The Wendy’s Company (WEN), Sonic Corporation (SONC), Burger King Worldwide Inc (BKW): Is This The Beginning of a Fast Food Renaissance?

Burger King also on the same path as Wendy’s

Burger King Worldwide Inc (NYSE:BKW) is also moving towards the 100% franchise model. As of 2012, 97% of its stores were owned by franchisees, and it expects to reach the 100% mark by the end of this year. Thus it can focus on building a brand rather than losing time managing the day to day operations. Because of the refranchising initiatives, second quarter profits came in at $0.21 per share, beating analyst estimates by $0.03, while revenues fell 48.5% year over year because of the same.

The company’s value items, like a $1.25 Whopper Jr, $0.50 ice-cream cone, and $1 frozen lemonade, are getting a good response, and so is the “Mix & Match 2 for $5 Special.” Management intends to continue to focus on the value meals in the second half of the year.

Burger King Worldwide Inc (NYSE:BKW) is also on a reimaging spree, planning to renovate 40% of its U.S. and Canada stores by 2015, through which management expects to see sales increase by 10%-15% on average. It also brought down the average cost to reimage a restaurant from $500,000-$600,000 to approximately $300,000.

International expansion is going to be the key long-term growth drivers for the company. As a part of this growth strategy the company entered into agreements in Russia, South Africa, Colombia, Mexico, Central America, China, and Singapore/Malaysia, with 500-750 international stores slated to open this year.

It partnered with Seattle’s Best Coffee to offer coffee in its restaurants adding 10 new coffee drinks to the menu. To further increase its revenue, it started a home-delivery system, which is currently in the testing phase.

The improving profits due to franchising, increasing sales due to store reimaging, new innovative products at valuable prices, and growth opportunities abroad may bring some nice profits for Burger King Worldwide Inc (NYSE:BKW) investors.

Conclusion

The transition toward 100% franchisee model, positive results from store renovations, and hot new line of products should continue to build The Wendy’s Company (NASDAQ:WEN) brand leadership. Improving same store sales, positive EPS growth expectations, cost saving initiatives and international growth opportunities present an excellent buying opportunity in the company.

The article Is This The Beginning of a Fast Food Renaissance? originally appeared on Fool.com and is written by Tushar Agarwal.

Tushar Agarwal has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide (NYSE:BKW).

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