Article

Burger King realizing results with turnaround strategy

North American segment delivers best sales performance in more than two years.

May 10, 2012 by Alicia Kelso — Editor, QSRWeb.com

Burger King's menu and marketing shifts seem to be paying off in the United States, as the company reported its best comparable sales performance in more than eight quarters.

Burger King Holdings Inc. reported its financial results for the quarter ended March 31 that included a systemwide comparable sales increase of 4.6 percent.

"We are off to a strong start in 2012, and are making terrific progress on the execution of our core global business strategies," said Daniel Schwartz, chief financial officer. "We are particularly pleased with our performance in North America. Our strong performance in key international markets underscores the significant potential of our global portfolio. We are excited to build on the quarter's strong momentum as we continue to deliver on our strategic priorities."

North America

The strong North American performance was driven by the promotion of BK's original chicken sandwich, the continued success of the brand's new french fries, promotion of the Croissan'wich, and a successful coupon drop with a bundling offer.

Schwartz said the company is particularly pleased with these results, as they were delivered prior to the launch of several new menu items and a new advertising campaign.

The new items were officially announced in the beginning of April and entail a variety of options to fill gaps in the menu. The items – from Garden Fresh Salads and Chicken Snack Wraps to Real Fruit Smoothies and Frappes – were tested and rolled out per the recommendation of a specially appointed menu task force.

Notably during the quarter, digital menu boards were rolled out across the entire system.

"This is a fantastic way to bring our new menu items to life and to drive sales," Schwartz said. "The impetus of these initiatives is to increase the consistency of the Burger King experience, to broaden our demographic and to strengthen the brand domestically."

Burger King expects 1,000 remodels to be completed within the next 12 to 18 months.

International

Burger King's comp sales were up 9.9 percent in Latin America, driven in part by a dessert partnership with Nestle, and through marketing promotions.

In the European markets, strong performances were turned in by Germany, Turkey, the Middle East, the Netherlands, the UK and Spain. Schwartz said these numbers were driven by successful marketing campaigns.

"The economic conditions in Europe remain challenging, but we're optimistic," Schwartz said.

APAC experienced negative sales of 2.8 percent attributable to a lackluster performance in Australia, which is largest footprint in the segment. Burger King plans to turn this trend around with a new marketing platform in that country.

The Burger King system experienced a net restaurant growth of 22 new units during the quarter, all of which came from international segments. Schwartz said the pace is expected to accelerate during this year.

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