By Annie Gasparro
Burger King Worldwide Inc.'s (BKW) sales trends declined in the
first quarter, but the chain's incoming chief executive says he
will stick with its strategy to expand its menu to reach a broader
demographic and be more aggressive with value-oriented deals in
light of the economy.
Incoming CEO Daniel Schwartz said Thursday in an interview the
challenging economy and heightened competitive activity caused
sales at locations open at least a year to decline early in the
first quarter, but same-store sales rebounded to growth in March,
after Burger King began advertising more compelling value
deals.
Burger King's global same-store sales fell 1.5% in the quarter,
also hit by the leap day adding an extra day to the prior year. In
the U.S. and Canada, same-store sales declined 3%. The company
expects to report adjusted per-share earning of about 17 cents for
the quarter, a penny above the view of analysts polled by Thomson
Reuters.
Chief Financial Officer Mr. Schwartz, who is being promoted to
chief operating officer and will become its new CEO July 1, said
Burger King still has "a lot more ground to gain," but is "on the
right track," with the strategy that private-equity firm 3G Capital
began putting in place when it acquired Burger King in 2010.
Burger King's Chief Executive Bernardo Hees will become the new
CEO of H.J. Heinz Co. (HNZ), once 3G and Berkshire Hathaway Inc.
(BRKA, BRKB) complete their $23 billion buyout of the ketchup
maker.
Burger King, which began trading on the stock market again last
year, after a stint as a private company, saw shares rise 3% to
$19.00 in recent trading Thursday, marking more than a 15% rise so
far this year.
After a complete overhaul of its menu attracted a surge of new
customers last year, Burger King is adding more premium sandwiches
and sides, like a turkey burger and "loaded" tater tots.
It also determined earlier this year that it needed to offer
more good deals to keep up with rivals, so it temporarily lowered
the price of its Whopper Jr. to $1.29, and is also offering other
promotions in some U.S. markets--like a daily discount program that
includes a different combo meal each day for about $4.99 from
Monday through Friday.
With the economy still shaky, fast-food chains are finding it
increasingly important to advertise their low prices to cater to
cost-conscious consumers.
McDonald's Corp. (MCD) ramped up advertising of its Dollar Menu
late last year, and then added the new Grilled Onion Cheddar Burger
to that list, which it said helped boost U.S. sales in January.
Shortly after, Wendy's Co. (WEN) came out with a "Right Price,
Right Size" menu, which it is also heavily promoting, that includes
multiple items ranging from roughly $1 to $2.
Mr. Schwartz said Burger King's plan is working to expand its
customer base to more women, children and seniors, and that its
recent more-aggressive value promotions are helping sales rebound
amidst heightened competition and the struggling economy.
Burger King also announced Thursday its board approved a 20%
increase to its cash dividend to six cents a share and authorized
the repurchase of up to $200 million under its share-buyback
program.
Write to Annie Gasparro at annie.gasparro@dowjones.com
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