October 28, 2019 / 11:04 AM / 2 months ago

UPDATE 3-Restaurant Brands sales falter as Tim Hortons disappoints; shares fall

(Updates analyst comment, share movement)

Oct 28 (Reuters) - Restaurant Brands International Inc’s quarterly revenue missed analysts’ expectations on Monday as its biggest chain, Tim Hortons, was hit by fierce competition from high-end coffee houses and breakfast chains.

The weakness at Tim Hortons also overshadowed strong results at Popeyes, whose widely popular chicken sandwiches helped the chain record its best comparable sales growth since its acquisition by Restaurant Brands in 2017.

Chief Executive Officer Jose Cil said Tim Hortons faced a challenging quarter. “Our result at Tim Hortons were not where we want them to be,” Cil told on a post-earnings call.

The company has been sprucing up its Tim Hortons’ outlets and adding new coffee and lunch offerings, while rolling out breakfast sandwiches with Beyond Meat’s plant-based sausages in select Canadian cities, but those efforts are yet to bear fruit.

Comparable sales fell 1.4% at the breakfast chain. Analysts were expecting growth of 0.93%, according to IBES data from Refinitiv.

“Tim Hortons will need more time to develop its coffee platforms to accommodate global tastes and preferences”, said Pacific Management Consulting Group’s John Gordon.

For an interactive graphic, click here tmsnrt.rs/2JqOg7q

The company’s U.S.-listed shares fell 3.7% to $65.95 in afternoon trading. They have gained over 26% so far this year.

Sales at restaurants open for at least 13 months rose 4.8% at Burger King and 9.7% at Popeyes in the third quarter ended Sept. 30, beating analysts’ estimates of 3.98% and 4.72% growth, respectively.

Popeyes’ fried chicken sandwich, launched in August, became an instant hit with consumers, forcing operators of McDonald’s Corp to demand for a new menu addition.

However, the popularity of the sandwiches led to shortages at Popeyes and the chain has since been working to secure supplies and bring them back in November.

Overall, revenue rose 6% to $1.46 billion, but fell short of the average analyst estimate of $1.47 billion.

Excluding items, the company earned 72 cents, beating estimates by 1 cent.

Reporting by Nivedita Balu in Bengaluru; Editing by Anil D'Silva

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