Burger King franchisee and franchisor of Taco Cabana and Pollo Tropical Carrol’s corporation yesterday reported revenues for the second quarter ended June 30, 2003 of $165.6 million, down 4.5% from the same period a year ago. Net income split nearly in half, falling from $5.3 million in second quarter 2002 to $2.7 million in 2003.

The drop in revenues and income was largely due to disappointing sales at its 351 Burger King restaurants. Same store sales at its burger stores fell 10.5% compared with the same quarter last year sending sales down 10.3% to $91.8 million. Chairman and CEO Alan Vituli said slower sales were expected compared to earlier this year and strong same store sales up 4.5% a year ago but competition was ultimately a factor. “Although the heavy price discounting that we experienced in late 2002 and early 2003 has subsided, a McDonalds’ large sandwich promotion and the addition of new products supported with aggressive advertising did have an impact during this timeframe and into July,” Vituli said.

Despite discouraging results, Vituli said sales have since turned around due to the introduction and promotion of the new Chicken Caesar sandwich. “New product introductions and effective advertising campaigns continue to be critical for Burger King to recapture market share,” he noted.

For its two Mexican concepts results were brighter in some respects. Despite same store sales declines for Pollo Tropical of -2.1% and Taco Cabana of –5.5%, the chains saw sales increase 6.7% and 2.4% respectively, due largely to opening new stores. Self-cannibalization was blamed for the same store sales declines. “Although our new store sales volumes have been better than expected, this has had an impact on our reported comparable unit performance,” Vituli reported.

Burger King franchisees have been struggling of late. Fellow franchisee Quality Dining reported revenues down 13.7% for second quarter and a net loss of $280,000.

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