Burger King's first-quarter earnings more than doubled even though revenue fell, as the fast-food chain trimmed several restaurant-related expenses.
The Miami-based company had warned earlier this month that sales at established restaurants were expected to fall during the quarter, and they wound up declining 1.4 per cent. That includes a 3 per cent drop in the United States and Canada.
Burger King said competition and a strong first quarter last year hurt U.S. and Canadian sales comparisons to this year's quarter. But it said sales from those countries rallied in March due in part to promotions like the $1.29 Whopper Jr.
The company has been adjusting its strategy to focus on more menu deals like that. McDonald's has been particularly aggressive in touting its Dollar Menu to boost traffic at a time when the restaurant industry is barely growing. Wendy's also revamped its value menu recently.
Overall, Burger King Worldwide Inc. said Friday its net income rose to $35.8 million, or 10 cents per share, in the quarter that ended March 31. That's up from $14.3 million, or 4 cents per share, in the previous year's quarter when it was still private.
The company previously said adjusted earnings, which don't count certain one-time expenses, totalled 17 cents per share in the most recent quarter.
Revenue fell about 42 per cent to $327.7 million. Analysts expected $305.8 million, according to FactSet.
Total restaurant expenses, which include things like food costs and payroll expenses, fell nearly 70 per cent in the quarter to $108.1 million.
Burger King has been undergoing a revamp since it was purchased and taken private in 2010 by 3G Capital, a private investment firm run by Brazilian billionaires. The company has been selling more restaurants to franchisees, a move that lowers overhead costs. Instead of booking sales from those restaurants, that means Burger King would collect franchise fees instead.
In the first quarter, the company's restaurant revenues tumbled 69 per cent to $121.1 million, but its franchise and property revenues rose 19 per cent to $206.6 million. The company sold 33 company-owned restaurants in the U.S. and Canada to franchisees during the quarter for $9.3 million.
Burger King said about 97 per cent of its restaurants are owned and operated by independent franchisees.
The company's selling, general and administrative expenses also fell about 30 per cent to $66.7 million in the quarter.
3G Capital also has slashed costs, signed international expansion deals and changed the U.S. menu to appeal to a wider audience. The moves came ahead of the company's return to public trading on the New York Stock Exchange last June.
Burger King says its efforts to revamp the brand remain on track. But CEO Bernardo Hees, a 3G partner, is moving on later this year to head Heinz, another 3G investment. Chief Financial Officer Daniel Schwartz, also a 3G partner, will succeed Lees as CEO at Burger King.
Burger King shares rose 21 cents, or 1.2 per cent, to close at $18.27 Friday. They have traded between $12.91 and $20.20 since relisting.