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010722 Mad Cow Concerns Hurt Burger King Sales

July 14, 20

Chicago - Burger King Corp., the second-largest hamburger chain behind McDonald's Corp., has seen sales at restaurants open at least a year erode in the last six months, due in part to the impact of mad cow disease in Europe, parent company Diageo Plc said.

The disclosure comes on the heels of similar announcements from McDonald's, which since late 2000 has seen sales in major European markets such as Germany and France hurt by concern over the brain-wasting disorder. A human version of the cattle disease is believed to be contracted through tainted meat.

Same-store sales at Miami-based Burger King's 11,000-plus worldwide restaurants remain below prior-year levels, London-based Diageo said in a press release highlighting semi-annual sales trends.

In addition to mad cow, the company blamed concern over foot-and-mouth disease, another contagious, but less-fatal disorder found in European herds.

Diageo did not provide specific sales figures on Burger King and company representatives were not able to provide further details.

Burger King, which has already delayed its planned separation from beverage conglomerate Diageo, is reviewing all aspects of the business to develop an appropriate strategy for the future, Diageo said.

“This is a management team that will have to be given time to turn things around,” said U.S. restaurant analyst Mark Kalinowski of Salomon Smith Barney. “The company is taking steps to address their issues.”

In April, former Northwest Airlines Corp. chief John Dasburg assumed the helm at Burger King. Known for his efforts to turn around the airline, Dasburg said in April that Burger King had held talks with investment firm Texas Pacific Group about a potential buyout or other deal to make the chain independent.

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