Restaurant Brands profit comes up short - analyst

Thursday, 19 October 2017

Fast food company Restaurant Brands says it will offer few discounts at its Carl's Jr burger restaurants and focus on increasing the chain's profit margins.

The listed company which also owns Starbucks Coffee, KFC and Pizza Hut in New Zealand, reported a $19.1 million profit after tax for the half year to September 11, up 41.3 per cent on the same period last year.

Hamilton Hindin Greene retail analyst Grant Williamson says Restaurant Brands are a cautious company that won't take too much risk.

Total group sales were up 50.7 per cent to $386.1m.

But Hamilton Hindin Greene retail analyst Grant Williamson said the result was short of expectations.

KFC, Pizza Hut, Carls Jr and Starbucks workers went on strike last year for better pay, which affected Pizza Hut sales.

KFC Fort Street Auckland introduced self-service kiosks to a new store format.

* Restaurant Brands staff get pay rise of up to $1 per hour

* KFC, Pizza Hut, Carls Jr, Starbucks workers go on strike**

'I wouldn't be critical of that result, it was a very good result but analysts were expecting a touch better than that,' he said.

Williamson said Restaurant Brands took a cautious approach to expansion and would focus on burger restaurant Carl's Jr in New Zealand before expanding further.

Sales for burger brand Carl's Jr and coffee brand Starbucks were both down almost 3 per cent.

Restaurant Brands said it was due to two Carl's Jr stores opening in Christchurch last year.

Restaurant Brands said it would reduce discounts and promotions at the chain and to focus on increasing profit margins.

In September, Restaurant Brands opened a $1.6m KFC in Fort Street, Auckland with a new format, self-serve kiosks and no drive through.

The company said the store was so successful it would be a prototype for new central city stores in 2018.

'This is a typical example of a company taking things quietly before further developing a concept,' Williamson said.

'I certainly think they will be expanding self-serve kiosks in other stores.

'It won't necessarily reduce staff numbers but … it could increase sales at better [profit] margins.'

New Zealand Pizza Hut store profits were down $400,000 due to higher wages and cost of ingredients, but sales were up.

In June, Restaurant Brands workers around the country won a pay rise of between 60 cents and $1 an hour, backdated to April 1.