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Andrew Willis: One of the top-performing Canadian stocks in our coverage universe in 2022, Restaurant Brands International (QSR), has been rapidly adapting to meet the changing demands of its fast-food customers.
From Burger King to Tim Hortons and Popeye’s, one of the biggest resolutions in the new year for these restaurants is omnichannel and off-premises experiences for customers. That means seamless app ordering, for example, with increased sales and brand-building opportunities in digital platforms like what Tim’s did with their revamped loyalty program. Restaurant Brands is taking these steps because they work: Tim Hortons’ digital mix is now north of 33% of sales, which equity analyst Sean Dunlop says is up from effectively zero. He also says he anticipates that similar investments will become a cost of doing business.
Reimagined restaurant footprints, a renewed emphasis on loyalty programs and proprietary e-commerce landing pages are among some of the steps that Restaurant Brands has been taking to meet the new expectations of customers. Among the brands under their belt, we see the company’s work on Tim Hortons as a turnaround story, as recent guidance for positive sales growth at stores that feels like “a breath of fresh air” to Dunlop.
In the U.S., Tim’s didn’t quite take off as expected, shedding a quarter of the 800 stores at its peak. But the franchise may be starting to fit in with its neighbours in the South, as stores with a smaller footprint and renewed espresso and cold beverage offerings have been driving an appetite. Meanwhile, Burger King’s experience in the U.S. isn’t ‘flaming hot’ at the moment as the brand remains a bit behind on the modernization efforts with aging store footprints and menus. We like the marketing efforts, but it’s no substitute for customer experience.
There is perhaps one substitute, or perhaps a remedy for poor customer experience… in rockstar products. This brings us to Popeye’s and their launch of arguably the best product in fast food since the Big Mac. Adding some $400,000 in volume, per location, their chicken sandwich should buy them a little time as fast food gets faster.
For Morningstar, I’m Andrew Willis.
Editor's Note: All images are courtesy of Unsplash.com and AP Images.
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