(Reuters) -Restaurant Brands International missed market estimates for quarterly sales on Friday as still-high inflation pressured consumer spending at its Burger King chain, signaling that the brand’s turnaround efforts were falling short.
Weaker household budgets are forcing some customers to cut back on restaurant food and instead rely on cheaper, home-cooked meals, a trend that has dented traffic across the U.S. restaurant industry over the past few months.
The Popeyes owner’s results contrast a strong third-quarter performance from rival McDonald’s, which has been doubling down on menu upgrades, promotions and pricing – eroding market share at Burger King and other chains.
The weak sales come despite Burger King executing a $400 million turnaround plan by streamlining menus, targeting younger consumers through better advertising and improving restaurant technology.
Traffic and customer spending at Burger King’s U.S. locations moderated in the quarter ended September from the previous three months, brokerage Wells Fargo said in late October.
Total same-store sales at the Burger King division rose 7.2% in the third quarter, missing estimates of 8.71%, according to LSEG IBES data.
Meanwhile, the company’s Canada-focused Tim Hortons chain has been attracting more customers with its coffees and new cold drinks, helping drive its comparable sales growth of 6.8% above estimates of 6.5%.
Toronto, Canada-based Restaurant Brands posted an adjusted profit of 90 cents per share, beating estimates of 86 cents.
Total revenue at the company rose to $1.84 billion in quarter ended Sept. 30, from $1.73 billion a year earlier, compared with estimates of $1.87 billion.
(Reporting by Deborah Sophia in Bengaluru; Editing by Devika Syamnath)
