(Reuters) - Restaurant Brands International Inc QSR.TOQSR.N was propped up in a rough first quarter by the huge success of the Popeye chain's chicken sandwich, it said on Friday, as it predicted a bigger hit from the coronavirus crisis to come.
The results numbers, while covering only the first two weeks of North American lockdowns, pointed to a grim second quarter for its Canada-centric Tim Horton’s chain, with widespread closures helping drive a 10% fall in comparable sales in the first three months of the year.
With restaurants scrambling to shift to drive-in, delivery and other takeaway options, sales at the company’s flagship Burger King operation were better, down 3.7%, while Popeyes continued a stellar run with 26% growth.
Chief Executive Officer Jose Cil said the online infrastructure the company had put in place over the past two years had helped it to adapt quickly. But the company also said the April to June period would be harder hit.
“We expect a more significant impact from COVID-19 on our full quarter results in Q2,” it said, adding it was unclear when its restaurants will return to normal operations.
Daily comparable sales at Popeyes, whose fried chicken sandwiches have stirred an internet war of words between supporters and those who prefer rival Chick-fil-A, were about flat year-on-year in the last two weeks of March but had returned to pre-crisis levels as of April, the company said.
At Tim Hortons, however, daily comparable sales were now down in the negative high thirties on a percentage basis at the end of April.
“Popeyes continues to be the standout among the brands ,” Bernstein analyst Sara Senatore said.
“Tim’s remains the laggard, in part due to its heavy morning daypart exposure, but also comp softness that preceded COVID-19.”
Restaurants have been relying largely on take-out, delivery and drive-thru sales as they had to close dine-in operations following lockdowns in many countries to curb the spread of the virus.
The sector is one of the most impacted from the health crisis, as stay-at-home orders kept diners away and investments in safety equipment, delivery orders and employee benefits increased.
Consumers have found a liking to comfort foods like pizzas during the crisis, ordering in more than usual and going for budget-friendly meals as many households face an uncertain financial future.
Overall, total revenue fell 3% to $1.23 billion for the first quarter ended March 31.
Analysts were expecting a comparable sales rise of 17.47% for Popeyes and a fall of 9.24% for Tim Hortons, according to IBES data from Refinitiv.
Net income attributable to the company’s shareholders rose to $144 million, or 48 cents per share, from $135 million, or 53 cents per share, a year earlier.
On an adjusted basis, the company earned 48 cents per share, compared with the expectation of 51 cents.
Reporting by Nivedita Balu in Bengaluru; editing by Patrick Graham
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