Diageo, the UK food and drinks group, said on Thursday that trading at its Burger King fast food chain remains weak. The group warned that full-year operating profit for the hamburger chain was likely to be down year-on-year.
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“Trading at Burger King remains challenging and in January comparable restaurant sales were down approximately three percent, however February is slightly better…the full year reported operating profit is likely to be down year on year,” Diageo finance director Nick Rose told a conference call to analysts.
The group reported strong half-year profits led by growth in its premium drinks business but operating profit at Burger King dropped by £6m to £99m. The firm blamed the BSE scare for a decline of 2% in sales at UK Burger King outlets, and 4% at German restaurants, during the second half of 2000.
The Pillsbury food unit, due to depart to General Mills later this year, reported an operating profit up 11%.
Diageo is now likely to delay the floating of Burger King until 2002 in the hope that the fast food chains financial outlook improves.
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By GlobalData“We are determined to improve the operating performance of Burger King to ensure that the proposed full separation of Burger King from Diageo realises value for shareholders,” Diageo’s CEO Paul Walsh said in a statement.
Burger King’s new CEO, John Dasburg would not confirm when the float would take place, saying only that he and Diageo were “working towards a separation, the timing and form of which will be discussed [after his arrival]”.
He earlier promised an aggressive expansion in the US in an effort to take market share from rival McDonald’s.
Dasburg who is due to join Burger King on 1 April after a decade as chief executive of Northwest Airlines, said: “In a business where market share matters, we need considerable unit growth, and we’ll have to have the unit economics to justify that.”
