Stock of the Day
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Burger King (BKC)
Does Burger King Have the Right Recipe?
Consumers have been forced to make concessions during these volatile economic times. Some have cut back on shopping while others have given up expensive cars and homes. One thing consumers are not giving up is fast food. Chains such as Wendy's (WEN: Charts, News, Offers), Arby's, and McDonald's (MCD: Charts, News, Offers) have thrived during the heart of the recession. Although these companies may not have the healthiest options, people are still purchasing their meals and raising profits. Who doesn't enjoy a burger or some fries every once in a while? Burger King is the latest fast food chain to report an increase in fourth quarter profits. What factors are keeping the company's earnings in positive territory? Will BK be able to maintain this upswing in the future?
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| Stock Analysis |
The second-largest US hamburger seller said fiscal fourth-quarter earnings hit 43 cents a share, up from 37 cents a year ago. That beat Wall Street forecasts of 33 cents a share. Burger King may not be doing as well as its rival McDonald's, but the company is definitely competing for the number one spot. As cash-strapped consumers cut back on everyday purchases, many people are still wondering how these restaurants are not taking a large hit. The answer is quite simple. Fast food restaurants such as BK offer consumers a cheap alternative. Instead of going to the store and purchasing food at elevated prices, consumers are opting to go to fast food restaurants. Every penny counts during these times, so it comes as no surprise that these businesses are performing well. Another factor contributing to Burger King's success is the “on the go” lifestyle that many individuals partake in. People just don't have the time anymore to go to the grocery store and then come home and prepare a meal every night. The easier option is to swing by a fast food place and spend $10 to feed the whole family.
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Some analysts are concerned that businesses that excelled during the recession will suffer when the economy finally stabilizes. This may or may not happen depending on the business. Places like Burger King are basically woven into many societies and consumers are more than likely to continue flocking to these restaurants despite the condition of the economy. Predicting the future of any business is a hard task, but BK's progress will likely lead to more success in the near future. Although American sales suffered during the quarter as unemployment increased, Burger King continued to do well overseas. The company recently opened 388 restaurants outside of the United States and Canada.
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More Views on Burger King
Burger King's Reign Hurt by Weak Industry - Wedbush Morgan lowered estimates on disappointing data points.
BK Workers May Try to Cheat You – Some Burger King drive-thru employees have found a new way to make it appear that you are being served faster.
Lower Sales, but Higher Profits– Examines how Burger King was able to top estimates despite a dip in sales.
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Profile |
Click here to view a detailed profile of Burger King.
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