Burger King Holdings announced positive sales everywhere but the U.S. and Canada despite the introductions of new burgers and new advertising.
Burger King reported a Q4 profit of $29.4 million, compared with a $93.9 million loss a year ago. Revenue declined 0.7% to $580.6 million. Systemwide same-store sales were +1.2% thanks to significant gains in Latin America (+9.7%) and Europe/Asia/Middle East (+7.3%).
In the U.S. and Canada, comp sales were -2%. Curiously, in a conference call with analysts this morning, CFO Daniel Schwartz attributed the domestic decline to an abundance of “competitive offers in the market.” In other words, consumers liked what other chains offered more than what Burger King offered?
The comp-sales decline stings because Burger King’s Q4 marketing effort included the Oct. 7 introduction of BK Toppers and Oct. 24 rollout of the Chef’s Choice burger. Price shouldn’t have been the problem: Although the Chef’s Choice is premium-priced at $4.99, the BK Toppers are just $1.99, so there was something new for any budget.
The chain also changed its advertising style, beginning in August. TV spots from new agency McGarryBowen are much more straightforward than previous shop Crispin Porter + Bogusky’s edgy but occasionally immature approach. The more adult tone didn’t help push comp sales positive, yet.
However, Steve Wiborg, president of Burger King’s North American operations, said domestic same-store sales were positive in the second half of Q4 and have been positive in 2012. Asked about new menu products—such as the Chicken Strips and Crispy Chicken Snack Wrap reported exclusively by BurgerBusiness.com—Wiborg would only say that the chain has interesting products to introduce in Q2.
New burgers didn’t help in Australia, either. Burger King’s Hungry Jack’s operation there underwent a major brand makeover in Q4, including the introduction of certified organic beef burgers. Still it saw negative Q4 comp sales. Elimination of its popular beet-topped Aussie Whopper may have been a factor. Calls for the burger’s return dot the chain’s Facebook page.
Schwartz told analysts that Burger King in the U.S. has focused on four priorities: marketing communications, menu, operations and image. He said the cost for the 20/20 design package has been cut in half to $250,000. Remodel commitments have been received for 1,017 restaurants, Wiborg said.