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Here's Why You Should Retain Restaurant Brands (QSR) Stock

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The past three months have been tough for the restaurant industry, and Restaurant Brands International Inc. (QSR - Free Report) has been no exception to the trend. In the same time frame, the company’s shares have fallen 2%, compared with the industry’s decline of 7.9%. The pandemic has negatively impacted the company’s performance. However, various sales-building strategies, Tim Hortons’s long-term growth prospects, and expansion efforts are likely to drive the company’s performance. Let’s delve deeper.

Key Growth Drivers

Restaurant Brands is optimistic about its strategies that are likely to drive comparable sales and profitability for all three iconic brands in the long run. Among the three brands, Tim Hortons is one of the largest restaurant chains in North America and the largest in Canada and is known for its coffee and donuts. Meanwhile, backed by multiple dayparts and product platforms, Burger King restaurants appeal to a wide array of consumers and diverse customer groups.

Restaurant Brands continues to focus on Tim Hortons' positioning in Canada through the enhancement of core platforms, product innovation and leveraging technology. QSR has rolled out its new fresh brewers across 90% of its locations in Canada. The company has also boosted its menu offerings by launching improved Dark Roastand Dream Donuts, in Canada. It rolled out fresh cracked eggs as well.

The company has been focusing on the expansion of delivery via digital platforms amid the pandemic. Two years ago, the company had just a couple of hundred restaurants in North America on delivery. However, the company currently has more than 10,000 active restaurants across its three brands with most offering delivery via its digital platforms.
 

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The Zacks Rank #3 (Hold) company believes that there is a huge opportunity to grow all its brands worldwide by expanding its presence in existing markets and entering new ones. Currently, it has more than 27,000 restaurants worldwide. During the second quarter 2021, the company opened the 400th Burger King store in France in association with its master franchisee, Groupe Bertrand. The company remains focused on its pipeline to deliver solid net restaurant growth in 2021. Restaurant Brands also continues to evaluate opportunities to accelerate the international development of all the three brands by establishing master franchisees with exclusive development rights, and joint ventures with new and existing franchisees. The company is optimistic about growth opportunities in 2022 and remains on track to expand its restaurant base toward its long-term goal of 40,000 locations.

Restaurant Brands’ loyalty program, Tim's Rewards, has been gaining popularity. The company announced that following a rapid ramp-up phase, nearly half of the customers pay through Tim's Rewards. It is presently testing a loyalty program in Canada across different markets as high loyalty card adoption rates have been witnessed in these test markets. QSR plans to integrate loyalty cards into the digital channel, basically through their mobile app.

 

Key Restaurant Picks

Papa John's International, Inc. (PZZA - Free Report) currently carries a Zacks Rank #2 (Buy). The company has been benefiting from its off-premise business model. Sales at off-premise business model have exceeded pre-pandemic levels. We believe that a boost in customer count coupled with targeted off-premise marketing is likely to drive the channel’s performance in the upcoming periods.

Papa John's fiscal 2021 earnings is likely to witness growth of 142.1%. PZZA stock has gained 52% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McDonald's Corporation (MCD - Free Report) carries a Zacks Rank #2. Robust digitalization will aid the company in driving long-term growth and capturing market share. McDonald’s launched its first-ever loyalty program in the United States. It has been making every effort to drive growth in international markets.

McDonald's has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of the company have gained 9.4% in the past three months. The Zacks Consensus Estimate for MCD’s current financial year sales and earnings per share suggests an improvement of 20.9% and 55.7%, respectively, from the year-ago period.

Noodles & Company (NDLS - Free Report) carries a Zacks Rank #2. The Zacks Consensus Estimate for Noodles & Company’s current financial year sales and EPS suggests growth of 22.5% and 196.6%, respectively, from the year-ago period’s levels.

Shares of Noodles & Company have gained 21.4% in the past year. In the past 60 days, earnings estimates for NDLS have increased 4 cents to 28 cents.