Burger King’s largest franchise increased its daily sales of chicken sandwiches by 18 or 19 orders per store during the second quarter, an upswing management tied directly to the item’s upgrade from a comparably priced version.
But the officials of Carrols Restaurant Group slapped a few asterisks on the revelation, including an acknowledgement that an outpouring of new chicken sandwiches like Burger King’s may be hurting sales at the company’s units of Popeyes, the instigator of the gold rush.
Same-store sales for the chicken restaurants declined 5.3% in the second quarter, a slide CFO Tony Hull attributed to “some pressure from competitors launching new chicken sandwiches themselves.”
CEO Dan Accordino noted that sales of Burger King’s chicken sandwich were strongest in the Northeast and Midwest and weakest in the South, Central and Southeastern regions.
“We believe that the concentration of chicken-based QSR restaurants based in the South coupled with numerous chicken sandwich introductions across the industry by our peers has weighed more heavily on its reception in these regions,” Accordino said. His comment seemed like a veiled reference to the strength within the South of Chick-fil-A, a chicken sandwich specialist with a cult-like following.
Comparable sales for Carrol’s Burger King restaurants for the second quarter rose 15.2%.
Company officials noted the same difficulties in staffing that virtually every public restaurant company has cited when airing its results for Q2. The franchisee raised hourly wages by an average of 12%, for an aggregate increase of $3 million for the quarter. Another $3 million was spent to staff up for the full reopening of units whose capacities were limited earlier in the pandemic.
An analyst participating in the call mentioned seeing recruitment signs at his local Burger Kings that promised wages of $20 an hour for the midnight to 6 a.m. shift.
“We have reduced our 24-hour stores because it just doesn’t make any sense to keep restaurants open if you have to pay those kinds of rates,” Hull said.
Overall, Carrols posted a Q2 net loss of $9.6 million, which management attributed to an $8.5 million charge related to extinguishing debt. The company generated a profit of $7.8 million in the year-ago quarter.
Revenues totaled $424.5 million, a 15.2% increase.