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.

| More on:
analyze data

Image source: Getty Images

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.

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.

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.

More on Investing

data analyze research
Dividend Stocks

Better Stock to Buy Now: Manulife or CIBC?

Both Manulife and CIBC had a great year last year. It may be smart for investors to wait for a…

Read more »

grow money, wealth build
Dividend Stocks

TFSA Growth Strategy: Turn $350 Weekly Into $100,000

By investing $350 per week in index funds like iShares S&P/TSX 60 Index Fund (TSX:XIU) you can achieve a $100,000…

Read more »

dividend growth for passive income
Dividend Stocks

3 Top Canadian Growth Stocks to Buy Now for Long-Term Growth

Canadian growth stocks can be a great way to create long-term growth, and these are at the top of the…

Read more »

Caution, careful
Dividend Stocks

3 Big Red Flags That Could Trigger a CRA Audit on Your TFSA

TFSA users engaging in business-like activities for profit will trigger a CRA audit.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

TD Bank Stock: The Easy Money’s Been Made

After settling with US regulators, this Canadian bank stock should at least market perform, but should you buy more shares?

Read more »

Silver coins fall into a piggy bank.
Investing

Want Safe Dividend Income in 2025 and Beyond? Invest in the Following 3 Ultra-High-Yield Stocks

These three TSX royalty trusts pay above-average, steady dividends.

Read more »

grow money, wealth build
Dividend Stocks

3 Top Canadian Stocks to Buy for Dividend Growth

Discover three outstanding Canadian dividend-growth stocks that have consistently delivered double-digit payout increases, fueling income growth for long-term investors.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $50,000 in This Stock and Get $2,950 Back Per Year in Dividends

First National Financial (TSX:FN) stock throws off a lot of income.

Read more »