Burger King says hot dogs helped boost US sales

28-Apr-2016 - Canada

Burger King's sales rose during the first quarter, boosted by the addition of hot dogs to the menu in the U.S.

Parent company Restaurant Brands International Inc. said Burger King's global sales jumped 4.6 percent established locations, including a 4.4 percent increase in the U.S. and Canada.

CEO Daniel Schwartz declined to specify how much of the sales increase in the flagship U.S. market was driven by an uptick in customer visits, versus higher spending per visit. But he said the hot dogs, introduced in February, were helping bring in new customers and driving up spending among existing customers who tack hot dogs onto their orders.

Sales at established locations are a key indicator of health because they strip out the volatility of store openings and closings.

Burger King's sales increase in the U.S. comes as competition has intensified in the fast-food industry, with many players fighting for customers with value deals. Wendy's has been touting a "4 for $4" deal, while McDonald's rolled out its "McPick 2" offering. On Thursday, Dunkin' Donuts said it planned to introduce its first national value deal in several years, given the heightened competition among the burger chains.

Given the crowded U.S. fast-food landscape, established players such as McDonald's and Burger King generally have a tougher time driving up customer visits, and need may need to rely more heavily on getting existing customers to spend more. That can be achieved through price hikes, or offering items people tack onto existing orders, as with Burger King's hot dogs.

McDonald's has also said that all-day breakfast is helping sales because some customers will get an Egg McMuffin in addition to their regular lunch orders. Last week, McDonald's said its U.S. sales rose 5.4 percent at established locations during the first three months of the year. It also declined to say how much of that was driven by spending, versus an uptick in customer visits.

Restaurant Brands International, based in Oakville, Ontario, also said global sales rose 5.6 percent at established Tim Hortons locations.

For the quarter ended March 31, Restaurant Brands earned $50 million, or 21 cents per share. It said earnings excluding one-time items were 30 cents per share. Analysts expected 21 cents per share, according to Zacks Investment Research.

Total revenue slipped to $918.5 million in the period, which the company said was hit by unfavorable currency exchange rates. Analysts expected $926.4 million, according to FactSet.

Shares of Restaurant Brands fell 2.2 percent to $41.46 in premarket trading.

Restaurant Brands shares have risen 14 percent since the beginning of the year. The stock has increased 4.5 percent in the last 12 months. (dpa)

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