Burger King: Turnaround efforts spurred first-quarter sales
Burger King Holdings Inc. on Wednesday reported the strongest same-store sales growth in more than two years for restaurants in the United States and Canada during the first quarter, indicating that turnaround efforts are taking hold.
The parent company to Burger King reported net income of $25 million for the March 31-ended quarter, compared with a loss of $5.9 million in the year-earlier quarter.
Company officials credited improved results but also decreased costs, resulting from the completion of restructuring and other projects. The company also benefitted from early extinguishment of debt related to a refinancing last year.
Burger King in April launched a menu overhaul and new star-studded advertising campaign, featuring David Beckham, Jay Leno and Salma Hayek. The 13 new menu items included premium salads, snack wrap sandwiches, fruit smoothies, chicken strips and frappe drinks.
The company also said it would become a public company again through the sale of a 29-percent stake to the publicly traded Justice Holdings Ltd., based in London. The deal came a little more than a year after Burger King was taken private by private equity firm 3G Capital Management in October 2010, which will retain a 71-percent stake in the chain.
Even before the new menu launch, however, efforts to revive sinking sales in the U.S. and Canada, where the chain has 7,488 locations, were improving results.
Same-store sales for the U.S. and Canada increased by 4.2 percent for the first quarter, compared with a decline of 6 percent in the year-earlier quarter.
Systemwide same-store sales globally increased 4.6 percent, including a 9.9-percent increase in Latin America and the Caribbean and a 6.6-percent increase in Europe, the Middle East and Africa, or EMEA.
The same-store sales growth among western nations offset a decline of 2.8 percent for the Asia Pacific region, however.
“We’re off to a strong start in 2012 and are making terrific progress on the execution of our core global business strategies,” said Daniel Schwartz, Burger King’s chief financial officer, in a statement.
“We are particularly pleased with our performance in North America, which delivered its best comparable sales performance in more than eight quarters,” he added. “Our strong performance in key international markets underscores the significant potential of our global portfolio.”
Revenues systemwide climbed 3.2 percent to $569.9 million.
Schwartz noted that the company will remain focused on its ongoing refranchising of company-owned restaurants in the U.S., as well as expanding its global consumer base. “We are excited to build on the quarter’s strong momentum as we continue to deliver on our strategic priorities,” he said.
Burger King ended the first quarter with 12,534 restaurants, including 1,285 company-owned and 11,249 franchise locations.