Industry News | February 5, 2009
Burger King Announces Q2 Results
Comparable sales were up 2.9 percent, marking five straight years of worldwide same-store-sales growth. In the U.S. and Canada, comparable sales were up 1.9 percent, the 19th consecutive quarter of same-store-sales growth. Comparable sales were driven by strong performances in key international markets, including the U.K., Spain, Canada, and Central and South America. In the U.S., strategic pricing, a mix of value and indulgent products, and the continued social relevance of the Burger King brand fueled positive comparable sales.
The company also posted its best quarterly development growth rate in eight years, opening 125 net new restaurants compared to 105 in the same quarter last year, up 19 percent. As a result, the company is on target to meet its full fiscal year development plan to increase net new restaurant count by 350 to 400.
Revenues for the quarter were $634 million, up three percent over the same quarter last year. Worldwide trailing 12-month average restaurant sales increased to $1.31 million from $1.25 million in the prior year period, a five percent increase.
"Our core business remains strong," says John Chidsey, chairman and chief executive officer. "Despite significant fluctuations in currency exchange rates, we are extremely pleased with our top-line performance and the continuing strength of our core business," Chidsey says. "We saw sequential improvement in our company restaurant margins as the quarter progressed as a result of declining commodity costs. The complexity and rapidity in currency fluctuations during our second fiscal quarter, created by uncertainties in the currency markets, was difficult to forecast and anticipate."
For the quarter, the company reported earnings per share of $0.33 which includes a negative impact to earnings of $0.05 per share due to currency exchange rate fluctuations as compared to $0.36 in the same quarter last year.
The company saw significant net restaurant expansion in the second quarter in all segments, with international markets leading the way as expected.
The company continued its U.S. and Canada reimaging plan in the second quarter, adding 14 restaurants to the program. Since the program’s inception, 60 restaurants have been reimaged to date. Remodeled and rebuilt restaurants are generating on average a 12 to 30 percent lift in sales, respectively, making this an attractive investment in the brand.
“We anticipate that our strong solid cash flow and balance sheet will enable us to continue to profitably invest in our company restaurant portfolio for the long-term, building new restaurants in high traffic locations and reimaging existing ones, both aimed at generating significant returns,” says Ben Wells, chief financial officer.
For the third and fourth quarters, the promotional and product calendar is designed to drive traffic. 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. In addition, the launch of the first Whopper Bar at Universal CityWalk in Orlando, Florida, this quarter is expected to keep the brand in the forefront. Innovative products will continue to be introduced to satisfy guests seeking indulgent well-priced sandwiches such as the U.S. national limited time offer of the Angry Whopper sandwich (also offered internationally) and the U.S. regional roll-out of the Steakhouse XT, an extra thick burger. And for those seeking value-priced alternatives, the company is introducing a mini-burger platform both in the U.S. and internationally. Called BK Burger Shots and BK Breakfast Shots in the U.S., the mini-burger platform will be available for all day parts.
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