McDonald’s Corporation (MCD), Burger King Worldwide Inc (BKW): Who’ll Win These Wars?

Burger King has also been working on a re-franchising plan. It has already finished re-franchising its restaurants across the US, Canada, Latin America and Asia Pacific regions.

By the end of 2013, the company will re-franchise 132 restaurants in Germany and Spain. The plan will help Burger King re-organize its cost structure. The company received $9.3 million in its last quarter from re-franchising transactions. The plan has already helped Burger King to reduce its overhead costs by 30%.

Also in the news

Last year, Burger King Worldwide Inc (NYSE:BKW) introduced delivery services in the US. The company now provides its home-delivery service in seven cities in the country. McDonald’s Corporation (NYSE:MCD) and Yum! Brands, Inc. (NYSE:YUM)-owned KFC already have their delivery services in place. While McDonald’s Corporation (NYSE:MCD) delivers in Latin America, Singapore and India, KFC delivers in Canada, South Africa, and Dubai among other places.

There seems to be a reason why the two companies are not deeply exploring delivery services in the US. Maybe a home-delivery facility in the US isn’t as profitable as it is in the other regions. There isn’t much we can do other than wait and watch how Burger King fares in an area where bigger players fear to tread.

The verdict

Burger King Worldwide Inc (NYSE:BKW) has a positive outlook for the future. It increased its dividend by 20% to $0.06. Also, the company plans to buyback shares worth $200 million, pointing toward a strong outlook for the future.  I, however, am a bit cautious about where this company is headed.

Its unique selling proposition, or USP, is value food, and with bigger players such as McDonald’s Corporation (NYSE:MCD) ruling the market for low-priced fast food, the company has little foothold for a strong future. Moreover, at 260%, its debt-to-equity ratio is way too high for comfort, not to mention a P/E of 55.4 when the industry ratio is 21.4. If I were you, I’d just wait to see what happens.

The article Will This Company Win the Burger Wars? originally appeared on Fool.com and is written by Sonam Chamaria.

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