Burger King Worldwide Inc, the third-largest U.S. hamburger chain, on Friday posted higher-than-expected quarterly profit, helped by cost cuts and new holiday sweets, premium sandwiches and special deals that boosted restaurant sales in the United States and Canada.
Total fourth-quarter operating costs and expenses plunged more than 40 percent to $292.6 million as the fast-food company spent less on everything from food and packaging to payroll and rents.
At the same time, Burger King tempted diners with gingerbread milkshakes, chicken parmesan sandwiches and a 55th anniversary Whopper hamburger deal.
The results landed as Burger King and fast-food rivals including McDonald's Corp and Wendy's Co fight hard for customers, who reeled in spending after the U.S. payroll tax increase in January cut take-home pay.
"We did see the environment become a little more challenging with consumers having a little less disposable income, weather conditions being a little bit worse and competition focused a little bit more on value," Burger King Chief Financial Officer Daniel Schwartz told Reuters.
Burger King has been broadening its appeal, especially among women and health-conscious consumers, with a barrage of new menu items and the company will keep it up, Schwartz said.
While McDonald's takes advantage of its massive size to negotiate better deals for everything from national advertising to beef, smaller chains like Burger King and Wendy's can be more agile when it comes to shaking up menus to whet diners' appetites.
Burger King on Friday reiterated its plans to use a mix of low-price and premium foods to drive profitable traffic to its restaurants.
During the fourth quarter, Burger King's Whopper anniversary deal offered customers who bought one full-price Whopper a second for 55 cents. A new limited-time deal offers Whopper Jr sandwiches for $1.29 - 40 cents less than the suggested retail price.
The company that recently introduced $1 Cinnabon Minibon Rolls also is switching to a new brew from Starbucks Corp's Seattle's Best Coffee brand and debuting a lineup of high-margin coffee drinks, including "cafe-quality" lattes.
The Miami-based chain said fourth-quarter net income nearly doubled to $48.6 million, or 14 cents per share.
On an adjusted basis, Burger King earned 23 cents per share. Analysts on average were expecting profit of 15 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell 30 percent to $404.5 million, but beat analysts' estimates of $375.31 million. Excluding the impact of unfavorable foreign exchange rates and sales of restaurants to franchisees, the company said revenue grew 5.6 percent.