Burger King announced a surprisingly strong beginning to 2012, reporting positive sales gains for most of its system. The U.S./Canada division had comp sales growth of +4.2% for the quarter that ended March 31, 2012 (compared with -2.0% for Q4 and -6.0% a year ago). This is the chain’s best showing in North America in two years. But while North America still accounts for 60% of all Burger King restaurants, its footprint here is declining: the chain registered a net loss of 58 stores in the U.S. and Canada over the past year.
Interestingly, Burger King—owned by a Brazilian equity firm but which has sold a minority stake to British-based investment vehicle Justice Holdings Ltd.—is increasingly driven by unit growth and sales gains in Latin America and Europe. Latin America comp sales were +9.9% in Q1; EMEA (Europe/Middle East/Africa) sales were +6.6%.
As reported here earlier, Burger King has added an innovative line of “Creole-style” burgers, called Churrasquito in Argentina. In Chile it offers a double-patty Premium Onion burger topped with grilled onion, thin-sliced ham and Cheddar.
Asia/Pacific (APAC) comp sales were the only disappointment at -2.8%. CFO Daniel Schwartz said much of the decline was due to troubles in Australia, where Burger King operate as Hungry Jack’s. Like Burger King in the U.S., Hungry Jack’s has overhauled its menu and is trying to make its brand image more adult. Removing the popular Aussie Whopper as part of the menu revamp generated enough negative feedback that it recently brought the beet-topped burger under a new name, Aussie XT.
Schwartz emphasized that Burger King’s solid Q1 sales came before the April introduction of its 13-item revised menu and its new TV campaign with Jay Leno, David Beckham, Sofia Vergara and others. Steve Wiborg, president of Burger King North America, wouldn’t quantify how well the campaign is boosting sales other than to say the chain’s sales momentum has continued into Q2.