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CEO Praises Burger King Franchisees as They Post 3 Percent Same-Restaurant Growth in Q2

Home of the WhopperRestaurant Brands International Inc. (NYSE:QSR), parent company to quick service chains Burger King, Tim Hortons and Popeyes Louisiana Kitchen, announced robust comparable sales of 3.0 percent for its U.S. Burger King restaurants in the second quarter of this year versus the same period last year.

Same-restaurant sales in constant currency for franchises in all countries grew by a whopper of 3.9 percent compared to the second quarter of last year.

Daniel Schwartz, chief executive officer of Restaurant Brands International Inc. (RBI) commented to stock analysts during an earnings call this morning on the contribution of Burger King franchise owners to this quarter’s success. “If you look in the U.S., I think our restaurant owners have done a great job renovating, improving the image of the restaurants and improving the quality of our operations.”

Compare the 3.0 percent increase in U.S. same-restaurant sales with McDonald’s U.S. stores, which had an even more sizzling increase in the second quarter of 3.9 percent compared to the same period last year. McDonald's launched a battery of new products — its Signature Crafted sandwiches and the $1 beverage.

The Golden Arches also shone with luster from a 6.6 percent increase in global comparable restaurant sales. But Burger King also had strong rising numbers for the quarter.

Traffic has been a stickler. Last year quick service restaurants as a whole had no increase in customer traffic, according to foodservice researcher NPD Group. Lunch visits actually declined by 2 percent at fast food restaurants in 2016.

In combating that phenomenon, Burger King launched value products, such as the 89 cent pancakes stack, to entice more customer visits. It introduced its fun Mac n’ Cheetos. Like McDonald's, it has also employed a barbell marketing strategy of offering low-priced value items, but also expanding its premium items such as the Steakhouse King, Chicken Parmesan, and Mushroom & Swiss King sandwiches.

Burger King Q2 2017 ResultsThe CEO did not mention if Burger King restaurants had a positive uptick in traffic, but he did indicate that a balanced approach of value on one side of the barbell and premium sandwiches on the other, mixed with a bit of fun, was good for traffic, which was at the top of his mind. "We will continue adhering to our strategy of maintaining a balanced menu architecture with operationally simple product launches to drive further sales and traffic in our restaurants for years to come," said Schwartz.

When the system is balanced and in the zone, Schwartz has a lot of help. That is because Burger King is somewhat set apart. Burger King franchise owners have an advisory board that advises the brand’s next moves, just like most other franchisors have set up. Corporate staff can decide whether or not they want to take franchisees' advice. But Burger King franchise owners also have an active independent franchisee association, the National Franchisee Association, which has the responsibility of focusing on the interests of franchisees and their restaurants, and pushing for better results. In addition, Burger King franchisees also own a purchasing cooperative, Restaurant Services Inc., which sources, purchases and distributes all of the product supplies to the chain’s restaurants. Burger King has a franchisee-supported system that is little understood or even heard of by shareholders, but which is quietly behind the scenes nonetheless, actively involved in leading, pulling and operating the brand — in short, making the brand run smoothly.

There are now 16,000 Burger King restaurants around the world. The Canada-based franchisor oversaw system-wide sales rise by 10.6 percent. Its net count of franchised restaurants globally grew by 6 percent compared to the same period in 2016.

All of that positive activity contributed to the bottom line. Its adjusted EBITDA was up 9.7 percent to $217 million over the previous year.

“We had notable strength at Burger King, with both strong comparable sales growth and net restaurant growth,” announced the CEO. Schwartz continued, “We appreciate all of the hard work from our franchisees and their teams to deliver a great guest experience, and we are confident in our ability to create further value for all of our stakeholders for many years to come.”

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