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Restaurant Brands international Inc. works to keep price hikes in line with the Consumer Price Index.

Burger King parent RBI aims to keep price hikes in line with CPI

Company works with franchisees to not ‘get too far head of the consumer,’ says CEO José Cil on Q2 earnings call

Restaurant Brands International Inc. endeavors to keep its pricing “roughly in line” with the Consumer Price Index, executives said Thursday.

The Toronto-based company, which owns the Burger King, Tim Hortons, Popeyes Louisiana and Firehouse Subs brands, reported earnings for the second quarter ended June 30, which José Cil, RBI’s CEO, said were impacted by ongoing commodity and utility price increases and wage pressures as well as interest rates and economic uncertainties.

“We've been focused on working closely with our franchisees to take thoughtful action to alleviate those within our in our franchisees’ control,” Cil said in an earnings call. “Together we've strategically taken price across each of our brands, always being mindful of traffic and the guest experience.”

Over the 12 months ended June 2022, the U.S. Consumer Price Index for all urban consumers increased 9.1%, the largest increase since the 12-month period ending November 1981.

“We take into account obviously pressures that we're seeing from a commodity standpoint and other areas of the P&L and inflation wage inflation as well as utilities,” Cil said. “We look at the competition and then we take into account the consumer and where they are in the journey. So we're very thoughtful about this.”

Specifically, the brands use third parties to assess the markets and the brands, he added, “and then we work with the franchisees to ensure that they can price in the best way possible to ensure that we don't get too far ahead of the consumer.”

RBI reported consolidated second-quarter same-store sales were up 9%, with bright spots of increases of 18.4% at Burger King’s stores outside the United States and increases of 14.2% at Tim Hortons Canada.

The Canada Tim Hortons sales increases were partially a result of the brand’s “back to basics” program, Cil said.

“For the quarter, this performance was a result of continued improvements in our core breakfast baked goods and coffee offerings, extensions to our P.M. food and cold beverage lineup and our second collaboration with [Canada-born musical artist] Justin Bieber — all of which have been aided by increased mobility and targeted strategic pricing initiatives,” he said.

For the second quarter ended June 30, RBI reported net income attributable to shareholders of $236 million, or 76 cents per share, down from $259 million, or 84 cents per share, in the prior-year period. Revenues in the second quarter were $1.639 billion, up from $1.438 billion in the same period last year.

Same-store sales, globally by brand, in the second quarter were: Burger King, up 10%; Tim Hortons, up 12.2%; Popeyes, up 1.4%, and Firehouse Subs, down 1.4%

The company plans for accelerating Burger King growth in the United States with investment announcements in September at a planned national franchisee convention, executives said.

Digital advancements continued for all the brands, said Josh Kobza, RBI’s chief operating officer.

“Results this quarter show us guests are using digital channels more than ever,” Kobza said.

The brands are working on technology as it relates to delivery, loyalty and mobile order and pay, he said.

“We're seeing benefits from collaboration between our marketing and digital teams with exclusive online offers such as the Frequent Fry’ers campaign at Burger King,” Kobza said, adding that the brands have enhanced their e-commerce platforms to reduce time to place an order.

As of June 30, Restaurant Brands International had 29,747 restaurants systemwide in more than 100 countries under the brands Burger King (19,311 units), Firehouse Subs (1,233), Popeyes Louisiana Kitchen (3,851) and Tim Hortons (5,352).

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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