Pomerantz Appointed Co-Lead Counsel in Restaurant Brands Securities Litigation
On March 11, 2021, Chief U.S. District Judge K. Michael Moore of the Southern District of Florida appointed Pomerantz LLP as Co-Lead Counsel on behalf of Lead Plaintiff Paul J. Graney in Graney v. Restaurant Brands International, Inc., 21-cv-20508 (S.D. Fla.), a securities action brought on behalf of a class of defrauded investors concerning allegations that Restaurant Brands International (“Restaurant Brands” or the “Company”) misled investors regarding the performance of its loyalty program and its ability to generate sustainable revenue growth.
Restaurant Brands is a quick service restaurant company that has approximately 27,000 restaurants under the Burger King, Popeyes and Tim Hortons brands in more than 100 countries.
Allegations include that Defendants failed to disclose that: (i) Restaurant Brands was failing to generate substantial, sustainable growth for its Tim Hortons brand through its touted “Winning Together” plan (a strategy to boost revenue and growth by improving the restaurant experience, product excellence and brand communications); and (ii) the Company’s customer loyalty program (Tims Rewards), was not generating enough sustainable revenue growth to offset the associated discounting.
On April 29, 2019, during a conference call to discuss Restaurant Brands' first quarter 2019 financial results, Chief Executive Officer José E. Cil touted both “the successful launch of our Tims Rewards program, which has exceeded our expectations in its first few weeks” and a "sales increase [of] just over 2%" which he attributed to the Company's Winning Together plan.
On May 15, 2019, during Restaurant Brands’ Investor Day presentation, President Alexandre Macedo stated that “we’re executing very well on the core elements of our Winning Together plan that’s driving our sustainable growth" and touted that "[B]eyond a doubt, the largest driver for long-term sales growth under the restaurant experience pillar is our new loyalty program."
On August 2, 2019, during a conference call to discuss Restaurant Brands' second quarter 2019 financial results, CEO Cil stated that "we’re pleased with the positive momentum we’ve generated" through the Winning Together plan and touted "the success of our loyalty program, Tims Rewards."
The truth emerged on October 28, 2019 when Restaurant Brands issued a press release announcing its third quarter 2019 financial results in which it revealed a 0.1% system-wide year-over-year sales decline for Tim Hortons. During a conference call the same day, CEO Cil admitted that “results at Tim Hortons were not where we want them to be" and that “discounting [associated with Tims Rewards] is slightly more than offsetting the traffic levels, which is causing a little bit of softness in sales.” On this news, Restaurant Brands’ share price fell $2.59 per share, or 3.8%, to close at $65.86 per share on October 28, 2019.