BurgerFuel FY profit rises 33%, sees 2016 loss on costs of US expansion

Thursday 11th June 2015

Burger Fuel Worldwide said full year profit rose 33 percent as the NZAX listed fast food franchisor expanded its footprint of franchised outlets in the Middle East, Australia and New Zealand. Expanding in the US is expected to result in a loss for 2016.

Net profit rose to $532,000 in the 12 months ended March 31, from $401,000 a year earlier, the Auckland based company said in a statement. Sales rose 30 percent to $18.7 million, while system sales, which includes sales by franchisees, climbed 25 percent to $82.8 million.

BurgerFuel began to pull back its plan for an ever-expanding franchise strategy late last year, saying it could reap bigger profits by taking some stores inhouse and pointing to a global trend of listed food companies owning at least a quarter of their restaurants. It has also been looking at new types of partners including working with OhCal Foods, the biggest development agent for Doctor’s Associates Inc (DAI), the franchisor of the Subway chain, as BurgerFuel prepares for a push into the world's biggest economy. It inked a deal with DAI’s affiliate, Franchise Brands, last year.

"There is a lot of preparatory work required before we can confidently open in the US but we expect that this will occur this year," chairman Peter Brook and chief executive Josef Roberts said in a joint statement. "We want to be sure that we have got things right before we turn on the grills in the home of the hamburger and make our business a success there."

They said BurgerFuel has "set a FY16 budget which anticipates losses resulting primarily from the US expansion but which will be well within our financial capacity." The company has no debt and cash reserves of $7.7 million.

In the latest year, BurgerFuel chalked up a record 17 new restaurants. It had projected losses but deferred some spending to assess its strategy in the US. Expenses in the year ended March 31 rose to $17.9 million from $13.9 million.

BurgerFuel shares jumped 13 percent to $3.60 and have soared 1,100 percent in the past five years.

BusinessDesk.co.nz

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