I guess that's why they call Burger King
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?
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
Burger fans aren't getting a whole lot of help elsewhere. Wendy's/Arby's
The fresher the data, the more troublesome the results. CKE Restaurants
There are many possible explanations for the lackluster performance at the burger huts:
- Consumers are tiring of fast food after a couple of years of overexposure.
- Pesky unemployment rates are keeping folks home with time to prepare their own meals.
- Patrons are getting smarter about picking at the dollar-menu items without falling for the premium components of barbell pricing.
- With consumer confidence showing signs of life, the hungry are gradually migrating back to the casual-dining chains.
It doesn't matter what theory you subscribe to: The trend is undeniable. As investors, it's time to take a more cautious approach with the burger flippers.
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