Restaurant Brands, the parent company of Burger King, fails to meet third-quarter expectations.

• Wall Street's estimates for Restaurant Brands International's quarterly earnings and revenue were not met.
• The company's four chains reported weaker-than-expected same-store sales in their home markets.
• Canadian coffee chain Tim Hortons was the top performer of the quarter.

On Tuesday, the company reported quarterly earnings and revenue that did not meet analysts' expectations, as all four of its chains experienced lower-than-expected domestic same-store sales growth.

Shares fell about 2% in early trading following the report.

Based on a survey of analysts by LSEG, the company's third-quarter results differed from Wall Street's expectations.

• Earnings per share: 93 cents adjusted vs. 95 cents expected
• Revenue: $2.29 billion vs. $2.31 billion expected

In the quarter, the company's global same-store sales increased by 0.3%. Additionally, all three chains, Burger King, Firehouse Subs, and Popeyes, experienced declines in their domestic sales.

But so far in the fourth quarter, same-store sales trends have improved.

CEO Josh Kobza informed CNBC that October sales for the business are now positive and in low-single digits, representing an improvement from the third quarter.

The improvement in sales was attributed to more successful marketing promotions and better consumer sentiment in the U.S.

Kobza stated that gas prices, interest rates, and inflation have all decreased, contributing to the financial well-being of guests.

During the three-month period ending September 30, Burger King's same-store sales decreased by 0.7%. Despite analysts predicting a flat metric, StreetAccount estimates show that the chain is in the midst of a U.S. turnaround. However, consumers are also cutting back on restaurant spending, causing a renewed value war between Burger King and its competitors.

During the earnings conference call, Kobza stated that, like other restaurant chains, Burger King experienced a decline in consumer spending over the summer. Additionally, the emphasis on value marketing overshadowed other initiatives, such as its Fiery menu. Despite this, Kobza noted that the business is in a much better state than it was when Burger King launched its turnaround plan in September 2022.

According to StreetAccount estimates, Popeyes reported a 4% decline in same-store sales, which is significantly lower than the expected 0.2% gain. The chain has recently attempted to increase its value offerings, including promoting a three-piece bone-in chicken for $5 and reintroducing its Big Box deal at $6.

Kobza stated that both offerings are already generating traffic and sales improvements.

In the third quarter, Firehouse Subs experienced a 4.8% decrease in same-store sales, which was higher than the anticipated decline of 0.4%, according to StreetAccount. As of 2021, Restaurant Brands owns the sandwich chain, which is the smallest brand in their portfolio with only 1,300 locations.

Despite growing traffic and improving speed of service, Tim Hortons fell short of Wall Street's same-store sales growth expectations of 4.1%, with domestic same-store sales growth of only 2.3%.

In the quarter, Restaurant Brands' international same-store sales increased by 1.8%, slightly below the predicted 2.2%.

In the third quarter, Restaurant Brands reported a net income of $252 million per share, which is the same as the previous year.

Excluding items, the company earned 93 cents per share.

The company's net sales increased by 24.7% to $2.29 billion, mainly due to its acquisitions of its largest U.S. Burger King franchisee and its Popeyes business in China this year.

On Tuesday, Restaurant Brands revised its forecast for full-year system-wide sales growth to a range of 5% to 5.5%, from its previous projection of 5.5% to 6%.