Burger King net income drops a whopping 83 percent

Burger King said Monday that its third quarter net income dropped 83 percent. Much of the Burger King revenue hit came from the company selling company-owned stores to franchisees.

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    In this 2010 file photo, patrons enjoy a meal at a Burger King in Springfield, Ill. Burger King's net income dropped 83 percent in the third quarter, due to the strengthening dollar and the selloff of company-owned stores to franchisees.
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Burger King said Monday its third-quarter net income fell 83 percent as revenue was hurt by the stronger dollar, but adjusted results topped expectations.

The No. 2 worldwide fast-food chain reported results from its first quarter since returning to being a public company.

"We completed our first full quarter as a public company with continued positive momentum despite the challenging global economic environment," said CEO Bernardo Hees.

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For the three months ended Sept. 30, net income fell to $6.6 million, or 2 cents per share. That compares with $38.8 million, or 11 cents per share, last year. Net income excluding one-items totaled 17 cents per share. Analysts expected 15 cents per share, according to FactSet.

Revenue fell 26 percent to $451.1 million. Analysts expected revenue of $439.7 million.

Much of the revenue hit came from the company selling company-owned stores to franchisees. Burger King has struck deals to expand in China and Russia through partnerships with franchisees. During the quarter it refranchised 221 restaurants, including 182 in the U.S. and 39 abroad.

Revenue from company-owned stores fell 42 percent to $244.6 million from $422.8 million. Franchise and property revenue rose 12 percent to $206.5 million from $184.9 million.

In the U.S. and Canada, revenue in restaurants open at least a year rose 1.6 percent. The measure is key because it excludes stores that open or close during the year.

After losing market share to rivals, the U.S.-based company was purchased in 2010 by private equity firm 3G Capital. Since then, 3G has been working to trim expenses and revive the struggling chain. Burger King returned to the public markets soon after, debuting on the New York Stock Exchange in June.

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