Weakening Fast Food Sales

Burger King Corp. (Miami, Fla.), the nation’s second largest fast food burger chain, announced same-store sales dropped 3 percent during its fiscal first quarter, which ended September 30. The company says it expects those numbers to remain “soft” through the first half of the fiscal year, citing rising unemployment and menu markdowns by competitors as reasons for the declining results.

“This is the worst consumer environment we’ve seen,” chairman and ceo John Chidsey said during a conference call with investors. “Employment continues to worsen and competitive pressures remain fierce, so it could be some time before we see meaningful sustained improvements.”

The chain, which operates more than 11,000 restaurants worldwide, says quarterly profit dropped 6 percent to $46.6 million and revenue fell 5 percent to $636.9 million. During the fiscal fourth quarter, Burger King’s revenue sagged 2.4 percent, but profit climbed as the company cut costs.

Initially faring better during the recession, fast food restaurants are now starting to see sales decline, with market research firm NPD Group reporting sales at fast food restaurants dropped 3 percent this summer. The firm says that decline is still better than business at more expensive eateries where visits fell 4 percent at casual restaurants and 5 percent at mid-market ones.

McDonald's Corp. (Oak Brook, Ill.), which reported third-quarter same-store sales rose 3.8 percent globally, has warned this month that its same-store sales could be flat to slightly negative in October. For the third quarter, McDonald's reported a profit of $1.26 billion while revenue decreased 4 percent.