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Here's Why You Should Retain Restaurant Brands (QSR) Stock
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Restaurant Brands International Inc. (QSR - Free Report) will likely benefit from expansion efforts, digital initiatives and the loyalty program. Also, emphasis on innovation tests concerning service speed bodes well. However, inflationary pressures are a concern.
Let us discuss the factors highlighting why investors should retain the stock for the time being.
Factors Driving Growth
Restaurant Brands believes there is a huge opportunity to grow all its brands worldwide by expanding its presence in existing markets and entering new markets. During the second quarter of 2022, the company made solid development progress with respect to Popeyes and Tim Hortons. During the quarter, the company expanded Tim Hortons and Popeyes footprint (outside home markets) to nearly 2,500 restaurants, thereby increasing 20% on a year-over-year basis. Also, it stated progress with new partnership and development deals across international markets for Popeyes and Tim Hortons. The company intends to evaluate opportunities to ramp up international development by establishing master franchisees with exclusive development rights and joint ventures with new and existing franchisees.
Restaurant Brands continues to focus on improving its level of service through comprehensive training, improved restaurant operations and reimaging efforts to drive growth. During the second quarter, the company initiated testing of express drive-thru lanes for mobile order and pickup. This includes tandem drive-thrus (with two sets of menu boards and order points in a single lane) and restaurants with above-lane conveyor systems, enabling two cars to receive their orders at the same time. The company initiated testing of walk-up windows that can reduce wait times for both delivery drivers and guests (for mobile orders). The company remains optimistic in this regard and anticipates deploying the new tests in the coming years.
The company has been focusing on enhancing the company’s digital presence to make it more accessible to guests across service modes and platforms. During the second quarter of 2022, the company emphasized on enhancing its modern POS hardware and software, enabling greater agility in terms of adjusting menus, prices and content. Also, it rolled out a common network provider (in home markets), paving the path for more uptime to support its technology. Given the evolvement in restaurant technology, the initiatives are likely to facilitate digital orders and unlock more opportunities in terms of transactions through the drive-thru and other off-premise channels.
The company’s loyalty program is gaining popularity. Restaurant Brands stated that following a rapid ramp-up phase, nearly half of the customers pay through Tim's Rewards. During the second quarter of 2022, the company’s in-store loyalty sales increased double digits year over year. It reported heightened guest engagement backed by integrated marketing campaigns. With significant progress user experience and more active users, the company is optimistic about its potential for the respective brands over the long term. The company intends to integrate loyalty programs into digital boards to derive synergies.
In the past three months, shares of Restaurant Brands have gained 16.2% compared with the industry’s growth of 8.7%.
Image Source: Zacks Investment Research
Concerns
The coronavirus crisis has rattled the Retail - Restaurants industry and Restaurant Brands is not immune to the aftereffects. Pandemic-induced restrictions, labor challenges and inflation pressures have taken an enormous toll on the company. Zero COVID policies in China have impacted the company’s performance in the region. Although most dining services are open, traffic is still low compared with pre-pandemic levels. The company intends to monitor the situation on a regular basis to gauge the impacts of COVID-19.
Tecnoglass sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 24.4%, on average. Shares of the company have increased 7% in the past three months.
The Zacks Consensus Estimate for Tecnoglass 2022 sales and earnings per share (EPS) suggests growth of 28.2% and 47.7%, respectively, from the year-ago period’s levels.
Cracker Barrel carries a Zacks Rank #2 (Buy). Cracker Barrel has a long-term earnings growth of 6.9%. Shares of the company have increased 14% in the past three months.
The Zacks Consensus Estimate for Cracker Barrel’s 2022 sales and EPS suggests growth of 16.3% and 15.4%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 34.4%. Shares of the company have risen 38% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 27.1% and 104.2%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain Restaurant Brands (QSR) Stock
Restaurant Brands International Inc. (QSR - Free Report) will likely benefit from expansion efforts, digital initiatives and the loyalty program. Also, emphasis on innovation tests concerning service speed bodes well. However, inflationary pressures are a concern.
Let us discuss the factors highlighting why investors should retain the stock for the time being.
Factors Driving Growth
Restaurant Brands believes there is a huge opportunity to grow all its brands worldwide by expanding its presence in existing markets and entering new markets. During the second quarter of 2022, the company made solid development progress with respect to Popeyes and Tim Hortons. During the quarter, the company expanded Tim Hortons and Popeyes footprint (outside home markets) to nearly 2,500 restaurants, thereby increasing 20% on a year-over-year basis. Also, it stated progress with new partnership and development deals across international markets for Popeyes and Tim Hortons. The company intends to evaluate opportunities to ramp up international development by establishing master franchisees with exclusive development rights and joint ventures with new and existing franchisees.
Restaurant Brands continues to focus on improving its level of service through comprehensive training, improved restaurant operations and reimaging efforts to drive growth. During the second quarter, the company initiated testing of express drive-thru lanes for mobile order and pickup. This includes tandem drive-thrus (with two sets of menu boards and order points in a single lane) and restaurants with above-lane conveyor systems, enabling two cars to receive their orders at the same time. The company initiated testing of walk-up windows that can reduce wait times for both delivery drivers and guests (for mobile orders). The company remains optimistic in this regard and anticipates deploying the new tests in the coming years.
The company has been focusing on enhancing the company’s digital presence to make it more accessible to guests across service modes and platforms. During the second quarter of 2022, the company emphasized on enhancing its modern POS hardware and software, enabling greater agility in terms of adjusting menus, prices and content. Also, it rolled out a common network provider (in home markets), paving the path for more uptime to support its technology. Given the evolvement in restaurant technology, the initiatives are likely to facilitate digital orders and unlock more opportunities in terms of transactions through the drive-thru and other off-premise channels.
The company’s loyalty program is gaining popularity. Restaurant Brands stated that following a rapid ramp-up phase, nearly half of the customers pay through Tim's Rewards. During the second quarter of 2022, the company’s in-store loyalty sales increased double digits year over year. It reported heightened guest engagement backed by integrated marketing campaigns. With significant progress user experience and more active users, the company is optimistic about its potential for the respective brands over the long term. The company intends to integrate loyalty programs into digital boards to derive synergies.
In the past three months, shares of Restaurant Brands have gained 16.2% compared with the industry’s growth of 8.7%.
Image Source: Zacks Investment Research
Concerns
The coronavirus crisis has rattled the Retail - Restaurants industry and Restaurant Brands is not immune to the aftereffects. Pandemic-induced restrictions, labor challenges and inflation pressures have taken an enormous toll on the company. Zero COVID policies in China have impacted the company’s performance in the region. Although most dining services are open, traffic is still low compared with pre-pandemic levels. The company intends to monitor the situation on a regular basis to gauge the impacts of COVID-19.
Zacks Rank & Key Picks
Restaurant Brands currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Tecnoglass Inc. (TGLS - Free Report) , Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) .
Tecnoglass sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 24.4%, on average. Shares of the company have increased 7% in the past three months.
The Zacks Consensus Estimate for Tecnoglass 2022 sales and earnings per share (EPS) suggests growth of 28.2% and 47.7%, respectively, from the year-ago period’s levels.
Cracker Barrel carries a Zacks Rank #2 (Buy). Cracker Barrel has a long-term earnings growth of 6.9%. Shares of the company have increased 14% in the past three months.
The Zacks Consensus Estimate for Cracker Barrel’s 2022 sales and EPS suggests growth of 16.3% and 15.4%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 34.4%. Shares of the company have risen 38% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 27.1% and 104.2%, respectively, from the year-ago period’s levels.