February 17, 2015 / 12:52 PM / 2 years ago

UPDATE 4-New menu items help drive Burger King, Tim Hortons sales jump

3 Min Read

(Updates with details on sales growth, McDonald's context, market reaction)

By Solarina Ho

TORONTO, Feb 17 (Reuters) - Restaurant Brands International Inc, the parent of Burger King and Canadian coffee and doughnut chain Tim Hortons, reported robust quarterly sales growth on Tuesday, crediting new menu items for driving traffic.

Shares of the Oakville, Ontario-based company, which have soared more than 40 percent on the Toronto Stock Exchange since being listed in December, jumped another 10.1 percent on Tuesday to C$53.14.

The stock rose even though the company, which opened nearly 900 new restaurants in 2014, posted a hefty quarterly loss on one-time merger-related costs.

U.S. chain Burger King bought Tim Hortons for C$12.64 billion ($10.21 billion) in August, creating the world's third-largest fast-food restaurant group. The two chains are managed as separate brands under the parent company.

Investors are keen to see if Tim's dominance in the Canadian coffee market can help chip away at McDonald's Corp's leadership in the U.S. quick-serve breakfast market.

Restaurant Brands executives credited new menu items like Burger King's A1 ultimate bacon cheeseburger and Tim Horton's dark roast blend coffee for helping drive sales gains in the quarter.

The results contrasted with those of McDonald's, which has been fighting to win back customers and reported one of its worst years in decades with eight straight months of global same-restaurant sales declines.

Comparable store sales grew 4.1 percent at Tim Hortons and 3 percent at Burger King in the quarter, Restaurant Brands said. On a constant currency basis, system-wide sales grew 7.4 percent at Tim Hortons and 7.7 percent at Burger King.

Last month, the company cut some 350 corporate jobs at Tim Hortons as part of the post-merger reorganization.

"We executed our organizational restructuring up front, which really focused on back office, corporate areas where we said we'd see overlap in the business," Chief Executive Daniel Schwartz told Reuters. "We have no plans to have any more job cuts."

Executives said they would focus on deleveraging and reinvesting in the business. Tim Hortons' U.S and international growth would be a top priority, but something that would take time, they added.

Restaurant Brands, which has more than 19,000 restaurants in 100 countries, posted a net loss attributable to shareholders of $514.2 million, or $2.52 per share, in the fourth quarter ended Dec. 31, in its first quarterly results after the merger.

The company reported total revenue of $416.3 million in the quarter.

$1 = 1.2374 Canadian dollars With additional reporting by Sneha Banerjee in Bengaluru; Editing by Simon Jennings and Meredith Mazzilli

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