* Operating costs and expenses plummet
* Company plans to keep rolling out new menu items
* Sees 2013 inflation of around 3 percent
* Shares up almost 3 percent
By Lisa Baertlein
Feb 15 Burger King Worldwide Inc, the
third-largest U.S. hamburger chain, on Friday posted
higher-than-expected quarterly profit, helped by cost cuts and
new holiday sweets, premium sandwiches and special deals that
boosted restaurant sales in the United States and Canada.
Total fourth-quarter operating costs and expenses plunged
more than 40 percent to $292.6 million as the fast-food company
spent less on everything from food and packaging to payroll and
At the same time, Burger King tempted diners with
gingerbread milkshakes, chicken parmesan sandwiches and a 55th
anniversary Whopper hamburger deal.
The results landed as Burger King and fast-food rivals
including McDonald's Corp and Wendy's Co fight
hard for customers, who reeled in spending after the U.S.
payroll tax increase in January cut take-home pay.
"We did see the environment become a little more challenging
with consumers having a little less disposable income, weather
conditions being a little bit worse and competition focused a
little bit more on value," Burger King Chief Financial Officer
Daniel Schwartz told Reuters.
Burger King has been broadening its appeal, especially among
women and health-conscious consumers, with a barrage of new menu
items and the company will keep it up, Schwartz said.
While McDonald's takes advantage of its massive size to
negotiate better deals for everything from national advertising
to beef, smaller chains like Burger King and Wendy's can be more
agile when it comes to shaking up menus to whet diners'
Burger King on Friday reiterated its plans to use a mix of
low-price and premium foods to drive profitable traffic to its
During the fourth quarter, Burger King's Whopper anniversary
deal offered customers who bought one full-price Whopper a
second for 55 cents. A new limited-time deal offers Whopper Jr
sandwiches for $1.29 - 40 cents less than the suggested retail
The company that recently introduced $1 Cinnabon Minibon
Rolls also is switching to a new brew from Starbucks Corp's
Seattle's Best Coffee brand and debuting a lineup of
high-margin coffee drinks, including "cafe-quality" lattes.
The Miami-based chain said fourth-quarter net income nearly
doubled to $48.6 million, or 14 cents per share.
On an adjusted basis, Burger King earned 23 cents per share.
Analysts on average were expecting profit of 15 cents per share,
according to Thomson Reuters I/B/E/S.
Revenue fell 30 percent to $404.5 million, but beat
analysts' estimates of $375.31 million. Excluding the impact of
unfavorable foreign exchange rates and sales of restaurants to
franchisees, the company said revenue grew 5.6 percent.
Overall sales at established restaurants increased an
expected 2.7 percent, helped by a 3.7 percent gain at U.S. and
Canadian restaurants open at least 13 months.
During 2012, Burger King renovated about 600 restaurants in
the United States and Canada. It also added more field managers
to assist franchisees.
Burger King forecast 2013 inflation of around 3 percent on
the expectation that rising beef costs will be balanced by muted
or falling prices for potatoes, cooking oil and paper packaging.
The earnings report from Burger King landed as it and other
companies with European operations grapple with a scandal
involving horsemeat in products labeled as beef.
Burger King said traces of horse DNA were found in samples
of hamburger patties from a food-processing plant in Ireland but
that the meat never reached its restaurants.
The company returned to public ownership in June 2012, less
than two years after it was taken private in a $3.26 billion
sale to Brazilian investment fund 3G Capital Management LLC,
which is known for slashing expenses at the companies it buys.
The company's shares were up 2.6 percent at $17.01 in
afternoon trade on the New York Stock Exchange.