Burger King's Franchising Efforts Pay Off Big in 3Q Burger King's net income surged in the third quarter due to its franchising strategy and heavily-hyped products.
By Kate Taylor
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Burger King's third quarter net income surged to $68.2 million from $6.6 million a year ago, due in part to its franchising strategy over the last 12 months.
In the past year, the burger chain refranchised 519 company-owned restaurants. As a result, revenues declined 39.6 percent to $275.1 million, but net income increased tenfold.
Approximately 99 percent of Burger King restaurants are owned and operated by independent franchisees. Since 2010, when 3G Capital purchased the company, Burger King has been selling more restaurants to franchisees, reducing overhead costs. Burger King collects franchise fees from these restaurants instead of booking sales
"We grew comparable sales across all three international regions and opened 133 net new restaurants globally," said CEO Daniel Schwartz in a statement.
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The completion of refranchising 19 restaurants in Spain at the end of October marked the end of Burger King's global refranchising initiative. While sales in U.S. and Canada grew 0.3 percent, international sales grew 2.4 percent in Europe, the Middle East and Africa, 2.1 percent in Latin America and the Caribbean, and 3.7 percent in Asia Pacific.
The burger chain additionally attributed third-quarter success to heavily hyped new products, such as Satisfries, its reduced-fat fry option. "We believe that new products like this, combined with our focus on improving operations will enhance the guest experience and drive increased restaurant profitability," says Schwartz.
Burger King, founded in 1954, operates over 13,000 restaurants in 91 countries worldwide.
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