U.S. News

Burger King Earnings Rise 40%, Helped By Xbox Promotion


Burger King Holdings, the world's No. 2 hamburger restaurant chain, posted a better-then-expected 40% increase in quarterly profit as an Xbox 360 video game promotion spurred sales in the United States.

Burger King said net income for the fiscal second quarter, ended Dec. 31, was $38 million, or 28 cents a share, compared with $27 million, or 24 cents a share, a year earlier.

Wall Street analysts, on average, had been expecting the newly public company to earn 26 cents a share, according to Thomson Financial.

Quarterly revenue rose 9% to $559 million, driven by new restaurant openings and higher sales at restaurants open at least a year, or same-store sales.

Same-store sales, a closely watched metric of retail and restaurant health, rose 3.7% worldwide and 4.4% in the United States.

Chief Executive John Chidsey said Burger King's lower-priced "Value Menu" and the Xbox promotion helped drive sales and customer traffic. He said more than 3.2 million Burger King-branded Xbox games were sold, at $3.99 each.

Burger King introduced the value menu last year to help it compete against its bigger rival McDonald's Dollar Menu and Wendy's International Super Value Menu.

Restaurant margins rose 0.7 percentage point in the quarter, the company said, due to lower food costs and higher revenue at company-owned restaurants.

Burger King, which is aggressively expanding internationally, said it expects net openings to accelerate and closures to diminish during the second half of its fiscal year.
The company also announced a quarterly dividend of 6.25 cents a share, payable on March 15 to shareholders of record on Feb. 15.