(Continued from page 1)

Executives announced the new menu strategy after reporting that completion of its global refranchising strategy sent Burger King’s net income soaring to $68.2 million in the Sept. 30-ended quarter from $6.6 million a year earlier.

The company’s revenue fell 89 percent compared with a year earlier, from $244.6 million to $27 million, as a result of the refranchising 519 company-owned locations worldwide in the previous 12 months. Yet the company’s total operating expenses fell nearly 90 percent, significantly improving earnings.

Miami-based Burger King Worldwide is now nearly 100-percent franchised, which would allow the company to grow net new units, sales and profit margins in the United States and Canada, as well as its three major international divisions, executives said.

“Over the past two years, we’ve refranchised 1,000 restaurants around the world and fundamentally transformed our business model,” chief executive Daniel Schwartz said during Burger King’s third-quarter earnings call. “We remain confident that a fully franchised business model will allow us to accelerate growth, while maximizing value for franchisees and shareholders.”

Though the North American division closed a net 13 units in the third quarter, Burger King’s three international divisions picked up the slack, leading to 133 net openings worldwide in the period, more than doubling from 63 openings in the third quarter of 2012.

Europe, the Middle East and Africa accounted for more than half of that growth, with 80 net openings, followed by 39 openings in the Asia-Pacific division, and 27 in Latin America and the Caribbean. More than half the growth in the past 12 months has come from large emerging markets like Brazil and China, where Burger King has joint-venture agreements with a master franchisor.

But “we’re also seeing traction in smaller markets,” Schwartz said, noting a new development agreement in Sri Lanka and the opening of the first unit in Pakistan.

“As was the case last year, we’re going to have a significant acceleration sequentially into the fourth quarter, both domestically and internationally,” Schwartz said. “If you look at where we were the past few years, we’ve come a long way, growing at many times the pace of our historical growth. When you look at next year, we’re confident we can continue this growth.”

The United States and Canada’s restaurants would continue an aggressive effort to reimage and remodel, Schwartz added, and the company is in line with its projection to have 40 percent of the North American system updated by 2015. On average, reimaged stores are producing a sales lift between 10 percent and 15 percent, officials said.

Burger King’s mostly franchised system of 13,259 restaurants operates in the United States and 90 foreign countries.

Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN