19 Oct 2013

Restaurant Brands expects retail environment to slowly improve

10:24 am on 19 October 2013

Restaurant Brands is expecting the retail environment to improve, but it will be slow, and it's not anticipating a big turn around in the second half.

The listed fast food operator's profit was flat for its first half. Excluding non-trading items, it made a net profit of $8.8 million for the 28 weeks to 9 September.

The company, which owns the KFC, Pizza Hut, Starbucks and Carl's Jr chains, says the retail environment continues to be challenging.

Restaurant Brand's operating earnings rose slightly, by $200,000 to more than $27 million, but it says it's pleased it managed to hold it at above last year's level given the pressure on margins.

The company's chief executive, Russel Creedy, says margins will start to improve as the environment does.

He expects the environment to stabilise going into the Christmas season and that next year the retail sector will accelerate and start to become more buoyant.

Mr Creedy says if that happens it should be a solid second half of the year and a stronger 2014 for retailers across the board.

Restaurant Brands opened another three of its Carl's Jr stores over the period and the company says it's beginning to gain momentum.

Mr Creedy points to the chain's marketing, which he describes as edgy, and partnering up with Jim Beam for its Bourbon burger, which he says other fast food chains have mirrored.

And while Carl's Jr produced a small loss which was expected because of the cost of opening the stores, Mr Creedy says he's confident profitability will begin to improve.

Mr Creedy says it will open another two Carl's Jr before Christmas and another six during the next calendar year, it will also open a KFC store at Auckland International Airport next week.