Q2 Looks Up for BK
Fast food retailer Burger King Holdings Inc. rebounded from
a disappointing Q1 fiscal 2010
by improving worldwide revenue, net income and margin during Q2 2010 (ended December 31, 2009). Selected highlights and analysis follow.
Restaurant Growth Aids Q2 Results
Burger King credited the net addition of 95 global restaurants during the quarter as providing a boost to worldwide revenue, net income, and gross margin. Worldwide revenue grew 2%, from $634.1 million USD to $645.4 million USD. Worldwide net income increased 13.3%, from $44.3 million to $50.2 million. Worldwide gross margin rate improved from 13.6% to 13.8%.
Burger King cited a number of developments in its U.S. and Canadian operations as also driving overall financial growth. The retailer said U.S. marketing efforts promoting a new double cheeseburger special, as well as promotional tie-ins to NASCAR driver Tony Stewart, the films “Twilight: New Moon” and “Planet 51,” and the animated cartoon “SpongeBob SquarePants,” helped drive positive worldwide traffic growth. In addition, Burger King attributed some of its margin growth to reduced food, paper and product costs in the U.S. and Canada.
Comp Sales Dip Again
For the second quarter in a row, Burger King reported decreases in worldwide and U.S./Canadian comparable store sales. Worldwide comparable store sales declined 2%, compared to a 2.9% increase in Q2 fiscal 2009. U.S./Canadian comparable store sales dropped 3.3%, compared to a 1.9% gain in Q2 fiscal 2009. International comparable store sales bucked the trend by rising 0.9%, still well below the segment’s 5% growth one year earlier. Burger King cited weak consumer spending caused by high global unemployment rates.
A Look Ahead
Burger King is forecasting a positive second half of fiscal 2010. Expectations include:
- Opening 250-300 net new restaurants by the end of the fiscal year.
- Reimaging and remodeling North American stores.
- Introducing new value-based promotions.
- Nationally launching its premium Steakhouse XT burger in February 2010.
- Nationally rolling out new batch broilers at all U.S. stores in February 2010.
- Continuing the U.S. rollout of an advanced POS system.
Competitive Comparison with McDonald’s
Burger King’s chief rival McDonald’s completed the fourth quarter of its fiscal 2009 the same day Burger King closed out Q2 fiscal 2010. During the quarter,
McDonald’s reported consolidated revenues of $5.97 billion, a 7% increase from $5.56 billion. Without the positive impact of foreign currency translation, McDonald’s quarterly revenues would have risen 2% to $5.557 billion.
Foreign currency also had a major positive impact on McDonald’s consolidated fourth quarter net income, which rose 23%, from $985.3 million to $1.22 billion. Excluding foreign currency, consolidated net income still climbed 16% to $1.14 billion.
McDonald’s strongly outperformed Burger King in the area of comparable store sales. For the quarter, McDonald’s reported a 2.3% jump in consolidated comparable store sales.
Burger King operates more than 12,000 locations in all 50 U.S. states and 73 countries.
