By Ananya Mariam Rajesh and Hilary Russ
(Reuters) -Restaurant Brands International Inc beat Wall Street estimates for first-quarter revenue and profit on Tuesday, boosted by higher traffic and prices at Tim Hortons restaurants in Canada despite closures of some U.S. Burger King locations.
The company's global comparable sales rose nearly 10% in the March quarter, versus analysts' estimates of 6.5% according to Refinitiv IBES data. Tim Hortons Canada sales grew 16% and Burger King International's were 12% higher. Shares were up 1.5%.
Big restaurant chains have posted strong sales in the first quarter despite rising concerns about consumer spending power this year amid stubbornly high inflation.
McDonald's Corp (NYSE:MCD) and Chipotle Mexican Grill Inc (NYSE:CMG) also topped quarterly sales and profit expectations as they pushed new menu items and raised prices over the past year to protect margins from a jump in raw materials and labor costs.
While Burger King has been adding restaurants and growing comparable sales internationally, in the United States it has struggled with bankruptcies by two big franchisees.
In the first quarter, Burger King closed a net 124 U.S. locations or 1.7%, to end the quarter with just under 7,000 U.S. restaurants, according to its earnings release.
This year, the brand is seeking additional franchisees with stronger finances but still expects to close between 300 and 400 more restaurants, Chief Executive Joshua Kobza said during a call with investors. Usually, it closes a couple hundred annually, he said.
"There will always be a minority (of franchisees) who aren't dedicated, enthusiastic operators," Chairman Patrick Doyle said on the call. "We'll work with them to leave the system."
The brand's $400 million "Reclaim the Flame" turnaround plan - to reverse its loss of market share, revive run-down restaurants, streamline overly complicated menus and operations, and draw more young customers - may be starting to work as Burger King's U.S. comparable sales rose 8.7%.
Tim Hortons drove visits higher - including during afternoon hours - with new items like chipotle steak for its loaded bowls and wraps.
Higher menu prices and other offerings like cold brew also drove sales.
Excluding items, Restaurant Brands, which also owns Popeyes and Firehouse Subs, earned 75 cents per share, compared with estimates of 64 cents, according to Refinitiv IBES data.
Total revenue rose to $1.59 billion from $1.45 billion a year earlier. Analysts on average had expected $1.56 billion.