Tuesday, September 01, 2009
Rick Aristotle Munarriz :: Townhall.com Columnist
Time to Bury the Burger Chains?
by Rick Aristotle Munarriz
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I guess that's why they call Burger King (NYSE: BKC) the home of the Whopper.

The country's second-largest burger chain quietly ended a once-impressive streak this week, when it posted its first quarter of negative comps in more than five years. Global comps in its fiscal fourth quarter clocked in at a negative 2.4%, after positive showings in each of the 21 previous periods.

Burger King didn't acknowledge the end of its DiMaggio-esque streak in its release. The fast-food giant simply widened its timeline to brag about its streak of six consecutive fiscal years of positive comps.

The market bought it. Shares of Burger King jumped 6% higher yesterday, largely the result of the chain's ability to beat Wall Street's profit expectations.

I'm a bit more cynical. I'll have a Whopper Jr., but hold the sugar-coated bun. After all, what if there's more to this mortal slip? What if the recessionary run that found penny-pinching patrons flocking to value meals is toast?  

McDonald's (NYSE: MCD) is holding up considerably better at the register, but the trend is undeniable. After watching comps grow by 6.9% in April and 5.1% in May, same-store sales for the entire quarter that ended in June rose by only 4.8%.

July didn't get in the way of the downtrend, with comps up by just 4.3% -- and just 2.6% if we limit ourselves to domestic locations. One can only imagine how bad results at McDonald's would have been if it hadn't rolled out its premium McCafe coffees earlier this year, in a push to take on Starbucks (Nasdaq: SBUX) and raise the ceiling on beverage prices.

Burger fans aren't getting a whole lot of help elsewhere. Wendy's/Arby's (NYSE: WEN) posted a 0.4% decline in comps at its North American Wendy's restaurants in its latest quarter. Red Robin Gourmet Burgers (Nasdaq: RRGB) and Jack in the Box (Nasdaq: JACK) posted even lower comps in their latest quarters. 

The fresher the data, the more troublesome the results. CKE Restaurants (NYSE: CKR) recently posted sales metrics for the four weeks ended Aug. 10. Its burger brands Carl's Jr. and Hardee's posted comps declines of 5.2% and 1.6%, respectively. Continued...

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