Burger King Posts Strong U.S. Sales Growth as McDonald's Flounders
The Whopper maker is looking to new frontiers, introducing mobile payments and making a push into India.
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McDonald's Big Mac may not be selling like it used to, but Burger King's Whoppers are flying off the grill.
Burger King's same-store sales in the U.S. and Canada surged by a better-than-expected 3.6 percent during the third quarter, marking the best quarter of growth since 2012, while global same-store sales rose 2.4 percent. Last month, McDonald's reported a sharper-than-expected 3.3 percent drop both in the U.S. and worldwide during the same period.
Not all the news was good, however. Burger King posted a loss of $23.5 million, or 7 cents a share, during the quarter, mostly as a result of expenses related to its merger with Canadian coffee chain Tim Hortons. Excluding charges, the company earned 27 cents a share – in line with analysts' estimates.
Total revenue hit $279 million, a $3 million increase from the same quarter last year, but short of the $282 million analysts polled were expecting.
Instead of overloading the menu with new items, Burger King has focused on launching "fewer, more impactful products," such as the reintroduced Chicken Fries. Meanwhile, franchisees at McDonald's have blamed the slump in part on a lack of leadership and an overcomplicated menu, in contrast to Burger King's uncluttered yet fruitful product pipeline.
The coming months look like they will only bring more growth for the Whopper maker as it expects its merger with Tim Hortons to close in late 2014 or early 2015. The deal, which critics have decried as a money-saving scheme, cleared the first of its regulatory hurdles last week.
Also in the works: mobile payments. On Monday, PayPal announced that the online payment service teamed up with Burger King to integrate mobile payment into the chain's official app. Later this quarter, customers will be able to pay for their orders with PayPal with an update to the existing Burger King app.
Burger King's PayPal partnership come on the heels of McDonald's announcing in September that it would accept Apple Pay in all U.S restaurants.
In other news, Burger King is opening its first restaurant in India on Nov. 9. The chain's Indian restaurants will have the distinction of not serving beef, to better fit the needs of customers in a country where the majority of citizens are Hindu or Muslim. Instead, customers can order chicken, mutton and vegetable versions of the Whopper.