KEY POINTS:
Burger King, now making up for years of soggy growth and a decaying global business, is plotting an expansion into Asia in the next five years to narrow the gap with arch-foe McDonald's.
Chief executive John Chidsey said the world's second-largest hamburger chain was confident of beating its
target of 15 per cent net profit growth next year, riding a resurgent brand and a nascent international drive.
The Miami-based firm hoped to open as many as 300 outlets across China in five years as part of a regional expansion that would help the company rake in half its revenue from non-US markets in four to five years, he said.
Indeed, Burger King is finally returning to markets such as Japan, from which it withdrew years ago, pummelled by heated competition from the likes of Yum Brands' KFC.
"Asia, certainly in the next two to three years, will become the most important and fastest-growing piece of our business," Chidsey said in Hong Kong.
"In five years, China will be a big part of Asia, but so will Japan, so will Hong Kong and so will Indonesia."
Burger King Holdings operated 11,290 outlets worldwide as of September 30 but with 200 restaurants in Asia it remains a bit player in a fast-food arena dominated by McDonald's and KFC.
Non-US markets contribute just a third of global revenue - U$S602 million ($790 million) in the first quarter of this year - for the company that invented the Whopper hamburger but is a perennial runner-up to McDonald's.
It intends to accelerate its expansion aggressively, especially into China, where its 10 outlets are vastly outnumbered by 800 for McDonald's.
Burger King will rely on franchises to help it take its Whopper beyond its Shanghai base to Beijing, Tianjin, Guangzhou and other top-tier cities, and has an agreement with a franchisee for the southeastern region of Fujian.
"We should be able to grow there [in China] for five, 10 years. I want the company's restaurant presence to get bigger and bigger and bigger," Chidsey said.
Lehman Brothers reckons Burger King will enjoy a revitalisation of its brand, driven by a renewed focus on international growth after years of "lacklustre performance due to brand mismanagement".
Its shares have risen more than 50 per cent since they debuted in May last year.
Investors now cheer Burger King and its growth since listing last year, when the firm revamped its menu, designed smaller outlets and adjusted its restaurant format to cut costs.
Analysts polled by Reuters Estimates expect its net profit to grow 18 per cent to US$177 million in the year to June.
"We are very comfortable with the guidance we have given for the year," Chidsey said.
Last month, Burger King reported a 23 per cent rise in quarterly profit, helped by new menu items and promotions featuring the Simpsons and Transformers.
Burger King has said it was on track to open about 300 new restaurants globally this fiscal year, 80 per cent of which would be outside the US.
"Asia will be the fastest," Chidsey said.
"Not only the fastest growing part of Burger King, but where we will be building most restaurants."
- Reuters
