Burger King's net income fell 83 per cent in the third quarter as the world's second biggest hamburger chain sold off more of its restaurants to franchisees as part of a turnaround push. But the adjusted results topped Wall Street expectations, and shares advanced.
The private investment firm that owns a majority stake in the fast-food chain, 3G Capital, has been working to put the shine back in Burger King's crown since purchasing it in 2010. The firm has been shifting to an entirely franchisee-owned model to cut down on overhead costs and boost profit margins
The U.S.-based chain that has more than 12,600 locations worldwide.
For the quarter, Burger King said global revenue at stores open at least a year rose 1.4 per cent. In the U.S. and Canada, the figure rose 1.6 per cent.
CEO Bernardo Hees said sales at restaurants open at least a year are showing signs of picking up again for the fourth quarter. The sales figure is a key metric because it strips out the impact of newly opened and closed locations.
For the three months ended Sept. 30, net income fell to $6.6 million, or two cents per share. That compares with $38.8 million, or 11 cents per share, last year. Net income excluding one-items totalled 17 cents per share. Analysts expected 15 cents per share, according to FactSet.
Revenue fell 26 per cent to $451.1 million, but was above the $439.7 million Wall Street expected. Much of the revenue decrease came from Burger King selling restaurants to franchisees, which means the company no longer includes sales from those stores on its books. As of Sept. 30, Burger King said 95 per cent of its restaurants were owned by franchisees.
