Burger King Declines in Sales, Profits
MIAMI, Fla. -- Sales and profits are down for Burger King, which posted a loss of $34.5 million for the second half of 2010, according to an annual transition report filed with the Securities and Exchange Commission. During the same time period in 2009, the corporation saw a profit of $96.8 million.
Although Burger King is no longer a publicly traded company following last October's sale to 3G Capital, it still has publicly traded debt, which mandates SEC financial reports. The report also listed revenue in the second half of 2010 as $1.18 billion, down 8 percent over the same time period in 2009. The report does not cover a full fourth-quarter performance due to the company changing its fiscal year following the sale. Its most recent results cover the post-sale time period of October 19 through December 31 as well as the last six months of 2010 versus the last six months of 2009.
Same-store sales in the U.S. were down 5 percent compared to last year and down 3.9 percent for the entire year. According to reports, same-store sales are also down approximately 10 percent from two years ago. Worldwide same-store sales were only down 2.3 percent, with a 6.2 percent increase in Latin America.
However, the report also reflects optimism on behalf of the Burger King's new owners; included in it is an outlined strategy based on expanding worldwide development, launching new products, cutting administrative costs, improving restaurant margins and profitability, promoting signature products, refranchising company-owned restaurants and generating cash to pay down the company's corporate debt.
"We believe there are significant opportunities ahead for our Company and the entire Burger King system," said the company in the report.
The company noted that some of its increased costs were due to severance benefits and expenses connected to the layoff of 625 employees in a worldwide restructuring. Burger King incurred $41 million in severance-related expenses in North America and Latin America during the fourth quarter, and another $16 million in other international markets. However, the company predicts a savings of $55 to $70 million annually in salary and benefits costs, although such savings are not guaranteed. "If we are not able to maintain our operations with a reduced workforce, we may incur additional [expenses] and therefore may not achieve these estimated cost reductions," the report added.
Burger King has no comment on the report, said spokesman Miguel Pedra.