Burger King's Weather Problems

| About: Burger King (BKC)

Burger King Holdings Inc. (BKC), the second largest hamburger chain, hinted that adverse weather conditions in the Central and Eastern part of the U.S. dragged down the U.S. & Canada segment comparable sales.

Comparable sales for the segment dropped 8.2% in the two-month period ended February 28, 2010, versus an increase of 3.1% in the prior-year period due to the presence of 75% of the segment’s company- and franchise-owned restaurants in the affected region.
Miami, Florida-based Burger King notified that bad weather hurt the U.S. & Canada segment’s comparable sales metric by about 3%.
Although some signs of improvement in sales and traffic were witnessed in the first week of March, Burger King has forecasted a fall in third-quarter 2010 revenue, company restaurant margin and income from operations from the year-ago quarter in the U.S. & Canada segment.
Worldwide comparable sales for the two-month period shrunk 5.4% compared with a rise of 2.5% in the same period last year. Comparable sales at other geographic segments were: EMEA/APAC segment was up 0.6% and Latin America segment was down 2.3%.
The fast-food restaurant operator reported weaker comparable sales results compared with its nearest rival McDonald’s Corporation (NYSE:MCD), where global comparable sales rose 4.8% in February 2010 after climbing 2.6% in January.
The quick service restaurant operators are waging a price war to lure budget-constrained consumers, who now prefer to dine out less given the economic constraints. Recent data from the NPD Group, a market research firm, pointed out that traffic at fast food restaurants dropped 3% in 2009.
Burger King currently operates more than 12,000 restaurants world-wide.

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