How Did Restaurant Brands NZ Achieve Record Sales Despite Margin Pressures?
Restaurant Brands New Zealand Limited reported record group store sales of NZ$703.2 million for the half year ended 30 June 2025, but rising costs pressured profits and margins across key markets.
- Record group store sales up 2.3% to NZ$703.2 million
- Store EBITDA declined 4.1% to NZ$90.7 million
- Reported NPAT down 5.6% to NZ$11.9 million
- Margins squeezed by higher labour, energy, and rental costs
- Strong sales growth in Hawaii and Pizza Hut New Zealand; challenges in Australia, New Zealand, and California
Record Sales Amid Challenging Conditions
Restaurant Brands New Zealand Limited (RBD) has delivered a mixed half-year performance for the six months ending 30 June 2025. The group achieved a new milestone with record store sales reaching NZ$703.2 million, a 2.3% increase over the prior corresponding period. This growth was driven notably by strong sales in Hawaii and the Pizza Hut brand in New Zealand, buoyed by innovative product launches and targeted promotions.
However, despite the top-line momentum, profitability metrics painted a more cautious picture. Store EBITDA declined by 4.1% to NZ$90.7 million, while reported net profit after tax (NPAT) slipped 5.6% to NZ$11.9 million. These results reflect the mounting pressures on margins across RBD’s key markets.
Margin Pressures and Regional Variations
The company cited rising labour costs, energy expenses, and rental outlays as significant headwinds. In California, a 29% increase in the minimum wage notably impacted margins, while inflationary pressures and cost of living challenges weighed on consumer spending in Australia and New Zealand. These factors contributed to a slowdown in recovery in those regions, despite ongoing efforts to innovate and improve operational efficiency.
Conversely, Hawaii continued to perform strongly, with sales and margins holding up well despite inflation. The region benefited from new product initiatives and promotional activity, underscoring the importance of localized strategies within RBD’s diverse portfolio.
Financial Health and Cash Flow Management
On the balance sheet front, RBD demonstrated prudent financial management. Net borrowings decreased to NZ$208 million, improving the net debt to EBITDA ratio to a healthier 1.6 – 1 from 1.9 – 1 the previous year. Operating cash flows remained stable, while investing cash flows were reduced as the company focused on portfolio optimisation. Free cash flow more than doubled to NZ$31 million, providing a solid foundation for future investments.
Looking Ahead – Innovation and Recovery
Looking forward to the second half of 2025, RBD expects stronger sales in New Zealand and Australia as inflationary pressures and interest rates ease. The company plans to increase capital expenditure on new store openings, refurbishments, and technology enhancements. Strategic priorities include customer engagement through new menu items and digital initiatives, protecting brand strength, margin recovery, and operational efficiency.
While elevated labour and energy costs are expected to persist, RBD remains cautiously optimistic that improving global economic trends will support a gradual recovery in operating conditions into 2026.
Bottom Line?
RBD’s record sales highlight resilience, but margin pressures signal a challenging road to sustained profit growth.
Questions in the middle?
- How will RBD manage ongoing wage inflation, especially in California?
- What specific innovations and marketing campaigns will drive the expected 2H 2025 sales uplift?
- Can margin recovery initiatives offset rising costs in Australia and New Zealand?