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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) is likely to benefit from expansion efforts, menu innovation and the loyalty program. However, pandemic-induced soft traffic is a concern.
Let us discuss the factors highlighting why investors should retain the stock for the time being.
Factors Driving Growth
Restaurant Brands believes that there is a huge opportunity to grow all its brands around the world by expanding its presence in existing markets and entering new markets. In January 2022, the company announced a Master Franchise and Development Agreement with the Silla Group subsidiary to boost the Popeyes portfolio in the South Korea region. The company will open its first restaurant in 2022. QSR 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. It plans to focus on its pipeline to deliver solid net restaurant growth in 2022.
Restaurant Brands continues to focus on improving services through comprehensive training, better restaurant operations, reimaging efforts and attractive menu options. This will help the company enhance overall guest satisfaction and drive comps. The company expects to drive traffic by expanding the customer base and continuing to build brand leadership in food quality and taste.
During fourth-quarter 2021, the company made solid progress with regards to its core products with ingredients. In the breakfast category, the company benefited from the cracked eggs platform as well as steak and egg breakfast sandwich, thereby boosting morning daypart sales ahead of 2019 levels. The company reported sequential improvement in hot beverage sales on the back of its brewed coffee offerings and handcrafted espresso beverages. The combination of richer and bolder recipes, dairy alternatives and equipment tune-ups with respect to espresso-based beverages, added to the upside. QSR also benefited from its plant-based product offerings, particularly in Europe. During the quarter, the company unveiled the veggie version of its iconic Long Chicken — in Spain and Germany. Backed by positive customer feedback, the company is optimistic in this regard and intends to expand the platform in new markets in Europe and across the globe.
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 fourth-quarter 2021, the company reported continued traction from the respective brands loyalty programs. With significant progress made in terms of user experience and gaining more active users, the company is optimistic about its potential for the respective brands over the long term. Going forward, the company intends to integrate loyalty programs into digital boards to derive synergies.
Image Source: Zacks Investment Research
In the past three months, shares of the Restaurant Brands have gained 0.8% against the industry’s fall of 11.1%.
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 supply chain disruptions have taken an enormous toll on the company. Although the majority of 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.
BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have rallied 47.1% in the past year.
The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and earnings per share (EPS) suggests growth of 40.9% and 66.2%, respectively, from the year-ago period’s levels.
Arcos Dorados sports a Zacks Rank #1. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have risen 51.6% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 10.3% and 62.5%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 19.6% in the past year.
The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, 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) is likely to benefit from expansion efforts, menu innovation and the loyalty program. However, pandemic-induced soft traffic is a concern.
Let us discuss the factors highlighting why investors should retain the stock for the time being.
Factors Driving Growth
Restaurant Brands believes that there is a huge opportunity to grow all its brands around the world by expanding its presence in existing markets and entering new markets. In January 2022, the company announced a Master Franchise and Development Agreement with the Silla Group subsidiary to boost the Popeyes portfolio in the South Korea region. The company will open its first restaurant in 2022. QSR 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. It plans to focus on its pipeline to deliver solid net restaurant growth in 2022.
Restaurant Brands continues to focus on improving services through comprehensive training, better restaurant operations, reimaging efforts and attractive menu options. This will help the company enhance overall guest satisfaction and drive comps. The company expects to drive traffic by expanding the customer base and continuing to build brand leadership in food quality and taste.
During fourth-quarter 2021, the company made solid progress with regards to its core products with ingredients. In the breakfast category, the company benefited from the cracked eggs platform as well as steak and egg breakfast sandwich, thereby boosting morning daypart sales ahead of 2019 levels. The company reported sequential improvement in hot beverage sales on the back of its brewed coffee offerings and handcrafted espresso beverages. The combination of richer and bolder recipes, dairy alternatives and equipment tune-ups with respect to espresso-based beverages, added to the upside. QSR also benefited from its plant-based product offerings, particularly in Europe. During the quarter, the company unveiled the veggie version of its iconic Long Chicken — in Spain and Germany. Backed by positive customer feedback, the company is optimistic in this regard and intends to expand the platform in new markets in Europe and across the globe.
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 fourth-quarter 2021, the company reported continued traction from the respective brands loyalty programs. With significant progress made in terms of user experience and gaining more active users, the company is optimistic about its potential for the respective brands over the long term. Going forward, the company intends to integrate loyalty programs into digital boards to derive synergies.
Image Source: Zacks Investment Research
In the past three months, shares of the Restaurant Brands have gained 0.8% against the industry’s fall of 11.1%.
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 supply chain disruptions have taken an enormous toll on the company. Although the majority of 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 BBQ Holdings, Inc. , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Tapestry, Inc. (TPR - Free Report) .
BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have rallied 47.1% in the past year.
The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and earnings per share (EPS) suggests growth of 40.9% and 66.2%, respectively, from the year-ago period’s levels.
Arcos Dorados sports a Zacks Rank #1. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have risen 51.6% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 10.3% and 62.5%, respectively, from the year-ago period’s levels.
Tapestry carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 19.6% in the past year.
The Zacks Consensus Estimate for Tapestry’s 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period’s levels.