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Chicken War Spurs Popeyes Sales

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Coming up on All Things Considered

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5 d ago

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Let's start with the restaurant. Industry and in particular restaurant brands international which is the decidedly unsexy name of the parent company of Burger King. Popeye's and Tim Hortons Fortensky fourth quarter profits and revenue for restaurant brands slightly higher than expected and all of the credit one hundred percent of the credit. Go to Popeye's yeah. There's no question because when we talk about same store sales and I think it was either on this show on Motley fool money last week we're talking about AAA which put up same store sales growth of thirteen percent and I said what most restaurants would kill for that. Can I interest you in same. Aim store sales growth of thirty eight percent. Yeah thirty eight percent that looks comical like when you look at the chart as you and I both did this morning owning. It looks ridiculous but now we know what that spicy chicken sandwiches worth well and if if you know if you listen to Ron and roses. Scathing adding scathing review it was not a good review. You wonder how many people are going to actually give that sandwich. Try Not I know I'm not I haven't tried it yet and I don't know that I actually will part of that is just because I'm probably too lazy in an overly like eating a lot of fast food but I do feel like this For for restaurant brains. This really does feel like they're McDonald's breakfast moment. I mean it was a little bit less I think it was a little bit less expected. I mean they they certainly planned this sandwich obviously I don't know that they even really expected the results that they're getting but you you take what you can get in this line of work because it's not always easy to come across and I think the big question for Restaurant Brands is candy. Sustain it because I mean yes they are diversified and then. They have have Popeye's in Tim. Hortons in Burger King. But this really is. I mean the the the growth is coming from this chicken sandwich and so the question is is is that sustainable and and we don't know that I mean this it's kind of like that greater investing lesson and no pun intended. But you're not looking to put all of your eggs in one basket in this case. You don't WanNa put all of your chicken sandwiches in one basket in. I think when you look at restaurant brands I mean. This really is a Burger King. Business First and foremost I mean Burger. King is responsible for close to seventy percents companies. Total revenue in Popeye's is actually the smallest revenue generator of the three but that said The laggard really his. Is Tim. Hortons and that to me is the bigger question because I. I don't have any doubt that they can continue to perform well with Popeye's even if the chicken sandwich doesn't bring this explosive growth going forward and it probably won't but it it'll probably do pretty well. It's been received well because a lot of people think it's really good The question for MEES. What are they going to do with Tim? Hortons because Tim Hortons is really. This is kind of like the Pizza Hut. This is like the conversation we had about yum brands where wear it was yet another quarter of KFC and Taco bell are doing just fine. Thank you very much and Pizza Hut. Just I'm almost speechless because I'm genuinely surprised that when Pizza Hut was handed the opportunity that they were of Papa. John's and all of the controversy around John Schnatter in the NFL deal and the NFL deal. They still can't make that concept concept work no. I think you probably could make the argument this point. Now that you know Tim Horton's could prep for a spin off in pizza. Hut could prep for a spin off. You put those two together you know what their ticker would be Chris L. A. G. Because those two together will lag the market for quarters in years to come in. I don't know why that is on the pizza. Hut Pizzas one of those things. I mean domino's recognized a while back. Hey listen we're not. We're not selling a lot of stuff because apparently our food in that great. So let's make good food in and for whatever reason Tim Hortons doesn't quite resonating as well and maybe it is. Maybe it is a geography thing. It's it's certainly not a brand that I think has much opportunity opportunity south of the border. Right I mean when when you bring that thing into the United States just don't think it's GonNa do What it could possibly do in Canada but the calms of minus four point point three percent? Now we'll say management attributed some of that to their rewards program. They're essentially investing a lot in this rewards program to stoke traffic bring people back in in and I appreciate that that makes sense. We see a lot of these restaurants. Do it and and starbucks I think is one of the companies out there who really wrote wrote the book on how to do it. Well a Tim Hortons. Maybe these are. Just some of the lumps that come with investing in that a but I it's it's taking a little a bit of a hit in the short run for. Hopefully it'll more long term sustainability that remains to be seen whether it's really gonNA work out. I'm not that optimistic. Whereas I feel like with Burger working at Popeye's there is a more universal geographical reach where people people are going to probably flocked to those brands a little bit more consistently So for me. Burger King and Popeye's strength their. Tim Hortons a lot of questions. They're going to continue to make investments the rewards program but I mean this is a company that has some big aspirations with somewhere in the neighborhood. Twenty th at twenty seven thousand total restaurants. Today they're aim is is for forty thousand restaurants in the next eight to ten years in so you got to believe that most of that is going to come on the Burger King Popeye's side and and and it doesn't We very well may see them make another acquisition. Bring another brand under their umbrella so to speak that remains to be seen but yeah I mean for all of the success. That Popeye's has had burger king. I get it Tim Hortons is the real big question mark and I don't know what they do to fix that to to go go back to something you said earlier regarding Ken. Popeye sustain this. No no anyone. Who's looking at this thinking boy? Can they do this every quarter no there. You'd you'd like to see maybe not thirty percent growth but you'd like to see given the comstock. They had a year ago. Then yeah you'd like to see some double double digit growth. But when we get to twelve months from now honestly if they can do. Single low single digit growth off of thirty eight percent. COP bumped than fantastic. I think the other restaurant that has to be looking very closely at this. Is McDonald's and Chris Kempinski. Who's been CEO for? Maybe almost three months. Now it's going to be interesting to see where they go with their chicken chicken sandwich and what they're able to do with well we. We have gotten some boots on the ground research on that already and apparently they've got some work to do on that on that front. I mean that's a really competitive space. I mean who would have figured we'd be sitting here just shining such a light on the chicken sandwich. I mean this really has become front and Center for the Quick Quick Service Restaurant Industry. Hasn't I mean but you know the the business opportunity for McDonald's and everyone else who's not chick-fil-a is the chick-fil-a is closed on Sundays Sundays. Yeah Yeah you can get just you know. You don't need to get all of their business. You just need to get some of their biggest need some of it and and and again I think. Go to your point about the chicken sandwich with Popeye's no it's not sustainable but it seems to be a good product wrong grosses reviews. Be Damned. I I do think that it would be really neat to see them. Come up with something like that. For the Burger. King side of the business that would be extremely meaningful because again a- as great of a success as the chicken sandwich with Popeye's has been it's still the smallest part of the business in that has to be taken into consideration ration-. This is a burger king story first and foremost so I bet you management is in a room somewhere trying to figure out. How do we capture the lightning in a bottle? Four Burger King and maybe they thought the impossible opera had that Had that potential doesn't seem like it's Gonna I mean and I don't know what it is but it does seem like no matter what it's going to revolve around chicken in some way shape or form.