Restaurant Brands price increases not keeping up with inflation

Restaurant Brands’ share price fell 12.23 percent to a near six-year low of $5.60 after reducing its full-year net profit guidance to $12m-$16m, down from $32.08m last year and $51.88m in 2021.

In its latest guidance update, issued 7 August 2023, the listed company said that a soft first half of the 2023 financial year was anticipated when the initial guidance was provided. 

‘However, the inflationary environment has continued to evolve, and performance continues to be impacted significantly due to: 

• Continued input cost increases in the New Zealand business which have exceeded earlier expectations of scope and quantum; and  
• Lower than expected sales growth in California and Hawaii.  

Given these factors will continue for some time, at a level far greater than anticipated, it has become apparent that recovery in the second half is also going to be weaker than expected. 

While the business has implemented a strategic programme of price increases and cost control measures to relieve margin pressures, we have not yet been able to raise prices to fully offset the input cost increases.  

Sales growth and customer loyalty remain foundational to RBD’s long-term growth strategy. While the near-term focus is firmly on managing cost pressures and margin performance, it is also critical that our pricing strategy continues to support sales volumes, protect our strong customer base and maintain relativity to competitors into the future. ‘