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TFSA Investors: Buy the Dip at Restaurant Brands International Inc.

If you’re looking for a premium growth stock that can bring your TFSA to new heights over the long run, then you should probably consider adding shares of Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) to its core. The company is an earnings-growth king that is likely to take over the fast-food world over the next decade and beyond. The company’s current brands in Burger King, Tim Hortons, and Popeyes Louisiana Kitchen may seem impressive now, but just wait until a decade from now, after the company pulls the trigger on more deals to beef up its portfolio of fast-food giants in need of an international boost.

The management team in 3G Capital knows how to trim fat, cut costs, grow same-store sales, and expand at the international level. They have a proven growth strategy they can follow, and it has already returned a great deal back in the pockets of shareholders since the company’s early days of trading.

Solid overall quarter, but weaker same-store-sales growth numbers for Tim Hortons and Popeyes

In the most recent quarter, Restaurant Brands saw same-store sales fall for Tim Hortons and Popeyes by 0.8% and 2.7%, respectively. But fortunately, Burger King offset these weak numbers with a whopping 3.9% increase in same-store sales.

One thing that really stood out was the reduction in same-store sales at Tim Hortons. 3G Capital has been spending a considerable amount of money to drive traffic to Tims stores, so such a same-store-sales decline was definitely cause for concern, especially considering innovative products and marketing campaigns that should cause same-store sales to surge. Baked goods sales were quite weak for the quarter, and many pundits may be speculating that the recent franchisee dispute hurt sales for the quarter.

Could the franchisee revolt be negatively impacting sales? 

The management team didn’t comment too much about its poor relationship with franchisees, but I think the recent dispute is a big reason why same-store sales declined in the last quarter. The franchisees aren’t happy, but I don’t think the dispute is anything to worry about over the long term. The company is actively taking steps to repair the relationship with its franchisees, and I do not believe the problem will grow out of control to a point where we see same-store sales suffer on a consistent basis because of customers who are not fans of Restaurant Brand’s treatment of its franchisees.

The management team is asking more of its franchisees to improve the Tim Hortons brand for the long term. The fast-food restaurants of the future are going to probably look a lot nicer than they do today.

Consumers love décor to go with a comfortable and clean environment to eat their food. But in order to have such an attractive dining area, many renovations are going to be needed. That means more mandatory spending for franchisees, and the last thing franchisees want to do is spend money, even if it’s for the better of the brand over the long term.

Bad relationships with franchisees are nothing new in the fast-food industry, so investors certainly shouldn’t think too much of the matter and its effect on future quarters for Tim Hortons.

Stay smart. Stay hungry. Stay Foolish.

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The Motley Fool owns shares of RESTAURANT BRANDS INTERNATIONAL INC. Fool contributor Joey Frenette owns shares of Restaurant Brands International Inc.

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