Burger King Holdings Inc., the second-largest U.S. hamburger chain, posted better than expected fourth-quarter profit, owing to late-night orders and sales from its breakfast menu.
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Net income in the fourth quarter was $36 million, or 26 cents per share, compared with a loss of $10 million, or 8 cents per share, a year ago. Excluding one-time costs, earnings were reported to be 29 cents a share, beating the analysts’ estimate by 2 cents.
Revenue rose 11 percent to $590 million, in line with average estimations.
Same-store sales or sales at restaurants open at least 12 months, rose 4.4 percent worldwide and 4.8 percent in the US and Canada.
In an attempt to take customers from bigger rival McDonald's Corp., Chief Executive Officer John Chidsey introduced the first fast-food discount breakfast in February and keeping U.S. restaurants open until late night.
Rising commodity costs were counterbalanced by sales in the morning and after-dinner hours that rose the fastest.
However, investors fear that the planned increase in capital spending this year would limit its ability to buy back stock sending the company’s shares down more than 4 per cent.
This year, Burger King intends to increase capital spending to between $120 million and $150 million, including an additional $20 million to $30 million for amendments of restaurants and another $20 million to $30 million for new company-owned restaurants and investments.
Burger King CFO Ben Wells said that the boosted investment in its restaurants "is expected to provide significant returns, increasing profitability and enhancing shareholder value."
The company also proclaimed its board of directors agreed to a $100 million share buyback program.
Shares of Burger King dropped 46 cents, or 1.8 percent, to $24.46 at 9:40 a.m. in New York Stock Exchange composite trading.
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