What is in this article?:
- Burger King: Consistency, simplicity keys to 2Q success
- Pushing growth abroad amid supplier challenges
Net income and same-store sales rise during the quarter for the quick-service brand.
Burger King Worldwide Inc. reported on Friday that its net income rose 19.4 percent in the June 30-ended second quarter on reduced expenses and expansion in markets abroad.
Miami-based Burger King, the nation’s second largest burger chain behind McDonald’s, reported net income of $75.1 million, or 21 cents per share, compared to $62.9 million, or 18 cents per share, during the same period a year ago. Revenue dipped to $261.2 million from $278.3 million in the prior-year period.
“The key to our second-quarter success was consistency,” said Daniel S. Schwartz, Burger King’s chief executive, in a conference call Friday with analysts. “We consistently executed on our strategy of menu and operational simplicity in North America, and we consistently grew the Burger King brand around the world.”
The company saw global same-store sales increase 0.9 percent during the quarter, with the U.S.-Canada region rising 0.4 percent, Europe-Middle East-Africa increasing 0.9 percent, Latin America rising 1.1 percent, and Asian-Pacific increasing 3.7 percent.
In the U.S.-Canada region, Schwartz said, the company saw its third consecutive quarter of positive same-store sales growth. That growth, he added, was “driven by launching fewer and more impactful products.”
In the second quarter, for example, the company introduced the Chicken Big King sandwich, which built on the brand’s positioning in fried chicken, Schwartz said. To entice guests to try the item, Burger King introduced it on its “two for $5” platform.” The menu items came with the addition of only one new stock keeping unit, or SKU, into the store’s operations, he added.
Alexandre Macedo, president of Burger King’s North America division, said the company was working on “laddering” the brand’s menu. “The main change that we did starting in Q2 was to create a ladder approach,” Macedo said. “We have product that starts at $1 and product at $1.29, $1.49, $1.69 and $1.99.”
On the premium side the company launched the BBQ Bacon Whopper, and on the “two for $5” menu it added the chicken sandwich and the Extra Long BBQ Cheeseburger. Macedo said Burger King has also seen success with the King Deal $1 value menu, which launched at the beginning of the year and focuses on items between $1 and $1.99.
Consumers look for different price points between $1 and $2, he said, and the laddering also simplified operations and profitability for franchisees.
Burger King has also worked to control costs. “Given that we don’t have control over commodity prices,” Macedo said, “we have a good team and targets throughout the company to make sure we can reduce everything that we have control over. We’re looking at everything inside the restaurant, from the paper cups to the wrappers to how we cook our product.”