Reformulated Chicken Tenders have done well but arrived too late to salvage Burger King’s dismal first quarter sales performance. The company reported a net loss of $6.8 million for the period ended March 31, 2011, compared with a $41 million gain a year ago. Sales fell 8% and same-store sales in the U.S. and Canada declined 6%. The company blamed the declines on lower customer traffic compared with last year’s first quarter, when it was luring bargain hunters with the infamous $1 Double Cheeseburger. Comp sales were down 6.1% during the same period a year ago. Sales in the rest of the world were positive for this year’s first quarter.
Burger King EVP-CFO Daniel Schwartz told analysts that the revamped Chicken Tenders brought out at the end of March brought a 70% increase in sales for the line. He added that 17% of that increase came from sales of a 20-piece pack priced at $4.99. He indicated BK will do more such promotions.
Soft-serve ice cream will be in all Burger King stores by summer and Schwartz says a variety of new items is in test. Prices for both beef and bacon are up 18% over last year, the company says.
The previously reported “America’ Favorite Burger” campaign (above, right) for the Whopper, the first support for the iconic product in 30 months, appears to be the kind of gentle brand-image marketing the chain wants to do more of when it names a new ad agency next month. Former shop Crispin Porter + Bogusky’s strength was in creating buzz, but Schwartz says Burger King needs to “drive profitable sales,” with the emphasis on profitable. That’s likely to mean more attention to full- or premium-price items like the BK Stuffed Steakhouse burger and less attention for value-meal products. Breakfast will get steady, year-long marketing attention rather than short-term campaign bursts.
Burger King execs attempted to clarify the status of the 20/20 restaurant design, saying the new version being offered to operators costs about 50% less than the original 20/20 model. Pressed for details and asked if 50% meant an average remodel cost of $250,000, Steve Wiborg, president of Burger King, North America, called that number “close.” He says the lower-cost 20/20 keeps “key elements” of the original.