Burger King Franchise Sees Beefy Profits With $1 Deals

This post was written by Michael on February 25, 2010
Posted Under: Uncategorized

Burger King Franchisee Success

Burger King Franchisee Success

Dollar-deals are luring cost-conscious eaters into fast-food restaurants, boosting second-quarter profits for Miami-based Burger King Corp. The king’s company saw a 13-percent rise in profit.

The nation’s No. 2 hamburger chain said it earned $50.2 million, or 37 cents per share, during the three months that ended Dec. 31. A year earlier, the company earned $44.3 million, or 33 cents per share.

Revenue rose 2 percent to $645.4 million, which the company said was helped by the addition of 95 restaurants and an additional $22.8 million due to currency translation. A fluctuating U.S. dollar can help or hurt sales overseas when they are translated back to U.S. currency.

The company said its second-quarter sales at restaurants open at least a year fell 2 percent, compared with a gain of 2.9 percent in the same quarter last year. The figure is a key measurement because it measures growth at existing establishments rather than including new ones.

Nonetheless, the weak economy and high unemployment numbers continue to drag down restaurant performances. Because of that, Burger King and competitor McDonald’s have been increasing their lower-priced offerings to keep people eating at their restaurants.

Burger King continued to market its value message to diners, including launching a six-month promotion for $1 double cheeseburgers in October. CEO John Chidsey said the company planned more promotions to keep luring in customers.

“We will continue to focus on our guests’ desire for extreme affordability,” he said in a news release.

The company’s franchisees fought against the double cheeseburger promotion when it was announced last fall, saying they would lose money on the deal. But the company said it spurred traffic.

It’s unclear how the results will sit with the company’s franchisees, who sued Burger King in November over the $1 double cheeseburger. The National Franchise Association, a group that represents more than 80 percent of Burger King’s U.S. franchise owners, said it faced at least a 10-cent loss on the deal and argued Burger King can’t set maximum menu prices.

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