Burger King Profit Plummets 17 Percent

Burger King Holdings Inc.'s fourth-quarter net income fell nearly 17 percent as sales slipped and costs for ingredients and packaging climbed.

The fast-food chain said Tuesday that it earned $49 million, or 36 cents per share during the period that ended in late June. That compares to last year's net income of $58.9 million, or 43 cents per share.

The company also got a smaller tax benefit than last year.

Revenue slipped 1 percent to $623 million.

The earnings beat Wall Street forecasts, but revenue fell short. Analysts surveyed by Thomson Reuters expected the company to earn 34 cents per share with revenue of $635 million.

The earnings were "better-than-feared" while revenue was sluggish, R.W. Baird analyst David E. Tarantino told investors in a research note.

Sales at restaurants open at least a year slid for the fifth consecutive quarter. That key indicator of a restaurant chain's performance excludes growth at stores that open or close during the year. The measure fell 0.7 percent around the globe and 1.5 percent in the U.S. and Canada.

While the declines weren't as steep as those recorded in previous quarters, Burger King continued to lag its bigger competitor, McDonald's Corp.

Burger King has been particularly vexed by the economic downturn as layoffs and high unemployment hurt its core demographic of young men. Its tried to compensate by expanding its menu with items that appeal to both budget-conscious customers and those willing to spend more.

On Tuesday, the company said that effort is showing some success as customers in North America bought its $1 menu items like a breakfast muffin and a double cheeseburger. But customers also gravitated toward some more expensive dishes too, like the company's breakfast bowl, Whiplash Whopper and ribs.

Burger King said it expects worldwide sales from restaurants open at least a year to continue to face pressure next year because of the economy, something Janney Capital Markets analyst Mark Kalinowski said could also hurt earnings per share.

"We believe that same-store sales improvement is not likely in the near term ... given continued high unemployment that is particularly detrimental to Burger King's core customer base, the young male," he wrote in a research note to investors.

For the full year, Burger King earned $186.8 million, or $1.36 per share. That's down 7 percent from last year's net income of $ 200.1 million, or $1.46 per share.

Full-year revenue slipped 1 percent to $2.50 billion.

"In fiscal year 2010, we faced sustained levels of high unemployment and a fragile global economy that combined made this one of the toughest operating environments in recent history," Chairman and CEO John Chidsey said in a statement.

Burger King is based in Miami and has more than 12,000 restaurants around the globe.

Its shares fell 8 cents to $16.54 in morning trading.