Must-know: Analyzing Burger King’s 2Q14 performance by segment

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Sep. 5 2014, Updated 1:00 p.m. ET

Burger King Worldwide, Inc., segments

Burger King Worldwide, Inc., (BKW) operates over 13,000 restaurants in 100 countries and reports its global income in four segments:

  1. The U.S and Canada
  2. Europe, the Middle East, and Africa (or EMEA)
  3. Latin America and the Caribbean (or LAC)
  4. Asia-Pacific (or APAC)

The U.S. and Canada

Burger King reported U.S. and Canada revenues of $160 million, which declined 3% compared to $164 million in 2Q13. Operating margins improved to 71% from 68% over the same period. Operating income includes operating revenues from company-operated restaurants as well as revenues from franchises.

The improvement in operating margins was due to the closure of company restaurants, resulting in lower operating expenses. The company restaurant count decreased from 74 to 52. The franchise unit count also declined, from 7,365 to 7,319.

EMEA

EMEA segment revenues amounted to $67.4 million in the second quarter. This was a decline of 19% from the $83 million in 2Q13. Operating margins improved to 79% from 54% over the same period.

Over the same period, all 19 company-operated restaurants closed and the franchised restaurant count increased from 3,191 to 3,556.

LAC

The company reported segment revenues of $19 million, which increased 10% from $18 million in 2Q13. Operating margins were up 90% compared to 89% over the same period.

By the second quarter of 2013, the company had shut down its remaining 98 company-operated restaurants and its franchise restaurant unit count grew to 1,583 from 1,424.

APAC

Burger King reported $16 million in revenues, which increased 13% from $14 million a year ago. Operating margins grew to 87% in the second quarter from 83% in 2Q13.

Plus, the company had no company restaurants and the franchise restaurant count grew from 1,072 to 1,298.

Key stocks and ETFs

McDonald’s (MCD) also operates in all the above segments.

But instead of investing in individual stocks, you can invest in exchange-traded funds like the Consumer Discretionary Select Sector SPDR Fund (XLY), which includes Yum! Brands (YUM) and Chipotle Mexican Grill (CMG).

Overall performance

In the next part of this series, we stack up all these segments and look at overall top line performance along with Burger King’s shifting business model.

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