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Carrols expects Burger King promos to boost sales in second half

By Eric Reinhardt

Date:

A Burger King restaurant on Route 5 in Auburn. (ADAM ROMBEL / BJNN FILE PHOTO)

SYRACUSE — The top official at Carrols Restaurant Group, Inc. (NASDAQ: TAST) believes upcoming Burger King promotions will help boost restaurant sales in the second half of the year, following a disappointing first six months.

“Looking ahead, we are confident that the Burger King marketing calendar, including the Impossible Whopper launch … and more effective promotions, can generate stronger sales performance and better restaurant-level margins through the remainder of the year,” Daniel Accordino, chairman and CEO of Carrols, said in the company’s quarterly earnings report issued on Aug. 8. 

His comment came after Carrols, the largest Burger King franchisee in the U.S., reported a net loss of $3.7 million, or 9 cents a share, in the second quarter. That compares to net income of $7.8 million, or 17 cents, in the prior-year quarter, Syracuse–based Carrols said. 

The company’s net loss in the second quarter included a $7.4 million loss on extinguishment of debt due to the 2019 refinancing and write-off of previously deferred financing costs, $400,000 of impairment and other lease charges, $1.4 million of acquisition expenses, and $1.2 million of integration expenses.

“While we are disappointed with our 2019 first-half performance, we do not believe that these short-term results reflect a shift in the fundamentals of our business model,” said Accordino. 

He also noted that restaurant-level profitability and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) during the second quarter were challenged by a number of factors, specifically higher commodity costs, labor-cost pressures, and less effective promotions compared to the year-ago period. 

“In addition, as we are early in our integration of the Cambridge merger, our results do not yet reflect any of the gains in sales and efficiencies that we expect to achieve once the integration is complete. Based on our experience and track record, we are confident that we can improve the sales and overall financial performance of the Cambridge restaurants over time as we assimilate them into our platform and implement our financial and operating systems,” said Accordino. 

Carrols owned and operated 1,023 Burger King restaurants and 58 Popeyes restaurants in 23 states on June 30.

The company on April 30 completed its merger with Memphis, Tennessee–based Cambridge Franchise Holdings, LLC which resulted in Carrols acquiring 165 additional Burger King and 55 Popeyes restaurants in 10 Southeastern states. 

Carrols on June 11 also completed the acquisition of 13 Burger King restaurants in the Baltimore, Maryland market, the firm said.

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