Miami - Burger King wants to double to about 15 percent the share of its restaurants directly owned by the company, top executives of the world's second-largest restaurant group said Tuesday.
"I'd like to see that in five years, and I'd like to exceed that (15 percent share) in a few years," Paul Clayton, president of Burger King North America, said in an interview after a presentation to industry analysts.
Only 801 of Burger King's 9,737 hamburger restaurants worldwide are owned by the company, a unit of Diageo Plc (quote from Yahoo! UK & Ireland: DGE.L). The great majority of restaurants are owned by individuals and other businesses which pay royalties to Miami-based Burger King.
In the fiscal year ending June 30, Burger King will have added 620 restaurants. Sixty will have been built and will be owned by the company at costs ranging from $650,000 to $1.2 million, Burger King executives said.
Burger King Chief Executive Officer Dennis Malamatinas said the returns on company-owned restaurants were about 15 percent, or about three times the rate the corporation earned on outlets owned by franchisees.
"There's a lot more confidence (in Burger King) at the parent company," he told reporters. "Company- owned stores will play a more important role."
The executives, who portrayed Burger King as recovered from an early 1990s sales slump and now poised for good growth in Europe, the Americas and parts of Asia, said the company would always rely heavily on franchised operations but believed its profitability could be enhanced by direct control in many instances.
Clayton said Burger King would build some of its own restaurants and was also considering acquisitions. But he said in the interview, "the multiples (that) owners are asking are pretty high since the business improved."
The executives gave no financial forecasts during detailed presentations to analysts, but said financial performance was improving and would be further helped by a flow of new food items such as miniature sticky buns recently rolled out in the United States. Spending on developing new food items has been doubled, the executives said.
The executives also said comparable restaurant sales, an important indicator of the tone of business, had increased each month from January through May over the same year-ago periods.
"The first five months of this year were positive," Malamatinas said.
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