Is Restaurant Brands Keeping Up With McDonald’s?
Restaurant Brands International (NYSE: QSR) is one of the world’s largest quick service restaurant (“QSR”) companies, with more than $30 billion in system-wide sales and over 25,000 restaurants (approximately 100% franchised) in more than 100 countries and U.S. territories as of December 31, 2018. They have 3 brands, namely Tim Hortons, Burger King, and Popeyes brands which have similar franchise business models with complementary daypart mixes and product platforms.
Restaurant Brands’ main competitors are other fast food chains. In this analysis we see how Restaurant Brands’ Key Operating Metrics compare against McDonald’s.
For detailed analysis with our interactive dashboard – How Does Restaurant Brands’ Key Operating Metrics Compare With McDonald’s? In addition, here is more Consumer Discretionary data.
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How does Restaurant Brands’ Revenue compare with McDonald’s?
- Restaurant Brands has a constant increase in revenue over the past few years. It rose from $4.1 billion in 2016 to $5.4 billion in 2018. Trefis estimates the trend to continue and revenue to be around $5.7 billion in 2019.
- McDonald’s US has seen a fall in revenue in recent years as the re-franchising has been done on a large scale. Revenue fell from $24.6 billion in 2016 to $21 billion in 2018. As the re-franchising is nearly complete, Trefis estimates revenue to have a positive growth and be around $21.5 billion in 2019.
Restaurant Brands’ & McDonald’s Revenue can be divided into 2 Key Metrics:
1) Number of Stores
- Restaurant Brands stores (Burger King, Tim Hortons, and Popeyes) have seen a constant increase from 20.4K in 2016 to 25.7K in 2018. Trefis estimates the expansion trend to continue and stores to be around 27.1K in 2019.
- McDonald’s stores has only seen a slight increase due to the re-franchising initiative. Stores went up from 36.9K in 2016 to 37.9K in 2018. Trefis estimates a further positive net addition which would take them to around 39.1K in 2019.
- Average revenue for Restaurant Brands has been fluctuating over the past few years. The metric decreased from $203.7K in 2016 to $187.5K in 2017 post the acquisition of Popeyes, but increased to $208.1K in 2018. Trefis estimates positive growth in 2019 and the metric to be about $211.1K.
- McDonald’s has seen a fall in average revenue in the US primarily due to the re-franchising initiative in which they are targeting 95% of restaurants to be under the franchise model. Average revenue went down from $667.3K in 2016 to $555.4K in 2018. Trefis estimates the metric to about $550.8K in 2019.
- Restaurant Brands’ Net Income margin has been fluctuating over the past few years. The metric increased from 8.3% in 2016 to 13.7% in 2017 primarily due to an Income Tax benefit for the year. It fell to 11.4% in 2018. Trefis estimates a bit of recovery in 2019 and the metric to reach around 12.3% of Total Revenue.
- McDonald’s has seen a continuous rise in its Net Income margin primarily due to the re-franchising initiative. It increased from 19% in 2016 to 28.2% in 2018. In 2019 we expect it to reach around 29.5% of Total Revenue.
Conclusion:
- Restaurant Brands has seen positive growth over the past few years in terms of overall revenue and increase in reach. The Average Revenue fell in the first year of Popeyes’ inclusion, but recovered in 2018.
- Meanwhile, McDonald’s has seen a fall in Revenue and related metrics because of the re-franchising initiative, the same has also resulted in better margins over the last few years.
- Overall, both the companies seem to have strong revenue and margins over the past few years and this trend is expected to continue.
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