Burger King profit drops 83% in third quarter
Burger King Worldwide Inc., one of the country’s largest hamburger chains, said its third-quarter net income tanked 83%, the first time the brand has reported earnings since returning to public trading.
The fast-food chain was one of very few public companies releasing quarterly financial data as Hurricane Sandy shut down Wall Street.
Burger King’s third-quarter profit dropped to $6.6 million, or 2 cents a share, compared with net income of $38.8 million, or 11 cents a share, for last year’s third quarter. Revenue fell 26% to $451.1 million from $607.7 million.
Burger King is rolling out a large menu update full of salads, snack wraps, frappes and real-fruit smoothies and hiring celebrities such as David Beckham and Jay Leno to stump for the brand. This year, the chain also promised to switch to only cage-free eggs and pork.
The company also is selling its remaining company-owned eateries to franchisees to stabilize its balance sheet and shield itself from commodity cost swings. Currently, 95% of Burger King restaurants are owned by franchisees.
“There is no silver bullet. It’s not just about marketing or a new product,” Chief Executive Bernardo Hees said in a call with analysts.
But the turnaround effort is costly. And heavy competition from similar concepts may have taken a toll. Hees also noted a “challenging global economic environment.”
Burger King returned to the New York Stock Exchange in June after being taken private in 2010 by 3G Capital Management. The private equity firm is now Burger King’s largest shareholder with a 71% stake.
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