BurgerFuel more than doubles 1H earnings on store openings

Wednesday 12th November 2014

BurgerFuel Worldwide, the NZAX listed fast food chain, more than doubled first half earnings as it opened seven new stores in the period, lifting sales.

Net profit rose to $213,000 in the six month period ended Sept. 30, from $96,000 a year earlier, the Auckland based company said in a statement. Group operating revenue rose 27 percent to $8.5 million, while system sales, which includes burger sales in its franchised stores, rose 29 percent to $38.6 million. Operating expense rose 24 percent to $8.2 million.

In the period, the chain opened seven new restaurants, with the total number of BurgerFuel outlets at 62, and last month announced plans for five more stores in Australia before the end of its 2015 financial year. In September, the burger chain announced plans to bring franchise stores in-house to boost profit, buying an outlet in Henderson, Auckland, for an undisclosed sum. It is targeting at least a 20 percent return on investment from company owned stores, and is considering opening its own restaurants in New Zealand, before taking the format overseas.

"We had previously advised the market given the need for considerable investment this year, we expected expenditure in the year to be greater than revenue, resulting in a possible loss for the period," the company said. Accordingly, its first half profit "was a particularly good result. We do however expect development expenditure to continue through the second half of the year."

BurgerFuel said the local burger market remains "highly competitive" with the presence of international chains like McDonalds, Burger King and the arrival of Carl's Jr, which is owned by fellow listed fast food operator, Restaurant Brands, as well as 'a number of smaller, niche market burger concepts". It said sales across its 39 New Zealand stores and two in Australia rose 36.3 percent in the period.

The company also has 21 BurgerFuel stores across the Middle East, where it said sales increased 18 percent in the six month period. Conflict in the region saw it close its single store in Iraq, while sales in its two Egyptian stores were slow. The company was looking to capitalise on rising tourist numbers in Dubai, boosting its international exposure and said Saudi Arabia had potential for further stores.

At the start of this year, BurgerFuel raised $5.9 million from US investor Franchise Brands to help fund its global growth aspirations, including plans to reach into the world’s biggest economy. BurgerFuel has partnered with Subway and Franchise Brands LLC to guide its entry into the US, where it plans to launch next year.

Shares of BurgerFuel were unchanged at $3.50, and have climbed 119 percent since the start of the year.

BusinessDesk.co.nz

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