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Burger King feels heat as rivals focus on value

Published on NewsOK Modified: February 15, 2013 at 11:39 am •  Published: February 15, 2013
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The franchisee-owned store model is aimed at cutting down on overhead costs and boosting profit margins. At the end of the year, the company said it was 97 percent franchised, versus 90 percent at the end of 2011. It planned to be nearly fully franchised this year.

Burger King said revenue at locations open at least a year climbed 2.7 percent in the quarter, boosted by a 3.7 percent increase in the U.S. and Canada. By contrast, McDonald's Corp. had reported last month that the figure rose just 0.1 percent globally and 0.3 percent in the U.S.

Burger King said results in North America were helped by new menu items such as its chicken parmesan sandwich, Cinnabon Minibon rolls and its holiday sweets menu.

In the region encompassing Europe, the Middle East and Africa, the figure rose 1.6 percent. It edged up a more modest 0.7 percent in Latin America and 0.8 percent in the Asia Pacific region. This figure is a key gauge of a restaurant operator's health because it strips out the impact of newly closed and opened locations.

For the three months ended Dec. 31, Burger King earned $48.6 million, or 14 cents per share. That compares with $25 million, or 7 cents per share, a year earlier.

Removing one-time costs, earnings were 23 cents per share. Analysts polled by FactSet expected 15 cents per share.

Revenue fell 30 percent to $404.5 million as a result of the refranchising. This still topped Wall Street's estimate of $375.3 million.

Shares of Burger King gained 43 cents, or 2.6 percent, to $17 in midday trading. Its shares have been trading near the upper end of their 52-week range $12.91 to $18.46.

For the year, Burger King Worldwide Inc. earned $117.7 million, or 33 cents per share. That's up from $88.1 million, or 25 cents per share, in the previous year. Annual revenue declined 16 percent to $1.97 billion from $2.34 billion.

Burger King Worldwide has more than 12,900 locations in 86 countries and territories.

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Follow Candice Choi at www.twitter.com/candicechoi