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Burger King: North American same-store sales rise 3.7%

Burger King: North American same-store sales rise 3.7%

Results in stark contrast to competitor McDonald's negative results

Burger King reported Monday a same-store sales bump of 3.7 percent in North America and 2.7 percent globally for July and August, compared with the previous year, according to a Securities and Exchange Commission filing.

Soon-to-be sister chain Tim Hortons reported preliminary same-store sales increases of 3.6 percent at its Canadian restaurants and 7 percent U.S. locations for its third quarter to date.

Both companies said they disclosed the results in connection with debt financing related to the merger of Tim Hortons Inc. and Burger King Worldwide Inc. by Burger King’s parent company, private-equity firm 3G Capital Management.

Burger King’s announcement comes in the wake of a dismal same-store sales report from rival McDonald’s, which last week said global same-store sales fell 3.7 percent in August — its worst results in a decade — following a 2.5-percent decrease in July. McDonald’s said U.S. same-store sales fell 2.8 percent in August and 3.2 percent in July.

Wendy’s most recently said same-store sales for its second quarter ended June 29 rose 3.1 percent at franchised locations and 3.9 percent at corporate units. Wendy’s does not report monthly same-store sales.

Piper Jaffray senior research analyst Nicole Miller Regan hailed Burger King’s results, which she called better than expected. She also praised the operator’s approach to expansion.

“The evolution of the brand’s master franchisee development approach and the reach of the brand’s international scope via new unit development should continue to result in strong cash flow generation and an increasing focus on shareholder returns,” Regan said.

In the past year, Burger King has signed master franchisees in France and India with the rights to sub-franchise throughout those countries.

According to YouGov BrandIndex, which measures brand perception among the public, Burger King has taken a public-image hit in the wake of its forthcoming merger with Tim Hortons, which includes moving the new company’s headquarters to Canada. Media reports accused Burger King of moving to lower its tax bill, which Burger King denies.

BrandIndex said Burger King’s buzz score fell from +13 to -1 — making it even with McDonald’s.

BrandIndex measures buzz scores by recording surveyed consumers’ responses to the question, “If you’ve heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative?” Scores range from +100 to -100, with a score of 0 being neutral.

According to BrandIndex, the acquisition of Tim Hortons could help make Burger King a major player in the coffee segment. While the Canadian-based coffee-and-doughnut chain has only a third of the brand recognition in the U.S. that Starbucks or Dunkin’ Donuts has, it scores reasonably well in terms of quality and value.

Tim Hortons quality score is +23, compared with +28 for Starbucks and +31 for Dunkin’ Donuts. In the past year, it has twice surpassed Starbucks on that metric.

In terms of value, Tim Hortons falls between the coffee giants, at +15. Dunkin’ Donuts’ score is +22 and Starbucks is -20.

Contact Bret Thorn at [email protected].
Follow him on Twitter: @foodwriterdiary

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