Burger King’s sales momentum faltered in Q1 as the introductions of its new Seattle’s Best coffee platform and Bacon Gouda Breakfast Sandwiches plus items such as the Avocado Whopper failed to translate into positive sales growth. For the quarter, Burger King same-store sales declined 3%, with global comp sales down 1.4%.
COO Daniel Schwartz, who becomes CEO on July 1, 2013, blamed the negative sales on an “unbalanced” menu early in the quarter that focused on premium items while McDonald’s and other competitors focused on value-priced items. The decline was slowed by a more balanced marketing approach that included value efforts such as the $1.29 Whopper Jr. and King Deals promotions coupled with new premium items such as the Chipotle Whopper, Bacon Cheddar Stuffed Burger, Turkey Burger and other Spring Menu items introduced in March. Schwartz would not say that its April sales are positive; instead he said they are flat with March sales.
Schwartz and Alex Macedo, newly elevated to North America president, also declined to project the number of restaurant remodels that chain will do this year. The completion of 600 U.S./Canada remodels in 2012 put the chain at 19% reimaged. The goal remains to have 40% of domestic stores remodeled by 2015. Macedo said that remodels see a sales bump of 10% to 15%.
Burger King moved closer to being totally a franchising company with no company operations. Only 132 company stores in Germany and Spain remain to be refranchised, which is expected to take place this year.
With a net increase of just four restaurants during the quarter, Burger King ended the quarter with a total of 13,001 locations, 7,448 of which are in the U.S. and Canada. Unit growth efforts are focused on international markets.