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Fitch upgrades Burger King on stronger sales

The Associated Press
Friday, 12 Oct 2012 | 6:20 PM ET

Fitch Ratings upgraded its credit rating on Burger King Friday, saying it's attracting more customers with an updated menu, cutting costs and franchising stores.

The fast-food chain, which has locations worldwide and is based in Miami, launched is biggest-ever menu revamp and ad campaign in the U.S. this spring. It is also changing its business model to one in which nearly all of its restaurants are franchised rather than owned by the parent company. That cuts costs for Burger King Worldwide Inc. while increasing revenue with franchise fees and royalty. Burger King is also trying to ramp up growth by expanding overseas.

Fitch said those moves are lifting sales trends, easing debt levels and strengthening cash flows. The rating agency upgraded the company's long-term issuer default rating one notch to "B" from "B-," keeping it in junk territory. That means it can be more expensive for the company to borrow than if it had high-rated debt.

Fitch has a positive outlook on Burger King's debt rating, which suggests that Fitch may upgrade again over the long term.

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