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Sales at Tim Hortons owner fell 31% during pandemic, Restaurant Brands earnings show – CBC.ca

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Restaurant Brands International Inc. saw the pandemic take a big bite out of earnings last quarter, with sales down 31 per cent year over year despite a rebound during the past month as commuters return to the roads.

The absence of morning coffee consumers and afternoon snack seekers for much of the second quarter pushed down profits at the parent of Tim Hortons and Burger King by 37 per cent compared with a year earlier, the company said.

“The pandemic has had an especially pronounced impact on routine-based visits, including on the morning commute and afternoon snack occasions, which each represent a significant part of our business,” RBI chief executive Jose Cil said on a conference call with analysts Thursday.

Nonetheless, he said system-wide sales have climbed back to 90 per cent of their pre-COVID-19 levels.

Most RBI locations in Canada and the U.S. remained open during the outbreak, but the company shifted heavily toward drive-thru and delivery as patrons shied away from bricks-and-mortar locations and dining areas became no-go zones.

Drive-thru sales — some 12,000 of RBI’s roughly 15,000 storefronts in Canada and the U.S. sport drive-thru windows — rose at least 10 per cent at Tim Hortons by June, 20 per cent at Burger King and 100 per cent at Popeyes, mitigating the larger revenue plunge.

The company has added nearly 3,000 more restaurants to its delivery network in Canada and the U.S. since February, bringing the total to nearly 10,000.

In spite of the boost in off-premise service, the pandemic drove a steep revenue decline at RBI’s two biggest brands, with sales at Tim Hortons and Burger King shrinking by one-third and one-quarter, respectively.

“It’s been a tremendous challenge for folks in our company, at the headquarters as well as our franchisees and the folks in the restaurants that are working every day to service through drive-thru and delivery,” Cil said in an interview.

A sales surge at Popeyes helped soften the blow, and RBI said virtually all 27,000 restaurants across the three brands are now open again.

Net income fell to $163 million US in the quarter ended June 30, down from $257 million US a year earlier, RBI said.

The Toronto-based company, which reports in U.S. dollars, said revenues fell 25 per cent last quarter to $1.05 billion US from $1.4 billion US in the previous year.

On an adjusted basis, diluted earnings plunged to 33 cents per share from 71 cents per share, nonetheless exceeding analysts’ expectations of 31 cents per share, according to financial markets data firm Refinitiv.

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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