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Burger King said Monday its third-quarter net income fell 83 percent as revenue was hurt by the stronger dollar, but adjusted results topped expectations.
The No. 2 worldwide fast-food chain said during the quarter, its first since returning to being a public company, revenue in stores open at least one year rose 1.6 percent in the U.S. and Canada, as it lost some business from value-based customers.
Competition in the fast-food industry has been intensifying, with rivals on the one hand like McDonald's Inc. stepping up its dollar menu and other value-oriented offerings. On the higher-end side, customers are increasingly flocking to newer chains such as Panera Bread Co. and Chipotle Mexican Grill Inc., which offer higher-quality food for a little more money.
To combat this, Burger King has rolled out a new "Taste Is King" slogan in the U.S., as well as numerous limited-time menu offers aimed at bringing in customers.
"We completed our first full quarter as a public company with continued positive momentum despite the challenging global economic environment," said CEO Bernardo Hees.
For the three months ended Sept. 30, net income fell to $6.6 million, or 2 cents per share. That compares with $38.8 million, or 11 cents per share, last year. Net income excluding one-items totaled 17 cents per share. Analysts expected 15 cents per share, according to FactSet.
Revenue fell 26 percent to $451.1 million. Analysts expected revenue of $439.7 million.
Much of the revenue hit came from the company selling company-owned stores to franchisees. Burger King has struck deals to expand in China and Russia through partnerships with franchisees. During the quarter it refranchised 221 restaurants, including 182 in the U.S. and 39 abroad.
Revenue from company-owned stores fell 42 percent to $244.6 million from $422.8 million. Franchise and property revenue rose 12 percent to $206.5 million from $184.9 million.
In the U.S. and Canada, revenue in restaurants open at least a year rose 1.6 percent, helped by demand for Burger King's Summer BBQ and chicken sandwiches. The measure is key because it excludes stores that open or close during the year.
After losing market share to rivals, the Miami-based company was purchased in 2010 by private equity firm 3G Capital. Since then, 3G has been working to trim expenses and revive the struggling chain. In April, Burger King unveiled its biggest-ever menu revamp, along with a star-studded advertising campaign.
Burger King returned to the public markets soon after, debuting on the New York Stock Exchange in June.