Burger King's sales are on fire - here are 3 reasons why
Restaurant Brands International, the parent company of Burger King and coffee chain Tim Hortons, reported Tuesday that Burger King sales increased 6.2% in the third quarter, far surpassing analyst expectations and outpacing the rest of the industry.
McDonald's reported a worldwide sales gain of 4% in the most recent quarter.Here are three reasons why Burger King is on a hot streak.
1. Customers love spice
The introduction of two products, Fiery Chicken Fries and the Extra Long Jalapeno Cheeseburger, went a long way in helping drive sales growth for the quarter. Apparently, consumers were craving spice.
2. Careful menu decisions
Two years ago, Burger King announced a new strategy of focusing on launching fewer, more impactful products, as opposed to continually cycling through limited time offerings.
That meant doubling down on products that were near guaranteed hits, like Chicken Fries and its successful off-shoot, Fiery Chicken Fries.By focusing on what works, Burger King was able to recreate a hit, with same-store sales growth in the U.S. and Canada growing 5.2% despite lapping last year's successful Chicken Fries launch.
3. Franchisee-lead expansion
In September, the majority shareholder of Burger King France announced the proposed acquisition of fast-food hamburger chain Quick - a move that would eventually add more than 500 new Burger Kings in France, Belgium, and Luxembourg. Almost 100 percent of Burger Kings are owned by franchisees, so franchisee acquisitions are key to the chain's expansion.
Overall, the burger chain opened 141 net new locations in the third quarter, bringing the chain to a total of more than 700 new locations in the last year.
Despite these gains, the company's revenue of $1.02 billion declined from last year.
The chain's weakness is something that no executive can control: the Canadian dollar. Almost one year after the chain closed the transaction that made Restaurant Brands International a Canadian company, currency headwinds are negatively impacting the currency.