Burger King Profit Up on $1 Breakfast Menu, Texas Double Whoppers

Burger King, on the trail of industry leader McDonald's, reported third-quarter profit that bettered Wall Street expectations--largely because of its $1 breakfast menu, which it intro'd in February and calorific Texas Double Whoppers, the latter playing into the hands of BK's "superfan."

System-wide comparable sales were up 3.2%, making this the 13th consecutive quarter of positive comparable sales increases. In the U.S. and Canada, comparable sales were up 2.6%, the 12th consecutive quarter of positive comparable sales increases.

BK officials Friday said the new Hold 'Ems would likely roll out in the fall, during the company's second quarter. The product, which officials called a "step change in terms of quality and innovation," is a warm wrap packed in a "holster" that fits in a car's cup holder.

BK's super fans are young men who eat fast-food hamburgers 92 times a year, officials explained, and several hundred times more at other restaurants. Overall, BK said, quick-serve restaurants are commanding an all-time high of 76% of the out-of-home meal dollar.



"We are at a large perceptual disadvantage on value for money," an executive said during the company's call with analysts. "We're going to keep driving behind generating pricing power through innovation and quality. The pipeline is filled with products that are differentiated."

The Miami-based company reported net income of $34 million, or 25 cents a share--compared with a loss of $12 million, or 11 cents, a year earlier. Revenue rose 8.9%, to $539 million.

Sales at U.S. and Canadian stores open at least 13 months rose 2.6%, boosted by oversized sandwiches. Worldwide same-store sales climbed 3.2%, the 13th consecutive quarterly gain.

BK operated 92 more restaurants than it did a year earlier. The chain added 17 new outlets in the third quarter.

Officials told analysts that it is mandating that its franchisees stay open at least until midnight, starting next month. Currently, 60% do so.

New products pushed average restaurant sales 6% higher, to $284,000, in the quarter, CEO John Chidsey told analysts.

Comparable sales in Europe, the Middle East, Africa and Asia Pacific increased 5.3% on the U.K. introduction of the Aberdeen Angus burger.

Positive comparable sales in every region worldwide and an increase in new restaurant openings drove revenues for the third quarter of fiscal year 2007 to $539 million--an increase of 9 percent from the same period last year of $495 million.

The company continued its expansion of new restaurants globally. In the last 12 months, the company and its franchisees opened 400 new restaurants including 74 in the U.S. and Canada, 229 in Europe, the Middle East and the Asia-Pacific region and 97 in Latin America. The company increased its net restaurant count by 92 during that period.

The company's healthy new restaurant pipeline includes previously announced development agreements in Japan, Indonesia, Egypt, Hong Kong and Poland that will help solidify development goals as it moves into fiscal year 2008.

Next story loading loading..