Sales of Burger King’s new soft-serve ice cream and desserts, as well as the BK Chef’s Choice burger, have exceeded expectations in the United States and Canada, company officials said Wednesday.
In a call to analysts following a mixed third-quarter report, Daniel Schwartz, chief financial officer for the burger chain’s parent company Burger King Holdings Inc., said the Chef’s Choice burger, launched as a limited-time offer in late October, has been added as a permanent menu item. The premium burger, with its 5.5-ounce patty topped with bacon, American cheese, red onion, lettuce tomato and a “Griller” sauce on an artisan bun, sells for a recommended $4.99.
In September, the chain rolled out soft-serve ice cream cones and sundaes, as well as hand-spun shakes. Steve Wiborg, the company’s executive vice president and president of the North America region, said ice cream sales hit a peak of about 200 units per day, which far exceeded company expectations.
“We’re very happy with launch as we go into the winter months,” he said.
The new menu items are part of ongoing efforts to re-energize the nation’s second largest burger chain since it was acquired by private investor group 3G Capital Management just over a year ago. During the past year, the company has launched a global restructuring effort, as well as a new zero-based budgeting plan to reduce costs.
In the United States, the chain has focused on menu enhancements, restaurant re-imaging, streamlining operations and revamping marketing to appeal to a broader consumer base and drive sales growth.
While same-store sales were relatively flat for U.S.- and Canada-based restaurants in the third quarter, the results indicated sequential improvement over the decline in same-store sales of 2.2 percent in the second quarter this year.
BK officials also said commodity costs remain challenging. Schwartz said food costs were up in the mid-to-high single digits during the third quarter, a trend that is continuing into the fourth quarter.
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Burger King did not raise prices during the third quarter, Wiborg said, but he the company will “continue to look at the menu, commodity costs, our competition and our value strategy.”
Schwartz said the company remains focused on other key strategies for driving domestic sales, including a new remodel plan for 2012.
The company has launched a lower-cost remodel initiative with third-party financing from Rabo Bank to help franchisees with re-imaging efforts. Schwartz said he hoped to see 1,000 units remodeled over the next 12 months — though plans for company locations have not yet been formulated.
Remodel costs are expected to range between $200,000 and $300,000, depending on the location, he said.
International results also drove improvements in the third quarter, and Schwartz said the company will continue to expand its global footprint, looking to grow in countries like Brazil, where Burger King recently signed with a master franchisee with ambitious plans for growth.
Third quarter same-store sales were particularly strong in Latin America, where they grew by 10.5 percent. Schwartz said more than half of the countries within the Latin American region showed double-digit sales growth, including Mexico.
Sales were also strong in Germany, Turkey, Spain, the United Kingdom and China, but locations in Australia saw same-store sales decline, he said.
Contact Lisa Jennings at [email protected].
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