Restaurant Brands 2025 Q1 Earnings Misses Targets with Net Income Down 32.6%

Restaurant Brands (QSR) reported its fiscal 2025 Q1 earnings on May 08th, 2025. The company missed Wall Street’s revenue expectations, despite a 21.3% year-on-year sales increase to $2.11 billion. The adjusted EPS also fell short of analysts’ consensus estimates. Restaurant Brands maintained its guidance for 2025, targeting at least 8% organic adjusted operating income growth. The company anticipates capital expenditures between $400 million and $450 million, aiming for long-term projections of 3% same-store sales growth and 8% organic adjusted operating income growth on average from 2024 to 2028.

Revenue
The total revenue of Restaurant Brands increased by 21.3% to $2.11 billion in 2025 Q1, up from $1.74 billion in 2024 Q1.

Earnings/Net Income
Restaurant Brands's EPS declined 32.9% to $0.49 in 2025 Q1 from $0.73 in 2024 Q1. Meanwhile, the company's net income declined to $221 million in 2025 Q1, down 32.6% from $328 million reported in 2024 Q1. The Company has sustained profitability for 12 years over the corresponding fiscal quarter, reflecting stable business performance. The EPS performance indicates challenges amid revenue growth.

Price Action
The stock price of Restaurant Brands has edged down 0.73% during the latest trading day, has climbed 3.49% during the most recent full trading week, and has jumped 8.90% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Restaurant Brands (QSR) shares after a quarter marked by revenue decline and holding them for 30 days has yielded a 59.70% return over the past five years. This compares to a benchmark return of 92.56%, resulting in an excess return of -32.86% and a compound annual growth rate (CAGR) of 9.86%. The investment strategy experienced a maximum drawdown of -26.78%, maintained a Sharpe ratio of 0.39, and exhibited volatility of 25.20%. Such metrics indicate that while the strategy provides returns, it underperforms against the benchmark, suggesting that investors should consider volatility and risk when employing this approach.

CEO Commentary
Josh Kobza, CEO of Restaurant Brands International, highlighted mixed performance in Q1 2025, with international markets showing robust growth of 8.6%, while U.S. operations faced challenges. He noted that overall system-wide sales grew by 2.8%, driven by international expansion, though comparable sales for major brands like Burger King and Popeyes declined. Kobza expressed optimism, stating, "As we come into the second quarter, that momentum has improved meaningfully," indicating confidence in navigating challenges through effective cost management and ongoing initiatives such as the "Reclaim the Flame" program for Burger King.

Guidance
Restaurant Brands International maintains its guidance for 2025, targeting at least 8% organic adjusted operating income growth. The company anticipates capital expenditures between $400 million and $450 million, aiming for long-term projections of 3% same-store sales growth and 8% organic adjusted operating income growth on average from 2024 to 2028. The CEO's comments reflect confidence in achieving these goals despite a slower start to the year.

Additional News
Recently, Restaurant Brands International announced the acquisition of all equity interests in Burger King China for approximately $158 million in an all-cash transaction, which aligns with its strategy to partner with experienced local operators while maintaining a primarily franchised business. Furthermore, the company has declared a dividend increase to $0.62 per share, reflecting a commitment to returning value to shareholders. Additionally, Firehouse Subs, part of Restaurant Brands, is expanding into Australia through a development and franchise agreement, with plans to open 165 restaurants over the next decade.