The sluggish economy and rising unemployment continues to hurt Burger King Holdings Inc. (BKC) results. The company’s fiscal 2010 first quarter earnings of 34 cents a share missed the Zacks Consensus Estimate of 37 cents and fell 11% from 38 cents reported in the prior-year quarter. 

Burger King’s total revenue for the quarter, dipped 5% to $636.9 million, primarily due to unfavorable exchange rates and fall in comparable sales. Company restaurant revenue slid 6% to $469.1 million, franchise revenue fell 5% to $138.7 million, whereas property revenue declined 5% to $29.1 million. 

By geographic segments, revenue in U.S. & Canada dropped 3% to $432.1 million, EMEA/APAC down 8% to $179.1 million and Latin America fell 19% to $25.7 million.
 Burger King is facing the brunt of the turbulent economy as cash strapped consumers are dining at home or at restaurant chains offering discounts, which is adversely affecting the comparable-store sales. 

Comparable sales for the quarter slid 2.9% in the quarter after declining 2.4% in fourth-quarter 2009, revealing the impact of a deepening recession. In the year ago quarter, Burger King reported positive comps of 3.6%. By geographic segment, comps were: US & Canada down 4.6%, EMEA/APAC up 1% and Latin America down 4.6%. 

However, quick service restaurant operators like McDonald’s Corp. (MCD), Yum! Brands Inc. (YUM) and Chipotle Mexican Grill (CMG) are faring better than casual dining restaurant chains like Cosi Inc. (COSI) and California Pizza Kitchen (CPKI) due to cheaper menu options. 

Total company restaurant margins expanded 40 basis points (bps) to 13%, driven by lower food, paper and product costs. Sequentially, restaurant margin improved 50 bps. Restaurant margins increased 180 bps to 13.9% at US & Canada, fell 300 bps to 9.9% at EMEA/APAC, and dropped 60 bps to 18.2% at Latin America. 

During the quarter, 58 net new restaurants were opened, of which nearly 80% were opened outside the US & Canada. Management expects to open 250 to 300 net new restaurants in fiscal year 2010.
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