Sunday, February 7, 2010
Burger King The Next Bankruptcy?
The Whopper is having a shocker. The world's second-largest hamburger chain, Burger King, is struggling to arrest a seemingly unstoppable erosion in sales and is under fire over an unimaginative menu, conflicts with franchisees and a "narrow philosophy" of sticking to flame-grilled meat sandwiches and fries.
The Miami-based multinational today trumpeted a 13% rise in quarterly profits to $50.2m (£31.7m). But Wall Street is worried about a dismal underlying trend – for the third consecutive quarter, like-for-like sales in Burger King's 12,078 restaurants were down with a drop of 2% globally and 3.3% in north America.
While its larger rival, McDonald's, has prospered from families "trading down" in the recession, Burger King has been floundering. Its customers, particularly in the US, tend to skew heavily towards poorer economic groups, including a large proportion of black or Hispanic diners, who have been hit particularly badly by unemployment. Burger King's shares have slumped by 19% over the last year, while McDonald's stock has surged by 12%.