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Burger King's earnings dive 83%

By Associated Press


NEW YORK » Burger King's net income fell 83 percent in the third quarter as the world's second-biggest hamburger chain sold more of its restaurants to franchisees as part of a turnaround push. But the company's adjusted results topped Wall Street expectations.

The private investment firm that owns a majority stake in the fast-food chain, 3G Capital, has been working to put the shine back in Burger King's crown since purchasing it in 2010. In addition to unveiling its biggest-ever menu expansion and a celebrity-studded ad campaign this spring, the firm has been shifting to an entirely franchisee-owned model to cut overhead costs and boost profit margins.

Burger King, which is based in Miami and has more than 12,600 locations, said global revenue at stores open at least a year in the third quarter rose 1.4 percent. In the U.S. and Canada, the figure rose 1.6 percent as barbecue-themed menu items for the summer drove sales.

The growth was slower than in the year-ago period, however, as the chain saw a decrease in the number of "value-focused" customers. Steve Wiborg, president of North American operations, noted that Burger King is less dependent on its value menu than McDonald's and Wendy's.

CEO Bernardo Hees said sales at restaurants open at least a year are showing signs of picking up again for the fourth quarter. The sales figure is a key metric because it strips out the impact of newly opened and closed locations.

For the three months ended Sept. 30, net income fell to $6.6 million, or 2 cents per share. That compares with $38.8 million, or 11 cents per share, last year. Net income excluding one-time items totaled 17 cents per share. Analysts expected 15 cents per share, according to FactSet.

Revenue fell 26 percent to $451.1 million but was above the $439.7 million Wall Street expected.

Much of the revenue decrease came from Burger King selling restaurants to franchisees, which means the company no longer includes sales from those stores on its books.

As of Sept. 30, Burger King said 95 percent of its restaurants were owned by franchisees; the goal is to reach 100 percent.

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Maneki_Neko wrote:
I think the decline in earnings came when they started substituting kangaroo meat for beef in their whoppers.
on October 30,2012 | 09:28AM
nodaddynotthebelt wrote:
I can't say much about Burger King as a corporation but I can say something about the local franchises. When your company advertises something for ninety-nine cents or a dollar you should offer it for that much. You should not add almost a dollar more on it and expect consumers not to feel ripped off. That is the case when I took my family to a Burger King. We wanted to try that "deal" for a small burger and found that the restaurant had tacked on additional amount and the employee stated that the "deal" was only at "participating" restaurants". With a budget for eating out that is limited my family, as many families, have chosen to eat at home instead. In this case, we crossed the street to McDonald's where the prices of their dollar menu is actually a dollar. How can it be that one restaurant chooses to offer the "deal" while another across the street tacks on additional amount? I notice that this mentality is prevalent among local franchises here in Hawaii where they tack on an additional amount to cover the higher cost of doing business here in Hawaii. From that local pizza restaurant that charges almost double what the national ad states to that taco place that does the same thing it is very common here. Maybe consumers are tired of this nickel and dime-ing that they simply forego eating out.
on October 30,2012 | 10:52AM
CriticalReader wrote:
Pizza Hut does the same thing. Then they're tight on the toppings. Gotta wonder how much longer these sort of places will last in Hawaii since wages ain't keeping pace with their prices or their quality, or their serviice, or their value.
on October 30,2012 | 11:12AM
Maneki_Neko wrote:
I never have this problem when I take the whole family out to snack at Allan Wong's, Mavro's or Roys. You guys should up your game.
on October 30,2012 | 12:10PM
Tony96822 wrote:
Zippy's saimin. Best deal in town bruddah.
on October 30,2012 | 08:23PM
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