Restaurant Brands International (TSX:QSR)(NYSE:QSR) is a great long-term investment that is bursting with potential. The company that is the name behind the Burger King, Popeyes and Tm Hortons brands has seen an incredible run up over the past few years that is likely to continue for the foreseeable future.
Investors contemplating an investment in the company should take note of the following key reasons why Restaurant Brands will likely only continue growing.
Strong financials despite negativity
Restaurant Brands announced results for the most recent quarter last month which revealed another quarter of growth across all of the company’s brands. System-wide sales growth saw Popeye’s realize an impressive 10.7% growth over the 3.3% growth noted in the same quarter last year.
Burger also saw strong growth of 9.4% in the quarter, but this came in below the 10.6% reported in the same period last year. Tim Hortons also saw a drop in system-wide sales, but still managed to witness some growth of 2.2%, which came in lower than the 2.6% from last year.
Restaurant Brands posted US$1,343.4 million in revenue for the quarter, which surpassed the US$1,132.7 million reported in the same quarter last year. Adjusted net income for the quarter came in at US$313.2 million, or US$0.66 per diluted share, far exceeding the US$241.7 million, or $0.51 per share reported during the same period last year.
Growth across all of Restaurant Brands’ labels appears to be progressing well, fueled both by initiatives such as the Winning Together plan and Breakfast Anytime initiatives at Tim Hortons, to the growing international footprint of the company’s brands, which shows incredible potential.
Increasing growth prospects across the globe
If there’s one thing that Restaurant Brands has really pushed in a relatively short amount of time, it’s international growth. Tim Hortons is a great example of this. The coffee shop chain has expanded to new multiple international markets in the U.K., Spain, the Philippines and Mexico in a relatively short amount of time thanks to adopting the master franchise model that was highly instrumental in Burger King expanding to dozens of countries worldwide.
That winning recipe now appears to be set for Popeyes as well. Last month Restaurant Brands announced that Popeyes would be opening in the Philippines, with other locations in Asia likely to follow in the future.
The interesting point worth mentioning about this expansion is that unlike the success of Burger King, Popeye’s menu of chicken is more amenable and likely to be adopted quicker than other fast food options that would require optimizing the menu to local tastes.
The announcement follows a similar one earlier in the year about Popeyes launching in Brazil and Burger King expansion to both Taiwan and the Netherlands announcements earlier in the year.
In short, Restaurant Brands is a growth machine with access to almost every market on the planet. This factor alone makes the company an intriguing buy for investors, and that’s not even taking into consideration the lucrative dividend that Restaurant Brands offers.
The current quarterly yield amounts to an impressive 3.11%, but more impressive than the yield is the frequency at which the company has raised its dividend over the past few years.
Should you buy?
Over the past two years, Restaurant Brands has transformed from a viable investment with growth prospects to an incredible long-term growth investment that can also double as an income-producing investment.
Given the company’s aggressive expansion to new global markets, there’s little reason to doubt that the company will not continue to be a great long-term investment for any portfolio.