Diana 2-28-2008 09:49
Burger King banks on 'broad-shouldered' menu
MIAMI (AP) -- Burger King, the world's No. 2 hamburger chain, saidWednesday it plans to start selling several new items this year,including two specialty Whoppers, a wrap, smoothies and even macaroniand cheese for children.
In a meeting with analysts, Burger KingHoldings said it expects earnings per share to grow by 15% this fiscalyear and described strategies that include opening more newrestaurants, employing a new broiler that cooks better burgers, andcontinuing to run advertisements with pop culture tie-ins to keep thebrand fresh in the minds of fast food diners.
Burger King hasposted 16 straight quarters of growth in same-store sales, or sales instores open at least a year. Since going public in May 2006, BurgerKing has introduced late night hours, a breakfast value menu and aspicy chicken sandwich, while heavily marketing its flame-broiledburger concept and its "Have It Your Way" mantra.
But Burger Kinghas space for growth, as it has roughly one-third of the restaurantsthat industry leader McDonald's does, and was a late-bloomer inintroducing a value menu and late night hours.
"We think this is just the beginning ... there's much more room to grow," Chief Executive John Chidsey said Wednesday.
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The Miami-based companysaid it hoped to lure customers with several new products in 2008. Someof them, such as grilled chicken tenders and apple fries - fresh applescut to look like French fries - already have been made public.
Thenew items discussed Wednesday include an Angry Bacon and Cheese Whopperwith spicy, crispy onions, and the Indy Whopper, which will have baconand pepper jack cheese and will be promoted together with the newIndiana Jones movie this summer. (A regular Whopper with no bacon orcheese has 670 calories and 39 grams of fat, according to Burger King'sWeb site.)
Also in the works are a BK Wrapper, three new flavorsfor its iced coffee line, a steakhouse burger, smoothies and even Kraftmacaroni and cheese.
"What you see is a construct here that is avery broad-shouldered menu," said Russ Klein, Burger King's presidentof global marketing and innovation.
Klein said Burger King'sbatch broiler, which the company says cooks better hamburgers whilesaving on utility costs, will be installed in all restaurants by June2010.
Klein also said Burger King will keep using promotions withmovie, video game and sports tie-ins, citing past success withadvertising blitzes using The Simpsons, Transformers, the NFL,Spider-Man 3 and the Xbox game system.
"Advertising is becoming more borderless and pan-regional around the world," Klein said.
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Burger King is targetingwhat the company calls the "superfan," whose demographics includepeople 18 to 49 years old who patronize Burger King five times a monthand eat fast food 16 times a month. Klein said an increase from anaverage of five to six "superfan" visits a month would increase trafficby 9%.
"What defines them is that they are the most prolific eaters-out in the market," Klein said. "They're time starved."
Chidseysaid Burger King still plans to open a net of 300 restaurants this yearand remodel existing restaurants. Eighty % of the chain's restaurantgrowth is coming from outside the U.S. as it competes with McDonald's ([url=http://money.cnn.com/quote/quote.html?symb=MCD&source=story_quote_link]MCD[/url], [url=http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/848.html?source=story_f500_link]Fortune 500[/url]), Chidsey said.
Fifteento 20% of restaurants in Burger King's U.S. system have been remodeledor "re-imaged" to date, Chidsey said. Major areas of growth willinclude Germany, Italy, Spain and Turkey, the company said.
BurgerKing also expects earnings per share to grow by at least 15%, Chidseysaid. The company said it expects 2008 earnings to be $1.28 per share.Analysts forecast a profit of $1.31 per share. Burger King's fiscalyear ends in June.
Among the top challenges for Burger King tomaintain its momentum are fierce competition for people who like to eatout and rising costs of commodities such as beef, chicken and cheese.The company said 2 to 3% growth in same-store sales would help itoutrun commodity prices.
Burger King operates more than 11,300restaurants. About 90% of its restaurants are owned and operated byindependent franchises.
Burger King's ([url=http://money.cnn.com/quote/quote.html?symb=BKC&source=story_quote_link]BKC[/url]) shares fell 70 cents, or 2.6%, to $25.96 in trading Wednesday. They have traded in a 52-week range of $20 to $29.19.