Expenses eat into earnings
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A boost in sales worldwide helped Burger King post a 2% increase in fiscal first-quarter profit Friday, but higher food costs and other expenses still took a bite out of earnings.
The nation’s No. 2 hamburger chain reported increases in commodity, remodeling and acquisition start-up costs, leading the chain to miss Wall Street’s profit estimates.
Higher commodity costs have been a problem for virtually all restaurant chains, with the price of beef, chicken, cheese and cooking oil rising.
Chief Executive John Chidsey said the company’s “commodities basket” grew 17% in the quarter -- a hefty increase that Burger King partially offset by raising prices on selected items in some markets.
Miami-based Burger King Holdings Inc. said net income rose to $50 million, or 36 cents a share, in the quarter ended Sept. 30, from $49 million, or 35 cents, a year earlier. Burger King earned 38 cents per share excluding charges, one penny shy of analysts’ estimates, according to Thomson Reuters.
Revenue increased 12% to $674 million. Analysts had predicted $667.6 million.
Shares fell 37 cents, or 1.8%, to end at $19.88.
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