Restaurant Brands International: Buy, Sell, or Hold in 2025?

Restaurant Brands International (TSX:QSR) has a lot to look forward to in 2025, as it goes for gains.

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Restaurant Brands International (TSX:QSR) has been navigating a rather harsh environment for quick-serve restaurants and fast food. Undoubtedly, demand for quick and tasty eats is still out there. It’s just that consumers have become more sensitive to prices in recent years. But who can really blame consumers as the lingering smoke of inflation continues to weigh heavily on the purchasing power of the Canadian dollar?

Going into 2025, competition in the fast-food scene will likely be nothing shy of intense as the top dogs in the space duke it out, not only with each other but the discount retailers and even the grocers. Of course, the fast-food scene has been leveraging value menus to win back foot traffic.

While loyalty programs, promos, and even longer-lived value menu offerings may be able to win over some sales from rivals in the space, the big question is whether such customers will keep coming back. While many consumers have become more value-oriented, it’s clear that there’s still demand for high-quality ingredients and more of an upscale dining experience.

Though it will be tough to find the right balance, I think that Restaurant Brands International, the firm behind such fast-food brands as Tim Hortons, Burger King, Popeyes Louisiana Kitchen, and Firehouse Subs, can achieve it over the coming months and quarters. With the stock in a bit of a slump going into this new year, investors seem somewhat cautious about the company’s abilities to engineer some sort of turnaround.

Another inflation storm around the corner? QSR stock could thrive

Indeed, passing on higher prices of input and labour costs to consumers isn’t all so easy anymore. They’ll just head to a rival that boasts a better value proposition. In any case, Restaurant Brands’s past bets on modernization (think digitization, taking a bit of friction out of the ordering process, and renovating restaurants) could begin to lead to some form of margin gains. Though such gains may not be able to offset price reductions through the company’s response to the “value menu wars,” I think that the long-term growth trajectory remains as sound as ever.

With potential Trump tariffs and deportations acting as drivers of another wave of inflation, questions linger as to how Restaurant Brands and its rivals will fare. With the right value menus in place and more of a focus on retaining business rather than driving margins, I think Restaurant Brands could fare a lot better if there is another bout of inflation in store for 2025. Sure, Restaurant Brands may not be the perfect inflation fighter out there, but it’s a discounted value gem that can make up for lost time, regardless of how markets fare in 2025.

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Restaurant Brands stock: Too cheap to ignore?

The stock trades at 15.65 times trailing price to earnings, with a 3.75% dividend yield, making it one of the better passive income options for value-minded investors. With Monday’s big rotation out of the AI plays and into the boring, old-economy plays, perhaps QSR stock could be a winner as the market tides shift back in favour of deep value and the predictable cash flow plays. All considered, QSR stock is a fantastic buy for Canadian investors looking to start February right. Shares are just so hated right here, and for no good reason, in my opinion.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has positions in Restaurant Brands International. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.

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