• by Karlene Lukovitz  @KLmarketdaily, February 5, 2009

The increased strength of the U.S. dollar drove Burger King's Q2 2009 net income down 10% to $44 million. However, the chain continued modest increases in comparable-unit sales.

Comparable sales rose 1.9% in the U.S. and Canada, and 2.9% worldwide. The period marked the QSR's 19th consecutive quarter of comparable sales growth in North America and its 20th worldwide.

"While 1.9% growth isn't jumping-for-joy territory, even modest continued growth is encouraging in this economy," comments Bob Goldin, EVP for restaurant industry consultancy Technomic. "Since there's more discounting going on, traffic and volume must be holding up."

"Burger King seems to be on track again after many years of decline," adds Darren Tristano, also an EVP for Technomic. "With McDonald's also performing well, it's good news for the burger industry as a whole."

BK also reported that net restaurant count increased by 125, or 19%, during the quarter--its fastest per-quarter growth in eight years--and that it plans to add 350 to 400 units during this fiscal year. In addition, 14 units in North America were remodeled in Q2 as part of the chain's ongoing "re-imaging" program. Remodeled units are realizing 12% to 30% sales lifts, on average, according to the company.

For the first six months of fiscal '09, BK's net income declined 4%, to $94 million. Company restaurant revenue rose 9% to $970 million, and franchise revenue rose 6% to $280 million.

The chain revised its full-year earnings-per-share guidance to between $1.44 and $1.49, down 10 cents from its August forecast.

BK chairman/CEO John Chidsey said the core business remains strong, and that earnings are expected to improve in the second half, in part as a result of declining food and energy costs. BK remains focused on increasing its global footprint, delivering value to consumers, product innovation and "socially relevant" and "market-leading" marketing campaigns and promotions, he stressed. However, he added that continuing uncertainties in the currency markets could continue to affect earnings.

On the marketing front, BK reported flat worldwide advertising/ promotion expenditures for the quarter ($24 million) and a 2% increase for its first half, to $48 million.

BK and its agency, Crispin, Porter + Bogusky, continued a string of edgy efforts with the "Whopper Virgins" and "Whopper Freak-out" campaigns, plus a quirky campaign for a BK "meat-scented body spray," Flame.

"They've been aggressive and successful with advertising resonating with young males, in particular," notes Goldin.

"In addition to appealing to Millennials with advertising and new products like the Angry Whopper, they've done a good job at reaching out to Hispanics," says Tristano. "And they've introduced value items at breakfast, which appears to be a first in the marketplace."

Promotions in the second fiscal quarter included SuperFamily efforts, including iDog and a Nintendo giveaway promotional tie-in with the BK Crown Card aimed at driving holiday sales.

In the second half, scheduled marketing initiatives include the Nickelodeon Kids' Choice Awards, The Pink Panther 2 Super Family Sweepstakes, SpongeBob SquarePants, Star Trek, Transformers 2, and a strong focus on a value platform. BK will also launch the first Whopper Bar at Universal CityWalk in Orlando, Fla.

In addition to the limited-time Angry Whopper sandwich (featuring onions, jalapenos and other spicy ingredients) and the smaller, value-oriented BK Breakfast Shots and Burger Shots, BK will launch a regional rollout of an extra-thick burger, the Steakhouse XT.