BK dodges the slowdown to post 29% profit gain

MIAMI Shrugging off macroeconomic pressures and other challenges that have saddled even the strongest restaurant companies, Burger King Holdings Inc. on Thursday reported a 29-percent year-to-year increase in its second-quarter profit on revenues that jumped 10 percent to $613 million.

The No. 2 burger chain posted a global same-store sales gain of 4.5 percent and a domestic same-store sales jump of 4.2 percent for the December-ended quarter. The news came the same week that quick-service segment leader McDonald’s posted flat domestic same-store sales for December and a 3.3-percent increase for the quarter. Coffee giant Starbucks recorded a 1-percent dip in domestic same-store sales for the quarter, its worst domestic report in the chain’s history.

Burger King said it was able to buck industry trends with sales and marketing surrounding its Whopper sandwich, new Homestyle Melts and a SpongeBob SquarePants promotion. The Miami-based company, which operates or franchises about 11,300 restaurants, also cited its value menu and aggressive advertising, like the Whopper Freakout campaign that is expected to continue to air in the current quarter, along with promotional partnerships with the NFL and family-driven brands like Snoopy and Cabbage Patch Kids.

“Our results this quarter substantiate our ability to outperform the restaurant industry despite macroeconomic pressures,” said chief executive John Chidsey. “The third quarter is off to a great start with strong January comps driven by traffic.”

The company said it would exceed its 2008 per-share earnings growth outlook — a rare announcement lately, as most companies have slashed their outlooks in response to the sluggish consumer economy and continued cost pressures. Burger King said it plans to increase earnings per share growth for fiscal 2008 “in excess” of 15 percent from the year earlier. Previously, it expected an increase between 12 percent and 15 percent.

For the quarter ended Dec. 31, net income totaled $49 million, or 36 cents per share, compared with net income of $38 million, or 28 cents per share, in the same quarter a year ago.

Systemwide trailing 12-month average unit volumes increased 8 percent during the second quarter to $1.25 million, the company said. Corporate restaurant margins, on a global basis, remained unchanged from a year ago, Burger King added, as strong same-store sales were able to offset increased costs and investments. In the United States, margins increased 0.3 percent, the company reported.

Burger King also reiterated its anticipation of positive net restaurant growth this fiscal year in the United States and Canada, marking the first time in six years the chain would not report more closures than openings in those regions.