Restaurant Brands Q2 profit soars as cost of buying Tim Hortons fades

Restaurant Brands International, the parent company of Tim Hortons and Burger King,reported a big jump in its quarterly profit on Thursday,despite flat revenue compared with the same time last year, which it attributed to the negative impact of currency fluctuations.

It earned net income for common shareholders of $90.9 million US or 38 cents per share in the three months ended June 30. That's up from $11.0 million US or five cents per RBI share in the second quarter of 2015.

Last year's profit was reduced by one-time costs associated with RBI's acquisition of the Tim Hortons restaurant chain. Excluding those and other items, RBI's adjusted net income was $192.4 million or 41 cents per share, up from $141.0 million or 30 cents per share a year earlier.

Comparable restaurant sales grew 2.7 per cent at Tim Hortons in the quarter, and Burger King sales were up by 0.6 per cent.

Revenue was little changed at $1.04 billion US, including $759.8 million US from Tim Hortons and $280.4 million US from Burger King.

Expansion as fast food market softens

Restaurant Brands CEODaniel Schwartzsaid the company is staying focused on their expansion strategy despite seeing softness in the quick-service restaurant industry in the quarter.

He declined to provide a reason for the softness, but other industry executives have cited weakening consumer confidence amid political and global uncertainty. Analysts have also noted that the increasing competition over promotional deals, as well as the growth of smaller, independent players.

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RBI saidit plans on making the Canadiancoffee shop as ubiquitous around the world as the American fast-foodchain Burger King.

"There is really no limit on how far the Tim's brand cantravel," Schwartz said.

Schwartztold analysts in a call Thursday that the company seesboth brands have an opportunity to grow on a global basis.

During the second quarter, the number of TimHortonslocationsincreased about three per cent to 4,464 stores, while Burger Kingrestaurants jumped about four per cent to 15,100 locations duringthe second quarter.

Last month, the company announced that it was opening a TimHortonsin the Philippines, its first foray into southeast Asia. Nolaunch date has been set.

New items onlunch menu

In an interview prior to the call, chief financial officer Joshua Kobza said RBI plans on continuing to expand its lunch offerings at Tim Hortons, which recently launched new menu items such as potato wedges and salads.

He said the company also wants to improve its late afternoon and evening menus, but is not looking at duplicating the business model of its competitor Starbucks, which recently began offering customers alcohol and tapas.

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