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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Longtime Fool contributor Rick Munarriz lives in Burger King's hometown of Miami, and he hits "the BK lounge" often. He owns no shares in any of the companies in this and is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.