U.S.-listed shares of the company rose more than three per cent after it topped results estimates for the fourth quarter ended Dec. 31, led by soaring online sales and better-than-expected same-store sales growth at Burger King in the U.S. and Tim Hortons in Canada.

Restaurant chains are raising prices because they are paying higher costs for shipping, labour and commodities including chicken, coffee and cooking oils amid COVID-19 related disruptions.

The record inflation levels and staffing disruptions due to the omicron variant dulled profits at McDonald’s and Starbucks.

Burger King’s Whopper — made from a quarter-pound of grilled beef — is an “iconic” product that has “been on this core discount platform for too long,” Restaurant Brands CEO Jose Cil told Reuters in an interview.

The chain, which often caters to lower-income customers, removed the item from its two for $5 deal but could offer limited discounts on the burger in the future (all figures US$).

Burger King also said it would stop selling some less-popular menu items altogether, including sundaes, whipped toppings and chocolate milk.

Cil declined to provide timelines for overall price hikes in 2022.

Toronto-based Restaurant Brands reported total revenue of $1.55 billion, above estimates of $1.52 billion.

But U.S. comparable sales fell at Popeyes, in part because some locations have had to reduce operations by an average of one hour due to staffing shortages.

Popeyes’ sales had been soaring even through much of the pandemic after the 2019 launch of its fried chicken sandwich, which was so popular that most rivals — including McDonald’s and KFC — introduced their own similar product.

Restaurant Brands reported per share earnings of 74 cents in the fourth quarter, topping Refinitiv estimates of 69 cents.

— Reporting for Reuters by Deborah Sophia in Bangalore and Hilary Russ in New York.

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Analysts have said fried chicken sandwich pioneer Popeyes, owned by RBI, has been hurt by McDonald’s and KFC launching similar items, while RBI-owned Burger King has underperformed in recent months on weak demand for its lower-priced menu items.

U.S. comparable sales at Burger King declined 1.6 per cent, and slipped 4.5 per cent at Popeyes in the third quarter ended Sept. 30.

Firehouse Subs, in comparison, reported U.S. same-store sales growth of 20 per cent from pre-pandemic levels between January and October, Restaurant Brands said.

RBI’s U.S.-listed shares rose marginally after it said the deal would immediately add to its earnings once it closes in the coming months. It also said it will fund the acquisition through cash on hand and debt.

“(We) have kept an eye on it (Firehouse Subs) from a distance over the years,” RBI CEO Jose Cil told Reuters.

Jacksonville-based Firehouse’s franchisees own and operate 97 per cent of its 1,200 restaurants across 46 U.S. states, Puerto Rico and, since 2015, Canada.

Firehouse so far has just 48 Canadian stores, all in Ontario, run by franchisee Onfire Restaurants. The chain’s online listing of regions available to new franchisees shows all 10 provinces and three territories as having “no current availability.”

RBI, meanwhile, has about 27,000 stores in over 100 countries.

“There’s a tonne of room for growth here in the U.S. and Canada, and all around the world,” Cil said about Firehouse Subs, which is popular for its “Hook + Ladder” sub.

Firehouse Subs’ loyalty program has 3.5 million subscribers, and is adding around 50,000 more customers per month, said RBI, which earlier this year saw Burger King and Popeyes launch similar programs.

Firehouse Subs CEO Don Fox and finance head Vincent Burchianti will manage its day-to-day operations.

— Reporting for Reuters by Praveen Paramasivam in Bangalore. Includes files from Glacier FarmMedia Network staff.

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The entire campaign rests on the physicality of the cup itself. Almost 300 million cups are produced for the campaign, which usually ends in mid-April.

Some winners have been required to send in the entire cup to claim their prize, instead of just ripping off the tab. But to redeem any prize, a cup is required, which is something tangible.

But packaging is on everyone’s mind these days. Hardly a day goes by without a story on plastics, garbage, or unsustainable practices in food retailing.

In 1986, when Tim Hortons Roll Up The Rim campaign started, cities were still a few years away from launching recycling programs. Today, not only are food retailers and restaurant outlets under watch, Tim Hortons has been targeted specifically as one the largest generators of garbage that ends up on Canadian seashores, alongside McDonald’s, PepsiCo, Coca Cola, and Nestle.

What is different now is how society values the concept of the circular economy. A company, any company, will remain responsible for the product it sells, from the initial transaction between the consumer and retailer to when all materials have eventually been repurposed, in one way or another.

No waste, no pollution — only positive and desirable results, from a sustainable perspective. But even the slightest disregard for the environment will break the cycle of sustainability.

Everyone cares about the environment, it seems, until life gets in the way. Time constraints, carelessness, laziness — many things can prevent proper disposal of products once they get into consumers’ hands. But gradually, companies are being held partially responsible for the garbage left in a parking lot, a stadium, on a beach or in a schoolyard. Times are changing. But the ‘Roll Up The Rim To Win’ campaign is not.

A group of Calgary-based students, Mya Chau, Eve Helman and Ben Duthie, have amassed over 100,000 signatures to encourage Tim Hortons to bring the entire campaign online. Another Albertan tried the same thing in 2016.

Digitizing the promotion is being proposed by these groups so that customers can then bring in their own reusable cups to Tim’s, in order to reduce waste. A noble objective indeed.

For Tim Hortons though, such a shift would fundamentally change the nature of what the campaign is all about. There would no longer be conversations among friends or co-workers, with their cups of Tim’s coffee, waiting to see if anyone has won a car, cash, or simply another coffee.

The campaign strategy worked and got many Canadians hooked. And sales at Tim Hortons during the mid-winter months magically soared and customers kept coming back.

But it’s 2019, and the argument that increased profit justifies the means carries less weight than it did in 1986.

It is not just about increasing sales or getting customers on board. A promotional campaign is now, perhaps more than ever, about making people feel better. Buying countless paper cups with plastic lids isn’t acceptable anymore, especially for younger customers, specifically generation Z and millennials. That would be anyone under the age of 39, which accounts for more than 40 per cent of the population.

Demographic pressures are real. Not only does this age group value the environment, their economic clout is increasing. What’s more, they mostly see the internet, or apps, as a viable, easy alternative to any physical aspects of a marketing campaign. They believe that if the technology exists, why not use it?

Some less tech-savvy customers may feel disenfranchised by a shift to an online campaign, but Tim Hortons could risk losing more customers by sticking to past practices. Starbucks and other chains are making changes, so expectations are shifting rapidly.

Simply put, Canada’s love affair with ‘Roll Up The Rim To Win’ needs to be modernized. It was nice while it lasted, but Canadians are expecting restaurant chains to embrace the circular economy, and that includes Tim Hortons.

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Tim Hortons’ year was just plain awful. It went from fourth to 50th, in just 12 months. This significant free fall can be linked to the very public spat between Tim Hortons franchisees and parent company, Restaurant Brands International (RBI). This dispute has taken its toll and likely affected the reputation of the iconic Canadian company.

RBI has been at war with Tim Hortons franchisees since 2014, when RBI swooped in with an efficiency-driven agenda.

Menu changes, royalty structure modifications, higher costs of supplies to operate outlets — all were revised to serve RBI’s shareholders, not necessarily to the Canadian public. This year’s Leger-National rankings confirm that Canadians have been keeping tabs.

RBI’s profit-driven agenda has started to work against it. The $15-an-hour minimum wage campaign made Tim Hortons a public target. To make matters worse, memos were leaked suggesting that, in Ontario, where the minimum wage increased by 22 per cent on January 1, 2018, some Tim Hortons employees had been asked to pay for uniforms and cut out breaks.

Interestingly, however, even though RBI’s strategy has been all about profitability for the holding company, its share price has taken a hit recently. Sales are slumping, and as a result, RBI’s shares values have fallen and could drop even further.

RBI’s response is to invest $700 million over the next four years, in changing the interior design all of its Tim Hortons restaurants. But here’s the catch: most franchise owners will be required to pay over $450K per outlet. Given that the average Tim Hortons franchisee owns three outlets, the cost to support RBI’s new redesign strategy will be well over $1 million for a typical franchisee.

RBI’s message to franchisees is quite simple: pay up or leave. RBI’s intent is clearly to renew its portfolio of franchisees and deal with operators who are more inclined to buy into the parent company’s philosophy. Not a great move on its part, if it cares about reputation.

The Leger-National survey may not measure how nationalistic ideals affect Canadians’ perception of companies at home, but this factor clearly skews ranking results.

In Tim Hortons’ case, the brand itself is inherently linked to our perception of how it honours Canadian values.

So, what the recent reputational survey is really telling us is that Tim Hortons is no longer seen as a Canadian company. Things are different now, and Canadians can feel it.

Franchisees have known for a while that RBI’s game is disconnected from Canadian beliefs and that the company is distanced from Canada and from the restaurant business.

Since the RBI takeover, the traditional uniforms, the successful Roll up the Rim to Win campaign, the welcoming friendly smiles — all have been just a façade. They hid the troubling truth about the Tim Hortons conversion.

The recent Leger-National survey confirms that Tim Hortons’ transformation into a foreign company is now complete.

The brand will eventually survive, but things will never be the same.

Sylvain Charlebois, is professor in food distribution and policy and dean of the faculty of management at Dalhousie University.

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Restaurant Brands International, one of the world’s largest fast-food restaurant operators, has been criticized by activists for buying soy and beef from newly deforested land in Brazil and other South American countries.

It its first sustainability report, the firm, which also owns Tim Hortons and Popeyes, committed to making sure its suppliers stopped clearing primary forests or disturbing lands with a high conservation value by 2030.

“It is our intention to report regularly on our progress towards eliminating deforestation,” RBI said in its report released on Thursday.

The company also pledged to respect the land rights of communities who live in areas where its suppliers cultivate soy, cattle and other farm products to make sure local people grant informed consent concerning development on their land.

“As a company with global operations and a complex supply chain, we know we have a key role to play in promoting sustainable business practices,” company spokesman Patrick McGrade said in a statement.

Campaigners, however, say the promised changes are too slow and do not go far enough.

The Union of Concerned Scientists, a U.S.-based advocacy group, said the company’s environmental pledges are “embarrassingly weak.”

The firm should commit to ending deforestation in its supply chain by 2020 in line with other large restaurant chains rather than 2030, Sharan Smith, the group’s spokeswoman said.

“When it comes to protecting forests, Burger King means fast food and slow action,” Glenn Hurowitz from the U.S.-based campaign group Mighty Earth said in a statement.

Over the past 13 years, 271 million acres of rainforest has been destroyed around the world to make room for products like Burger King’s Whopper sandwiches, Hurowitz said.

“Burger King is sending a message that it’s OK… to keep revving up the bulldozers.”

RBI did not respond to interview requests from the Thomson Reuters Foundation.

Deforestation accounts for about 10 per cent of global greenhouse gas emissions which contribute to climate change, the Union of Concerned Scientists said.

— Chris Arsenault reports for the Thomson Reuters Foundation, the charitable arm of Thomson Reuters for coverage of humanitarian news, women’s rights, trafficking, property rights, climate change and resilience.

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Restaurant Brands International on Thursday released its first “Sustainability Report,” outlining its work during 2016 in support of “sustainable practices that promote positive change.”

Back in late December, Oakville, Ont.-based RBI announced its two chains would “eliminate the use of antibiotics deemed by the World Health Organization (WHO) as ‘critically important’ to human medicine” from its chicken supply lines.

At that time, it also said it would “work with our supply chain partners to support and implement these changes” in the U.S. in 2017, and in Canada in 2018.

In Thursday’s report, the company reiterated it’s “committed to using chicken that is raised without the use of antibiotics important to human medicine as defined by the (WHO)” but instead said “we intend to meet this commitment in U.S. and Canada by the end of 2018.”

However, the company on Thursday also made clear it will follow the WHO’s fifth revision to its document, Critically Important Antimicrobials for Human Medicine, which was released early this year.

To make that list, an antimicrobial must be both “the sole, or one of limited available therapies, to treat serious bacterial infections in people,” and used to treat infections in people caused either by bacteria humans can get from non-human sources, or by bacteria that can develop resistance genes from non-human sources.

In the document’s fourth revision last year, certain fluoroquinolones, third- and fourth-generation cephalosporins, macrolides and glycopeptides were recategorized to the “highest priority.”

In the fifth revision, polymyxins such as colistin are also moved to the “highest priority” classification, due to the “increasing usage of colistin to treat serious infections in humans in many parts of the world, the discovery of the mcr1 and mcr2 genes that confer transmissible resistance to colistin and the spread of colistin-resistant bacteria via the food chain,” the WHO said.

In Canada, the federal health department’s Veterinary Drugs Directorate places polymyxins in Category I (“very high importance”), the highest category in its list of antimicrobials based on their importance in human medicine.

RBI, in Thursday’s report, reiterated it “recognize(s) that antibiotics play an important and delicate role in animal well-being and human health. Antibiotics are sometimes required to control and treat disease to maintain animal health and welfare.”

The company said it “require(s) our vendors to purchase products only from farmers that administer antibiotics in a judicious and responsible manner when treatment is necessary, in keeping with veterinary and regulatory requirements.”

RBI made its 2016 pledge on antibiotics for chickens shortly before the company announced a deal to buy the Atlanta-based Popeyes Louisiana Kitchen chain, which includes over 2,600 restaurants, among them over 100 Canadian stores in Ontario and Alberta.

In an article Thursday on the sustainability report, Reuters’ Lisa Baertlein quoted RBI as saying the company intends to apply the new policy to all its brands over time. — AGCanada.com Network

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The deal is a bet by Oakville, Ont.-based Restaurant Brands that it can use its international reach to introduce Popeyes’ Louisiana-style fried chicken and buttermilk biscuits to more diners globally.

Popeyes shareholders will get $79 for each share they hold, a 19.5 per cent premium to the NASDAQ-traded stock’s Friday close (all figures US$).

Atlanta-based Popeyes, whose fans include pop singer Beyonce, began 45 years ago as a Southern-fried “Chicken on the Run” restaurant in a New Orleans suburb. As of last October, the chain includes more than 2,600 restaurants, of which over 1,900 are in the U.S.

Popeyes expanded into Canada starting in 1984 and now operates over 100 Canadian outlets, nearly all in Ontario. The company set up restaurants in Edmonton and Calgary late last year and is seeking other franchisees elsewhere in Canada.

Restaurant Brands was formed in 2014, when 3G Capital-backed Burger King acquired Canadian coffee and doughnut chain Tim Hortons for $11 billion.

Reuters reported Monday that Restaurant Brands was nearing a deal to buy Popeyes, citing people familiar with the matter.

Restaurant Brands said Tuesday it would finance the deal with cash on hand and a financing commitment from J.P. Morgan and Wells Fargo.

Popeyes CEO Cheryl Bachelder on Tuesday described the deal, which is expected to close in early April, as “a transaction that delivers immediate and certain value to the Popeyes shareholders.”

Restaurant Brands CEO Daniel Schwartz said the company “look(s) forward to taking an already very strong brand and accelerating its pace of growth and opening new restaurants in the U.S. and around the world.”

— Reporting for Reuters by John Benny in Bangalore. Includes files from AGCanada.com Network staff.

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Restaurant Brands International (RBI) in late December announced the new policy on its website, saying it “will work with our supply chain partners to support and implement these changes” in the U.S. this year, and in Canada in 2018.

Specifically, the new policy calls for the chains to “eliminate the use of antibiotics deemed by the World Health Organization (WHO) as ‘critically important’ to human medicine,” to help prevent further spread of antimicrobial-resistant infections.

The Oakville, Ont.-based company said it recognizes antibiotics play an “important and delicate role” in both animal well-being and human health and “are sometimes required to control and treat disease to maintain animal health and welfare.”

RBI said it already requires its suppliers to buy products only from farms that administer antibiotics in a “judicious and responsible manner when treatment is necessary, in keeping with veterinary and regulatory requirements.”

The company also noted it has been collaborating in 2016 with its “working group of suppliers and academics” and also “monitoring the guidance of external experts” such as the WHO and the U.S. Food and Drug Administration (FDA).

“We believe that it is important to reduce the use of antibiotics important for human medicine in order to preserve the effectiveness of antibiotics in both veterinary and human medicine,” RBI said.

RBI has been on the receiving end of pressure from major investors and Oakland-based shareholder advocacy group As You Sow to curb the use of medically important antibiotics in their livestock supply chains.

Noting McDonald’s and other companies have already “taken action” on antibiotics, As You Sow in 2016 put forward a shareholder resolution for RBI to adopt an “enterprise-wide” policy on phasing out use of antibiotics in its meat supply chains for any reasons other than therapeutic use or “non-routine disease control.”

As You Sow in March agreed to withdraw the resolution, after RBI agreed to “make disclosures” on its website in calendar 2016 about its policies on antibiotic use in livestock, covering its beef, pork and poultry supply chains.

The company also agreed those disclosures would include new timelines for curbing use of antibiotics in chicken, in Canada as well as the U.S.

RBI also agreed in March to include As You Sow in its future working-group discussions on antibiotic use.

On its website in late December, RBI also noted its suppliers “are currently required by law to adhere to legislated antibiotic withdrawal times,” thus ensuring “all antibiotics have cleared each animal’s system before it enters the food supply.”

To make the WHO’s “critically important” list, an antimicrobial must be both “the sole, or one of limited available therapies, to treat serious bacterial infections in people,” and used to treat infections in people caused either by bacteria humans can get from non-human sources, or by bacteria that can develop resistance genes from non-human sources.

The WHO in 2016 published a fourth revision to its “critically important” list, recategorizing certain fluoroquinolones, third- and fourth-generation cephalosporins, macrolides and glycopeptides to the “highest priority.”

“Special attention should be paid to carbapenems, lipopeptides and oxazolidinoses that are last-resort antimicrobials for treatment of serious infectious diseases in human that have no veterinary equivalent,” the WHO said at the time.

The latest “critically important” list also includes certain drugs from the penicillins, polymyxins, quinolones, aminoglycosides, ansamycins, glycylcyclines, monobactams and phosphonic acid derivatives, plus certain drugs used only to treat tuberculosis or other mycobacterial diseases. — AGCanada.com Network

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Shares of the Ontario-based company, which reported a better-than-expected quarterly profit on Tuesday, rose as much as nine per cent to $48.24 on the Toronto Stock Exchange.

The company also raised its quarterly dividend by one cent, to 14 cents per share.

“Restaurant sales can still be much greater and 2016 is already off to a good start,” CEO Daniel Schwartz said on a post-earnings call, adding that the company was “pretty excited” about the addition of grilled hot dogs to its menu.

Burger King said last week hot dogs would permanently feature on its menu, signaling that it was going back to its fast-food roots after attempting to tempt diners with salads and healthier offerings.

Competitors such as McDonald’s and Wendy’s have also been adding new items to lure customers back. McDonald’s has a new all-day breakfast offer, while Wendy’s latest promotions include a “4 for $4” meal.

“Menu innovation has not been the only key to growth at Burger King: value for money has also played a large part,” said Neil Saunders, CEO of research firm Conlumino.

Burger King’s new promotions include a new “2 for $5” sandwich deal, and an offer where customers can get 10 chicken nuggets for $1.49.

Sales at established Burger King restaurants rose 3.9 per cent, excluding currency impact, in the fourth quarter ended Dec. 31, helped by limited-time offers such as a pitch-black burger that the company dished out for Halloween.

The re-introduction of chicken fries as a permanent menu item last March has also helped the chain. Burger King has since innovated on the item, introducing chicken fries dusted in buffalo wings-style spices, and other flavours.

Sales at the Tim Hortons coffee and doughnut chain also rose, due to strong demand for beverages, a new line-up of steak paninis, grilled lunch wraps and Nutella pockets, which the company introduced last April.

Comparable sales at the chain rose 6.3 per cent, excluding currency impact. Analysts had estimated comparable sales growth of 3.9 per cent for Tim Hortons and 3.8 per cent for Burger King, according to Consensus Metrix.

Adjusted profit was 35 cents per share, above analysts’ average estimate of 29 cents, according to Thomson Reuters I/B/E/S.

— Reporting for Reuters by Anet Josline Pinto in Bangalore.

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Shares of the company, which had jumped more than 40 per cent on the TSX since being listed in December, rose another 7.7 per cent on Tuesday to $51.96. They gained 7.1 per cent at $41.49 in New York.

U.S. chain Burger King bought Tim Hortons for $12.64 billion in August, creating the world’s third-largest fast-food restaurant group. The two restaurant chains are being managed as distinct and separate brands under the parent company.

“Whenever you do a transaction like that, there’s going to be a lot of one-time fees,” Restaurant Brands chief financial officer Josh Kobza said in an interview.

“The underlying businesses are doing really well and that gives us a lot of confidence about the results that are going to come over the next few years.”

Comparable store sales grew 4.1 per cent at Tim Hortons and three per cent at Burger King in the quarter, Oakville, Ont.-based Restaurant Brands said. On a constant currency basis, system-wide sales grew 7.4 per cent at Tim Hortons and 7.7 per cent at Burger King.

Investors and industry experts have said Tim Hortons’ coffee products can help Burger King chip away at McDonald’s Corp.’s dominance in the quick-serve breakfast market, while Burger King can help Tim Hortons expand in the U.S. and abroad.

Last month, the company cut some 350 corporate jobs at Tim Hortons as part of the post-merger reorganization.

“We executed our organizational restructuring up front, which really focused on back office, corporate areas where we said we’d see overlap in the business,” CEO Daniel Schwartz told Reuters. “We have no plans to have any more job cuts.”

Executives said they would focus on deleveraging and reinvesting in the business. Tim Hortons’ U.S and international growth would be a top priority, but something that would take time, they added.

Restaurant Brands, which has more than 19,000 restaurants in 100 countries, posted a net loss attributable to shareholders of $514.2 million ($2.52 per share) in the fourth quarter ended Dec. 31, in its first quarterly results after the merger.

The company reported total revenue of $416.3 million in the quarter.

— Solarina Ho is a Reuters correspondent covering Canadian retail markets from Toronto. Additional reporting for Reuters by Sneha Banerjee in Bangalore.

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