Burger King profits as costs fall

Posted by James Ferre on 26th August 2009

Burger King, the world’s second largest burger chain, has reported a 2 per cent sales decline in the fourth quarter on the back of a weaker US dollar.

The maker of the Whopper did, however, record a revenue gain of three per cent for the full-year as consumer demand for cheap, convenient food remained robust. Profit for the fourth quarter also rose – by 16% – comfortably outstripping analyst estimates thanks to a reduction in costs.

Comparable sales were pressured by adverse macro-economic conditions including higher unemployment, more consumers eating at home and heavy discounting by other restaurant chains, the company added. The leading performer was the EMEA/APAC business segment – which includes Australia, posting positive comparable sales of 2.5 per cent in the fourth quarter.

The Whopper and Whopper Jr, meal deals provided a boost to their Australian operations.

“In the face of a continually challenging macro-economic environment, our business model remains strong,” said Chairman and Chief Executive Officer John Chidsey. “In fiscal 2009, we completed six consecutive years of positive comparable sales growth, achieved record revenues, generated strong cash flow from operations and increased net restaurant count by 360, our strongest development year in almost a decade.”

Mr Chidsey noted that there were signs of economic recovery, but would not be drawn of forecasts for the year ahead.

“As we enter into fiscal 2010, some macro-indicators suggest a stabilisation of world economies is underway. However, we anticipate that the challenging consumer environment will continue due to high unemployment levels, which has resulted in a significant reduction in out-of-home eating expenditures,” he explained. “Our long-term strategies remain on course and we are committed to tactically respond to an ever-changing consumer dynamic.”

“We are well-positioned to expand our global footprint, invest in our reimaging program and deliver operations excellence in our restaurants every day.”