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Carrols Restaurant Group executives alternately praised and slammed Burger King marketing and product-development strategies in explaining to analysts why the 312 BK restaurants it operates posted a 2.6% decline in same-store sales last year.

President-COO Dan Accordino applauded BK’s announced intention to focus on breakfast in 2010, saying the plans include introductions of a BK Breakfast Bowl as well as the BK Breakfast Muffin Sandwich it has been testing. Complaining that morning sales hadn’t been “addressed in a good long time,” Accordino called the new products and the agreement to sell Seattle’s Best coffee “very helpful.” Coffee now accounts for just 1.5% of total sales at its BK units.

But Chairman-CEO Alan Vituli was sharply critical of Burger King’s $1 Double Cheeseburger promotion and the brand’s emphasis on the low-price end of the barbell pricing strategy, saying it “undermines the proprietary qualities of the [BK] brand.” Increasing the Double Cheeseburger to $1.19 helps on profit margin, but replacing it with a $1 BK Double continues the focus on low-end products and results in what Vituli called a “terribly imbalanced” menu.

“Burger King Corp. is coining the phrase ‘extreme affordability.’ Unfortunately, the unforeseen consequences to the restaurants are that extreme affordability is converting too many of our core customers to extreme bargain seekers with no interest in looking beyond the extreme market, and we have got to break that chain,” said Vituli. Its 2010 comp sales for BK are off 8% through mid-February.

The $1 Double Cheeseburger gambit brought “improvements in both sales and traffic. However, these have [come at] the expense of some margin degradation given the inherent discount,” said Accordino. “In addition, while we’re selling a lot of sandwiches, our incidence of drink and fry add-ons is not that high, making the gross profit contribution less appealing than we had hoped.”

Fourth-quarter comp sales for Carrols’ BK restaurants were -3%. The average check decreased 5.8% while customer traffic increased 2.1%. Carrols is based in Syracuse, N.Y.

Vituli said the introduction of the Steakhouse XT line will help balance the BK menu. VP-CFO Paul Flanders called it “a good offering,” saying its BKs were selling 24 Steakhouse burgers a day even before advertising began. “I’m not certain that the [number sold is] going to be terribly significant,” Flanders added.

As for the addition of the new batch broilers (above) that will allow possible rollout of ribs—already testing for the past year—plus stuffed burgers and other items, Accordino said he is “cautiously optimistic… [but] it is difficult to estimate these net results given the backdrop of the current consumer environment.” He added that he remains “hopeful that as Burger King adjusts its discounting strategy and launches new products in 2010, these efforts will provide more balance to brand’s barbell strategy.”

Flanders said Carrols will remodel 16 BKs this year at a cost of $500,000 each. That should return a 5% to 8% sales boost for those units, the company says.