Unit growth and penetration
Burger King (BKW) opened a net of 131 new restaurants in the second quarter, making for a total net new restaurant count of 682 restaurants in the past 12 months.
South Africa has contributed significantly to the growth, with a joint venture partner that supplies 700,000 beef patties monthly. Burger King stated that this joint venture will also help accelerate expansion into Sub-Saharan Africa.
The company reduced its company-operated units by 96% to 52 in the second quarter of 2014 from 1,285 restaurants in the first quarter of 2012. In comparison, the number of franchise units grew by 22% from 11,249 to 13,756, bringing the total count of restaurants worldwide to 13,808.
McDonald’s (MCD), in contrast, has over 34,000 restaurants. Yum! Brands (YUM) has over 40,000 restaurants. Both chains, along with popular restaurant chain Chipotle Mexican Grill (CMG), are part of the Consumer Discretionary Select Sector SPDR Fund (XLY).
Restaurant visit program
Opening a new location also means increased traffic. Burger King (BKW) launched its Restaurant Visit Program (or REV) at the beginning of the year. Under this program, the company has coaches that work with a restaurant manager and the team by sharing best practices.
The company hopes to improve system-wide consistency with its REV program. “System-wide” includes restaurants owned by the company as well as franchises.
To ensure the success of the REV program, auditing by outside specialists analytically assesses performance to set a benchmark for the company’s operations.
The company stated that this REV program has improved guest satisfaction by 11% and improved the speed of service by 9%.
Next, we’ll cover management guidance, digital strategy, and other concerns for Burger King.
Burger King (BKW) reported its earnings on August 1 before the market opened. After the market opened, shares began trading at $26.7—which was 2% up from the previous day’s closing of $26.3.
Burger King (BKW) introduced premium products internationally that should complement its menu. It launched a Hashbrown Whopper in Korea, a Barbecue Bacon Whopper in the U.S., and a Mexican Whopper in Spain.
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