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Burger King's profit rises on cost cuts

Published April 25, 2014 8:25 am
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

New York • Burger King reported a higher first-quarter profit as cost-cutting offset weak sales in the U.S.

The Miami-based chain on Friday said global sales at established locations rose 2 percent as stronger results overseas boosted a 0.1 percent increase in the U.S.

McDonald's, Taco Bell and Dunkin' Donuts also reported underwhelming U.S. sales for the first three months of the year, citing the bad weather. But Chipotle and Starbucks, which charge higher prices, saw healthy sales gains under the same conditions.

Burger King Worldwide Inc. has been slashing costs since investment firm 3G Capital acquired it in 2010. The Brazilian firm, which is known for its cost-cutting measures, took the chain public again in 2012 and launched a revamped menu and splashy marketing at around the same time.

The company has since introduced an array of new items in the U.S., including lower-calorie fries called Satisfries and several items that seem modeled after items at McDonald's. The efforts have yet to produce major sales gains.

Overseas, however, the company is striking deals with franchisees to expand its global presence. More than half of Burger King's 13,600 stores worldwide are in the U.S.

After Burger King went public, key executives exited the company including 3G principal Bernardo Hees, who the firm had installed as CEO. Hees was moved to head food maker Heinz, another 3G acquisition, and replaced with Daniel Schwartz, another 3G principal.

Other departures include chief marketing officer Flavia Faugeres and Steve Wiborg, president of North America. Burger King had hired Wiborg, a former franchisee, to help mend its relations with its restaurant operators.

For the quarter, Burger King earned $60.4 million, or 17 cents per share. Not including one-time items, it earned 20 cents per share, a penny more than Wall Street expected.

Revenue declined to $240.9 million as the company refranchised restaurants, falling short of the $241.3 million analysts expected.


Follow Candice Choi at www.twitter.com/candicechoi






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