Markets & Finance

Burger King Beefs Up Bottom Line


The fast food giant's shares climbed after it reported that results swung to a profit in the third quarter

Burger King Holdings (BKC) managed to swing to a profit during recent months, as the Miami-based fast food giant pushed ahead with its international growth and persuaded more customers to buy new product offerings.

Burger King's net income rose to $34 million for the fiscal third quarter ended March 31 compared to prior year period's $12 million loss. "Fiscal year 2007 is shaping up to be a great year for Burger King, and we are committed to moving the brand forward by consistently delivering on our development and financial targets," CEO John Chidsey said in a press release Apr. 27.

Chidsey and his team have tried to boost their company's sales in recent months with efforts such as introducing a Burger King Breakfast Value Menu, which allows customers to choose from ten items starting at a dollar each. The company's total revenue rose 9% year over year to $539 million during the March quarter.

As sales grew and food costs fell, the amount the company profits on each sale rose to 14% during the quarter from 12.9% during the same period last year.

Meanwhile Burger King is also benefiting from its international growth. Burger King sales at stores open more than a year rose 3.2% system-wide, making this the company's 13th consecutive quarter of positive comparable sales increases. In the United States and Canada, comparable sales gained only 2.6%. In contrast the company's international sales gained 5.3%, driven by growth in the U.K. and steps such as the introduction of the Aberdeen Angus burger.

The company continues planning its expansion of new restaurants globally into countries such as Japan, Indonesia, Egypt, Hong Kong and Poland during the coming years.

Now Burger King says it is on target to achieve its goal of adjusted net income growth in the fiscal year above 20% and already expects to exceed its goal of growing top-line revenue by 6 to 7%. CEO Chidsey said in the statement that things such as a full quarter of the Burger King Breakfast Value menu should also help the coming spring quarter's results.

After the news investors bid up the stock 3.6% to $23.53 per share in midday trading on the New York Stock Exchange.


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