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Burger King steers away from special menus as profit beats

An employee prepares a food order on the opening day of the Burger King restaurant at the Marignane airport hall December 22, 2012. REUTERS/
An employee prepares a food order on the opening day of the Burger King restaurant at the Marignane airport hall December 22, 2012. REUTERS/

(Reuters) - Burger King Worldwide Inc , known for its Whopper hamburgers, on Monday said it plans to introduce fewer seasonal and limited-time menu items in a bid to help restaurant operators improve profits and speed up service.

Burger King, which reported a better-than expected third-quarter profit, has recently added a string of attention-getting products ranging from bacon sundaes and a summer BBQ menu to low-fat "Satisfries" french fries, which have become a permanent menu item.

The company is now "focused on introducing fewer, more impactful products. A good example of this is the recent launch of Satisfries," Chief Executive Daniel Schwartz said on a conference call with analysts.

Shares in the fast-food chain jumped 5.6 percent to $20.87 in early trading on the New York Stock Exchange after the profit report, helped by lower costs from selling restaurants to franchisees.

The third-largest U.S. hamburger chain, behind McDonald's Corp and Wendy's Co , said expenses fell about 90 percent, mainly because it sold more than 500 restaurants in the last year to franchisees.

Sales at established restaurants were up 3.7 percent for the Asia Pacific region including China, where rivals McDonald's and KFC parent Yum Brands Inc have seen sales soften. Analysts had expected growth of 2.7 percent for that region, according to Consensus Metrix.

That result was offset by weakness in other parts of the world.

Burger King said same-restaurant sales in United States and Canada fell 0.3 percent due to continued weakness in consumer spending and intense pricing competition among fast-food chains. Analysts had expected a rise of 0.8 percent.

This was despite the launch of "Satisfries" late last month drawing more diners to U.S. restaurants during the last week of September. Executives said the U.S. government shutdown in October did not result in a meaningful impact to the business.

Burger King also reported a softer-than-expected 2.4 percent rise in sales in its Europe, Middle East and Africa business.

Burger King's third-quarter global same-store sales growth of 0.9 percent matched that of McDonald's, which reported last week and warned that global sales would be relatively flat in October because of stiff competition and a weak economic recovery.

Burger King's net income grew to $68.2 million, or 19 cents per share, from $6.6 million, or 2 cents per share, a year earlier, when it owned and operated hundreds more restaurants.

On an adjusted basis, it earned 23 cents per share, topping the average analyst estimate of 21 cents, according to Thomson Reuters I/B/E/S.

With almost all of its restaurants now franchised, total sales fell about 40 percent to $275.1 million.

Shares in Burger King are up about 24 percent this year.

(Reporting by Lisa Baertlein in Los Angeles and Aditi Shrivastava in Bangalore; Editing by Kirti Pandey, Saumyadeb Chakrabarty and Krista Hughes)

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