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Viral chicken sandwiches aren't enough for Wall Street: Morning Brief – Yahoo Finance, Yahoo.com

Viral chicken sandwiches aren't enough for Wall Street: Morning Brief – Yahoo Finance, Yahoo.com

Tuesday, February ,

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The general public isn’t the investing public “data-reactid=” 23 “type=” text “> The general public isn’t the investing public Make no mistake: Popeyes chicken sandwich is a runaway hit.

rose 49. 4% and system-wide sales at Popeyes stores grew . 3%. “Data-reactid=” (“type=” text “> In the fourth quarter,

same-store sales at Popeyes

rose 4% and system-wide sales at Popeyes stores grew . 3%.

QSR ) – Popeyes parent company – said on Monday , Popeyes chicken s andwich “has proven to be a game changer for the brand in every way.” “data-reactid=” “type=” text “> As Jose Cil, CEO of Restaurant Brands ( QSR – Popeyes parent company – said on Monday , Popeyes chicken sandwich “has proven to be a game changer for the brand in every way.”

phenomenon that became known as the chicken sandwich wars Looking at trends on social media, BofA found that, “brand penetrations of ‘chicken sandwich’ Instagram posts and Tweets show that Popeyes has been able to take a meaningful share of conversations.” “Data-reactid=” 30 “type=” text “> In a note to clients last week, analysts at Bank of America Global Research explored the (phenomenon that became known as the chicken sandwich wars looking at trends on social media, BofA found that, “brand penetrations of ‘chicken sandwich’ Instagram posts and Tweets show that Popeyes has been able to take a meaningful share of conversations ations. ” This work led to BofA suggesting that fourth quarter comp sales growth at Popeyes would likely come in around %. Actual results, of course, were more than 59% better than this estimate.

Popeyes viral chicken sandwich is a marketing dream . And the results have backed up the hype.

But one viral sandwich still hasn’t been enough to get investors excited about the stock. And this episode serves as a great illustration of how the general public and the investing public look differently at brands, sales, and what makes a good investment.

The sustained buzz and hype surrounding the Popeyes chicken sandwich has very obviously led to strong sales . Following a Peter Lynch-style “invest in what you know” maxim might lead to you taking a position in the stock. But But the the fourth quarter, shares of Restaurant Brands fell over 9% during a quarter when the S&P 784 rose some %. For the full-year , shares of Restaurant Brands rose about (% against a gain of nearly) % for the S&P And the story for Restaurant Brands is fairly simple: the success at Popeyes is not enough to paper ove r the struggles at its Tim Hortons brand. (Same-store sales at Tim Hortons fell 4.3% during the fourth quarter. ) View photos

This Aug. , , photo, shows Popeye’s new chicken sandwich, the spicy version, in New Rochelle, NY (AP Photo / Julia Rubin) As Cil said: “At Tim Hortons, our performance did not reflect the incredible power of our brand. and it is clear that we have a large opportunity to refocus on our founding values ​​and what has made us famous with our guests over the years, which will be the basis for our plan in () In the fourth quarter of , system-wide sales at Tim Hortons totaled $ 1. (billion against Popeyes sales of $ 2020 million. In the fourth quarter of Tim Hortons sales fell to $ 1. (billion with Popeyes totaling $ 1.) billion during the same quarter. And so just a year after Tim Hortons had nearly double the quarterly sales of Popeyes, the brand saw quarterly revenue top those at its smaller family brand by just %. These struggles are also more acute for the stock because Tim Hortons is a much larger part of the Restaurant Brands profit picture. In the fourth quarter, adjusted EBITDA at Tim Hortons totaled $ million, accounting for just under % of the company quarterly adjusted EBITDA. The fourth quarter of Tim Hortons recorded adjusted EBITDA of $ 600 million with that income accounting for more than half of the entire company quarterly adjusted profit.

Popeyes, in contrast, saw adjusted EBITDA rise more than % from the prior year, but still accounts for less than % of the company quarterly total.

Chicken sandwich virality hasn’t fundamentally changed the profit outlook for Restaurant Brands. At least not quite yet.

And while some readers might roll their eyes at being alerted to the fact that profits matter to investors, sentiment around the stock of Popeyes parent company seems divorced from consumer enthusiasm for their chicken sandwich.

To the general public, the Popeyes chicken sandwich is one of the most interesting business stories of the year. To the investing public, the chicken sandwich is just part of a profit picture that is under pressure.

@ MylesUdland “data-reactid=” (“type=” text “>

(By Myles Udland , reporter and co-anchor of (The Final Round)

. Follow him at @ MylesUdland What to watch today (

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