A budget-conscious consumer and a competitive industry created a challenging climate for quick serve restaurants in Q3 2024. Wendy's (WEN, Financial) and McDonald's (MCD, Financial) reported disappointing earnings, followed by Restaurant Brands International (QSR, Financial), owner of Burger King (BK), Popeye's Louisiana Kitchen (PLK), and Tim Hortons (TH). QSR missed Q3 EPS and sales estimates, with consolidated comparable sales growth slowing to +0.3% from +1.9% last quarter.

• PLK experienced the most significant downturn with comparable sales at (4.0)% compared to +4.9% in Q2. Higher menu prices at PLK contributed to this decline. Yum Brands' (YUM, Financial) KFC division also saw a 4% drop, while Taco Bell's value-centric menu led to a 4% increase. QSR plans to introduce more value offerings at PLK, including a $5-$6 meal.
• BK's comps dipped to (0.7)%, consistent with last quarter, as its turnaround plan, involving $400 million investments in store remodels and technology upgrades, struggled to gain traction. BK's comps had previously surged by 10.3% in Q3 2023 and 13.8% in Q2 2023, but macroeconomic challenges in 2024 have hindered progress.
• Tim Hortons was the only banner to post positive comps at +2.3%, although this was a decline from last quarter's +5.4%.
• QSR's system-wide sales growth of 3.2% was driven by expansion efforts, especially for PLK and Firehouse Subs (FHS). Net restaurant growth for PLK was 4.1%, and FHS's footprint grew by 3.9%, reaching 1,300 restaurants by the end of Q3.
• QSR improved consolidated comps in October and remains confident in achieving adjusted operating income growth of 8% or more in 2024, following a 6.1% increase in Q3.

QSR's earnings results mirrored those of WEN, YUM, and MCD, highlighting a tough environment that emphasizes value. QSR is expected to increase promotional activity, potentially boosting comps but possibly affecting profit margins.