Goodreid Investment Counsel in Toronto. Madden is waiting for the franchisee issues to be resolved and for valuations to come down to buy the stock.

Macedo said Tim Hortons could have communicated better with franchisees and acted faster to address the their issues. He said the chain is now acting on many of their ideas, and ticked off a slew of measures, including upgrading outlets, a new kids menu, all-day breakfast and a loyalty program. Tim Hortons also began testing deliveries this week and plans to introduce self-service kiosks, he said.

Macedo added that he was trying to improve relations by meeting disgruntled franchisees throughout Canada.

The Great White North Franchisee Association, formed last year, has filed two suits against the company alleging mismanagement of advertising funds and intimidation of franchisees. Its U.S. arm also has a lawsuit against the company.

A person who has spoken with many aggrieved franchisees, who asked not to be identified, told Reuters that members have not yet seen improvements in their circumstances or profits, even though some of them have met individually with the company and the franchisee advisory board, which represents all Tim Hortons restaurant owners across Canada.

The official franchisee advisory board has distanced itself from the association that is suing the company. Lou Gossner, chair of that board, attributed the association’s grievances to miscommunications and misunderstandings.

Regardless, “public perception of this brand has really been tainted and tarnished over the last year to 18 months,” Goodreid’s Madden said. “It’s going to require things that put money back into the pockets of franchisees to fix it.”

— Reporting for Reuters by Nichola Saminather in Toronto and Karan Nagarkatti in Bangalore; additional reporting by Laharee Chatterjee and John Benny in Bangalore.

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Restaurant Brands International, one of the world’s largest fast-food restaurant operators, has been criticized by activists for buying soy and beef from newly deforested land in Brazil and other South American countries.

It its first sustainability report, the firm, which also owns Tim Hortons and Popeyes, committed to making sure its suppliers stopped clearing primary forests or disturbing lands with a high conservation value by 2030.

“It is our intention to report regularly on our progress towards eliminating deforestation,” RBI said in its report released on Thursday.

The company also pledged to respect the land rights of communities who live in areas where its suppliers cultivate soy, cattle and other farm products to make sure local people grant informed consent concerning development on their land.

“As a company with global operations and a complex supply chain, we know we have a key role to play in promoting sustainable business practices,” company spokesman Patrick McGrade said in a statement.

Campaigners, however, say the promised changes are too slow and do not go far enough.

The Union of Concerned Scientists, a U.S.-based advocacy group, said the company’s environmental pledges are “embarrassingly weak.”

The firm should commit to ending deforestation in its supply chain by 2020 in line with other large restaurant chains rather than 2030, Sharan Smith, the group’s spokeswoman said.

“When it comes to protecting forests, Burger King means fast food and slow action,” Glenn Hurowitz from the U.S.-based campaign group Mighty Earth said in a statement.

Over the past 13 years, 271 million acres of rainforest has been destroyed around the world to make room for products like Burger King’s Whopper sandwiches, Hurowitz said.

“Burger King is sending a message that it’s OK… to keep revving up the bulldozers.”

RBI did not respond to interview requests from the Thomson Reuters Foundation.

Deforestation accounts for about 10 per cent of global greenhouse gas emissions which contribute to climate change, the Union of Concerned Scientists said.

— Chris Arsenault reports for the Thomson Reuters Foundation, the charitable arm of Thomson Reuters for coverage of humanitarian news, women’s rights, trafficking, property rights, climate change and resilience.

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Restaurant Brands International on Thursday released its first “Sustainability Report,” outlining its work during 2016 in support of “sustainable practices that promote positive change.”

Back in late December, Oakville, Ont.-based RBI announced its two chains would “eliminate the use of antibiotics deemed by the World Health Organization (WHO) as ‘critically important’ to human medicine” from its chicken supply lines.

At that time, it also said it would “work with our supply chain partners to support and implement these changes” in the U.S. in 2017, and in Canada in 2018.

In Thursday’s report, the company reiterated it’s “committed to using chicken that is raised without the use of antibiotics important to human medicine as defined by the (WHO)” but instead said “we intend to meet this commitment in U.S. and Canada by the end of 2018.”

However, the company on Thursday also made clear it will follow the WHO’s fifth revision to its document, Critically Important Antimicrobials for Human Medicine, which was released early this year.

To make that list, an antimicrobial must be both “the sole, or one of limited available therapies, to treat serious bacterial infections in people,” and used to treat infections in people caused either by bacteria humans can get from non-human sources, or by bacteria that can develop resistance genes from non-human sources.

In the document’s fourth revision last year, certain fluoroquinolones, third- and fourth-generation cephalosporins, macrolides and glycopeptides were recategorized to the “highest priority.”

In the fifth revision, polymyxins such as colistin are also moved to the “highest priority” classification, due to the “increasing usage of colistin to treat serious infections in humans in many parts of the world, the discovery of the mcr1 and mcr2 genes that confer transmissible resistance to colistin and the spread of colistin-resistant bacteria via the food chain,” the WHO said.

In Canada, the federal health department’s Veterinary Drugs Directorate places polymyxins in Category I (“very high importance”), the highest category in its list of antimicrobials based on their importance in human medicine.

RBI, in Thursday’s report, reiterated it “recognize(s) that antibiotics play an important and delicate role in animal well-being and human health. Antibiotics are sometimes required to control and treat disease to maintain animal health and welfare.”

The company said it “require(s) our vendors to purchase products only from farmers that administer antibiotics in a judicious and responsible manner when treatment is necessary, in keeping with veterinary and regulatory requirements.”

RBI made its 2016 pledge on antibiotics for chickens shortly before the company announced a deal to buy the Atlanta-based Popeyes Louisiana Kitchen chain, which includes over 2,600 restaurants, among them over 100 Canadian stores in Ontario and Alberta.

In an article Thursday on the sustainability report, Reuters’ Lisa Baertlein quoted RBI as saying the company intends to apply the new policy to all its brands over time. — AGCanada.com Network

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