5 Apr 2013

Restaurant Brands profit slips

7:02 am on 5 April 2013

Restaurant Brands' full year profit has dropped as a result of falling Starbucks sales, higher overhead costs and weaker margins for some of its brands.

The company reported a profit of $16.2 million for the year to February compared with $16.9 million a year earlier.

Same store sales at Starbucks fell 1.7% and weaker margins from both the coffee chain and KFC outlets offset a strong performance from its Pizza Hut stores.

However total sales for stores open more than a year rose nearly 2%, driven by growth at KFC and Pizza Hut.

The company's revenue expanded 1% to $313 million.

Restaurant Brands opened its first two Carl's Jr stores last year, and while establishment costs affected gross earnings, the company says the stores are on target to produce positive results over the next financial year.

Costs rose 16.5% to $13.2 million due to an upgrade of its information systems and establishing the Carl's Jr brand.

The number of stores fell by 17 to 177 over the year, with the closure of a number of Starbucks stores and the sale of regional Pizza Hut stores to independent franchisees.

The company is expecting its Starbucks chain to reverse what has been weaker same store sales, while continuing to close poorly performing stores as leases come to an end.

Restaurant Brands says it is confident in the strength of its brands, and is predicting an increased profit this financial year due to an overall improvement in the economy, and keeping a lid on costs.

Shares in Restaurant Brands rose 4% or 11 cents on Thursday to $2.83.