(Bloomberg) -- Restaurant Brands International Inc. shares rose as much as 6.5% in premarket trading after the company reported earnings that topped analysts’ estimates, thanks to better-than-expected sales at its Popeyes fast-food chain.

  • Popeyes same-store sales surged 34.4% in the the fourth quarter, while analysts estimated a 15% gain, according to Consensus Metrix. At Burger King, the key performance measure rose 2.8%, compared with projections for 3.4% growth. At Tim Hortons, comparable sales declined 4.3%.
  • The company reported fourth-quarter adjusted earnings per share of 75 cents, exceeding the average analyst estimate compiled by Bloomberg of 73 cents.

Key Insights

  • Popeyes business in the U.S. is surging after the brand introduced a new chicken sandwich last year. It sold out in the summer, but was brought back in November chainwide. The sandwich “has proven to be a game changer for the brand in every way,” CEO Jose Cil said in a statement.
  • Burger King is also having success in the U.S. with new fare, including the much-hyped Impossible Whopper, and the chain plans to expand the line further this year. But faux meat competition is building as other chains, including McDonald’s Corp., add Impossible Foods Inc. or Beyond Meat Inc. items.
  • Restaurant Brands has big growth plans in China for Popeyes and Tim Hortons, but those may be put on hold until the full impact of the coronavirus outbreak becomes clearer. Rivals including McDonald’s and Yum China Holdings Inc. have closed locations in China. Restaurant Brands said in August that Burger King had more than 1,000 locations. The company didn’t mention the virus in its statement Monday, although investors may get some details on an earnings call Monday at 8:30am Toronto time.
  • Tim Hortons continues to struggle in its home market of Canada. The chain has failed to pull in diners with its lunch offerings, as well as cold coffees, amid steep fast-food and cafe competition.

Market Reaction

  • The shares rose as much as 6.5% to $68 in premarket trading in New York Monday. Last year they gained 22%, trailing the S&P 500 Index.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editors responsible for this story: Sally Bakewell at sbakewell1@bloomberg.net, Anne Pollak, Lisa Wolfson

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