MIAMI Burger King Holdings Inc. said Thursday its profit fell 6.4 percent for the company’s September-ended first quarter, as consumers dined at home or sought bargains elsewhere and foreign currency conversion rates hurt earnings.
The effects of Burger King’s $1 double cheeseburger promotion, which started this month and has been controversial among franchisees, were not measured in the first quarter. Comments from Burger King franchisee Carrols Restaurant Group Inc., however, said that during the initial weeks of the promotion, sales were strong and traffic trends had improved. The company, which operates more than 500 Burger King locations, spoke this week at the Wells Fargo Securities consumer conference.
Franchisor Burger King said first-quarter profit totaled $46.6 million, or 34 cents per share, compared to $49.8 million, or 36 cents a share, in the same quarter last year. Latest-quarter revenue fell 5 percent to $636.9 million.
Unfavorable currency exchange rates hit Burger King’s bottom line by 2 cents per share, it said, and reduced revenue by $20.9 million.
Global systemwide same-store sales in the first quarter fell 2.9 percent, reflecting a decline of 4.6 percent in the United States and Canada.
“We are clearly not where we want to be as it relates to comparable sales and overall profitability,” John Chidsey, Burger King’s chairman and chief executive, said in a statement.
He added that the company expected “the unpredictable consumer environment will persist in fiscal 2010.”
The company cited The NPD Group Inc.’s recent study that showed a traffic decline of 3 percent across the quick-service segment for the three months ended in August. McDonald’s earlier this month warned that it expected same-store sales would be flat to slightly down for the month October. Burger King also said that high unemployment, now at 9.8 percent nationally, was affecting the No. 2 burger chain’s target demographic.
Contact Ron Ruggless at [email protected].
