Costs take big bite out of burger chain

Burger King's sales were up, but its loss also increased. Photo / Greg Bowker

Blackstone Group's Burger King chain in New Zealand continues to lose money as sales growth is swallowed up by finance costs and other expenses.

The net loss for Tango Holdings NZ grew to $7.5 million in 2014, from a loss of $4.4 million a year earlier, according to its financial statements.

As a result, income tax credits were $385,528, down from $1.4 million in 2013. Sales rose 1 per cent to $177.6 million.

The stand-out expense was finance costs at $18.6 million, up from $14 million a year earlier, which mainly reflected an increased payment on preference shares at $2.4 million and a fair-value charge of $447,366 compared to a $1.9 million gain a year earlier.

The burger chain's biggest finance cost, interest on bank facilities, fell to about $7.5 million from $7.9 million.

Burger King has 83 outlets nationwide and employs 2800 people.

It competes mainly with the 164 McDonald's branded fastfood outlets, which generate a profit of about $31 million a year for McDonald's Restaurants (New Zealand) on sales of $221 million.

It also faces competition from NZX-listed Restaurant Brands, which operates the Carl's Jr, KFC, Starbucks and Pizza Hut brands.

BurgerFuel Worldwide, which listed on the NZAX in 2007, also operates a franchise model.

The 2014 loss was the third since Tango was incorporated in October 2011, when private equity firm Blackstone acquired the burger chain.