Burger King owner’s marketing efforts spur sales, squeeze profit

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By Anuja Bharat Mistry

(Reuters) -Restaurant Brands missed quarterly profit estimates on Thursday, hurt by aggressive marketing that boosted demand at Burger King and its other brands in the U.S. and international markets.

U.S.-listed shares of the company fell 4% after Restaurant Brands posted an adjusted profit of 94 cents per share, below analysts’ estimates of 97 cents, as per data compiled by LSEG, as supply chain and commodity costs also surged.

The company’s profit miss “highlights the tough terrain quick service restaurants are navigating as cost-conscious consumers continue to pull back,” said Zak Stambor, analyst with eMarketer.

The Trump administration’s unpredictable trade policies have disrupted business operations and shaken consumers, especially lower-income groups, who are increasingly seeking bargains and scaling back dining out plans as they grapple with inflation.

“We saw a bit softer performance in some of the lower-income cohorts in the U.S., and a little bit of better performance in the middle and higher income groups,” Restaurant Brands CEO Josh Kobza told Reuters.

U.S. quarterly same-store sales from Burger King, the company’s second biggest revenue generator, rose 1.5%, after rising just only 0.1% a year ago.

Value-meal deals starting at $5, also introduced by major fast-food chains Yum Brands and McDonald’s as consumer spending in the U.S. sees a decline, boosted foot traffic at Burger King.

This helped the company post revenue of $2.41 billion in the quarter ended June 30, above analysts’ estimates of $2.32 billion, according to data compiled by LSEG.

Comparable sales in the company’s international segments, which include restaurant chains such as Burger King and Popeyes, rose 4.2%, compared with a 2.6% rise a year ago.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shinjini Ganguli)