From a look at Restaurant Brands International (CA:QSR, US:QSR) pre-market report on Tuesday, the multi-brand restaurant conglomerate appears to be benefiting from the steady hand of the new executive chairman, Patrick Doyle.

The first-quarter 2023 results were very good for QSR stock holders. The Toronto-based restaurant operator’s revenue in the period was $1.59 billion (all figures U.S. dollars except where noted), $30 million higher than the analyst estimate.

On the bottom line, its earnings per share were 75 Canadian cents on an adjusted basis, 11 Canadian cents better than the consensus.

Same-store sales were up at all four of its brands: Tim Hortons (13.8%), Burger King (10.8%), Firehouse Subs (6.1%), and Popeyes Louisiana Kitchen (5.6%).

There was little for Restaurant Brands CEO Josh Kobza to complain about from the company’s results.

“Our teams delivered a solid start to the year, with double-digit comparable sales and system-wide sales growth. Top line sales momentum translated into bottom line growth for our franchisees and our company,” Kobza stated in the company’s Q1 2023 press release.

Patrick Doyle has been in his role for six months. The results suggest the former Domino’s Pizza (US:DPZ) CEO — who nearly doubled the pizza franchisor’s sales from $3.1 billion in 2009 to $5.9 billion in 2017 — is working hard to generate a healthy return on the $30 million in QSR shares he bought when he joined the company in November 2022.

“Complaints are down at Burger King,” Doyle told viewers on Bloomberg Markets on Tuesday evening.

His holdings of QSR stock stand at 500,000 shares, according to Insider Positions data compiled by Fintel. Doyle’s portfolio also still holds DPZ stock, at 43,670 shares.

Since Doyle assumed the role, the QSR stock price is up more than 22%. The Vanguard Consumer Staples Index Fund ETF (US:VDC) is up 8.95% in the same period. At current levels, the shares trade just below the median analysts target price, $73.44, as tracked by Fintel. The high end of those targets is $81.90 and the low is $64.64, as of April 24.

The question is, where to from here?

Burger King Turnaround

Restaurant Brands can’t move fast enough to stem the red ink. Burger King franchisees have been dropping like flies in 2023. It’s gotten so bad that the media is keeping track of all the bankruptcies.

In early March, Meridian Restaurants Unlimited filed for Chapter 11 bankruptcy protection. It had 118 locations spread across nine states in the western half of the U.S. According to its filing, the company had more than $14 million in unsecured debt. It also owes royalties to Burger King corporate, so it’s a situation that’s hurt the brand in more ways than one.

“For many years, Meridian has had lower than the Burger King system average annual restaurant revenue volumes,” the Franchise Times reported Chairman James Winder’s comments from the filing. “The original founder acquired many underperforming restaurants with the unrealized objective to grow annual volumes. These lower volumes result in smaller profit margins and thus greater sensitivity to the recent dramatic rise in labor, commodity and maintenance costs.”

In January, Tom’s King, which had 90 locations, also entered Chapter 11. That is not a good look for the franchisor.

However, Winder did make positive comments about Burger King’s “Reclaim the Flame” initiative launched last fall. The franchisor is spending $400 million to grow the brand’s revenue and profits at the restaurant level.

“In an email to Franchise Times, Winder noted his support of the ‘Reclaim the Flame’ program and said Burger King leadership is ‘taking an effective step … to move the brand forward and drive future sales. If BKC leadership will continue to take a supportive tone and approach with their franchisees, consistent with their messaging, then the future of the brand could be very positive.’”

During the first quarter, Burger King invested $7 million in advertising and digital programs related to the initiative. In addition, it spent $7 million specifically on the restaurants. Since the Reclaim the Flame launch, it’s invested $45 million of the $400 million committed to the project.

The same-store sales growth suggests it’s working.

Brands Profitability Challenge

In the past year, its four brands have added 1,200 locations worldwide. The most significant addition was at Popeyes, which added 407 restaurants in 12 months, a 10.8% increase from Q1 2022. Overall, Restaurant Brands grew the number of stores by 4.2%, similar to last year.

Tim Hortons went through a rough patch a few years ago, but its Q1 2023 results suggest its business is thriving in 2023. Same-store sales were up 13.8% overall, benefiting from 15.5% growth in Canada, its largest market. On the top line, it had system-wide sales of $1.73 billion, with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $251 million.

The biggest issue for Restaurant Brands remains the other three brands’ overall profitability.

Tim Hortons adjusted EBITDA as a percentage of system-wide revenues was 14.5% in the first quarter, while Burger King’s was 4.1%, Popeyes (4.2%), and Fireside Subs (5.1%).

However, it’s important to note that Tim Hortons has by far the largest number of company-owned stores of the four brands, which does alter the profitability picture relative to Burger King and the other two brands.

If Patrick Doyle works his magic on Restaurant Brands as he did with Domino’s, shareholders should benefit greatly over the next 12-24 months.

The legendary turnaround artist is off to an excellent start.

This article originally appeared on Fintel

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