Restaurant Brands (NYSE:QSR) Exceeds Q4 Expectations

Anthony Lee /
2024/02/13 6:46 am EST

Fast-food company Restaurant Brands International (NYSE:QSR) announced better-than-expected results in Q4 FY2023, with revenue up 7.8% year on year to $1.82 billion. It made a non-GAAP profit of $0.75 per share, improving from its profit of $0.72 per share in the same quarter last year.

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Restaurant Brands (QSR) Q4 FY2023 Highlights:

  • Revenue: $1.82 billion vs analyst estimates of $1.80 billion (1% beat)
  • EPS (non-GAAP): $0.75 vs analyst estimates of $0.74 (2% beat)
  • Gross Margin (GAAP): 37%, down from 38.4% in the same quarter last year
  • Same-Store Sales were up 6% year on year
  • Store Locations: 31,070 at quarter end, increasing by 1,168 over the last 12 months
  • Market Capitalization: $24.42 billion

Formed through a strategic merger, Restaurant Brands International (NYSE:QSR) is a multinational corporation that owns three iconic fast-food chains: Burger King, Tim Hortons, and Popeyes.

Traditional Fast Food

Traditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.

Sales Growth

Restaurant Brands operates of the most widely recognized restaurant chains in the world and benefits from brand equity, giving it customer loyalty and more influence over purchasing decisions.

As you can see below, the company's annualized revenue growth rate of 5.8% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak, but to its credit, it opened new restaurants and grew sales at existing, established dining locations.

Restaurant Brands Total Revenue

This quarter, Restaurant Brands reported solid year-on-year revenue growth of 7.8%, and its $1.82 billion in revenue outperformed Wall Street's estimates by 1%. Looking ahead, Wall Street expects sales to grow 5.1% over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

Same-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.

Restaurant Brands's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 8.4% year on year. With positive same-store sales growth amid an increasing number of restaurants, Restaurant Brands is reaching more diners and growing sales.

Restaurant Brands Year On Year Same Store Sales Growth

In the latest quarter, Restaurant Brands's same-store sales rose 6% year on year. This growth was a deceleration from the 8% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.

Key Takeaways from Restaurant Brands's Q4 Results

We were impressed by how significantly Restaurant Brands blew past analysts' gross margin expectations this quarter. We were also glad its revenue outperformed Wall Street's estimates, and continued growth in same store sales was a nice addition. Overall, we think this was a good quarter. The stock is flat after reporting and currently trades at $78 per share.

So should you invest in Restaurant Brands right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.