Burger King heats it up with spicy Whopper and sales surge

AP News
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Posted: Apr 27, 2015 11:59 AM
Burger King heats it up with spicy Whopper and sales surge

NEW YORK (AP) — The home of the Whopper enjoyed its biggest sales jump in nearly a decade in the U.S. and Canada during the first quarter, boosted by a pricier new flavor of its signature burger and an ongoing 2 for $5 promotion.

Burger King's sales rose 6.9 percent at established locations in the U.S. and Canada, parent company Restaurant Brands International said Monday. The company, which also owns Tim Hortons doughnut chain, declined to say whether the increase at Burger King was driven by higher average spending or an uptick in customer traffic, which is a key indicator of health.

In a phone interview, Restaurant Brands CEO Daniel Schwartz cited a variety of factors for the sales increase at Burger King, including a spicy BLT Whopper that has a suggested retail price of $4.99 — which is a dollar more than a regular Whopper. Schwartz said the offering also illustrated how the chain is giving customers something new without really complicating kitchen operations with too many additional ingredients.

Sales were also helped by a premium A1 Ultimate Bacon Cheeseburger, marketing during the NCAA championships and healthy sales at breakfast, which Schwartz said accounts for about 13 to 14 percent of sales.

"We said it in the past — there's no silver bullet," Schwartz said in a phone interview.

The company has also been pushing for franchisees to remodel restaurants, with 40 percent of locations now remodeled, he said.

The showing comes as rival McDonald's has been fighting to hold onto customers, with sales at established U.S. locations falling 2.6 percent during the first three months of the year. Taco Bell, which is benefiting from the launch of a national breakfast menu, saw sales rise 6 percent during the period, according to parent company Yum Brands Inc.

While Burger King has been striking franchising deals to expand internationally, the company said the number of locations in the U.S. has been flat to slightly down at around 7,000 stores.

McDonald's, which has more than 14,300 in the U.S. and more than 36,200 around the world, has said it would slow it global expansion as it works on fixing its business.

On a global basis, Burger King's same-store sales rose 4.6 percent at Tim Hortons' rose 5.3 percent.

For the quarter, Restaurant Brands International Inc. reported adjusted earnings that beat analysts' expectations.

The Canadian company, which was formed in December through a combination of Tim Hortons Inc. and Burger King, reported a loss of $8.1 million, or 4 cents per share. But it had earnings of 18 cents per share after adjusting for certain costs.

Analysts polled by FactSet expected profit of 15 cents per share.

Revenue rose slightly to $932 million. Analysts polled by FactSet expected $944.7 million.

The results were subdued by a strong U.S. dollar and the company said it would have seen 9.6 percent growth without currency swings.

Shares of Restaurant Brands were up 3.6 percent at $43.07.

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