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Earnings Preview: Burger King releasing 3Q results

Thursday, 25 Oct 2012 | 4:33 PM ET

NEW YORK -- Burger King Worldwide Inc. reports its third-quarter results Monday, which should give investors another snapshot on the chain's efforts to refresh its outdated image in the U.S. while expanding overseas.

WHAT TO WATCH FOR: After losing market share to rivals, the Miami-based company was purchased in 2010 by private equity firm 3G Capital. Since then, 3G has been working to trim expenses and revive the struggling chain. In April, Burger King unveiled its biggest ever menu revamp, along with a star-studded advertising campaign.

Burger King returned to the public markets soon after, debuting on the New York Stock Exchange in June.

It has also has struck deals to expand in China and Russia through partnerships with franchisees. In the U.S., it rolled out a new "Taste Is King" tagline, as well as numerous limited-time menu offers aimed at driving traffic. To gauge whether the efforts are paying off, investors will be watching for the company's revenue at restaurants open at least a year. The metric is a key indicator because it strips out the impact of newly opened and closed locations.

In the previous quarter, Burger King said revenue at locations open at least a year rose 4.4 percent. Locations in Latin America and the Caribbean reported a 10.5 percent jump, while the Asia Pacific region and Europe, the Middle East and Africa also posted gains.

WHY IT MATTERS: Competition in the fast-food industry has been intensifying, with customers increasingly flocking to newer chains such as Panera Bread Co. and Chipotle Mexican Grill Inc., which offer more premium food for a little more money.

Among traditional burger chains, McDonald's Corp. has dominated rivals in recent years by focusing on value while rolling out a steady stream of new menu items. But the world's biggest hamburger chain is starting to show signs of vulnerability and last week reported that its net income was down 4 percent in the third quarter. The Oak Brook, Ill.-based company noted that tougher competition at home was a factor.

Like Burger King, Wendy's is also in the midst of a turnaround push. And Taco Bell, owned by Yum Brands Inc., said revenue in restaurants open at least a year rose 7 percent during the third quarter. Yum attributed to increase to its new, upscale Taco Bell menu created by celebrity chef Lorena Garcia.

WHAT'S EXPECTED: Analysts expect Burger King to report a profit of 15 cents per share on revenue of $439.8 million, according to FactSet.

LAST YEAR'S QUARTER: The company said it earned $48.1 million in the year-ago quarter, when it was still privately held. Revenue was $608.1 million.

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