001202 Wendy’s Leaves Argentina; Others to Stay

Buenos Aires - Fast-food giants McDonald's and Burger King on Wednesday promised to continue flipping burgers in Argentina despite recent slow sales, a day after a major competitor called it quits.

Citing difficult economic and competitive conditions, Wendy's International Inc. said it was shuttering its 18 stores in Argentina, which saw its economy shrink last year and expects almost no growth in 2000.

Wendy's said its Argentine operations had been unprofitable for more than a year and posted a pre-tax operating loss of $3.2 million through September.

But local officials for based McDonald's Corp. and Diageo Plc's Burger King unit said they saw growth ahead despite the doldrums in Latin America's third- largest economy.

“Even though the economic context isn't the best one, we continue to bet on the fast-food business since we believe it has growth potential,” Guillermo Casarotti, marketing director for Burger King in Argentina, said.

“The macroeconomic context isn't helping at this moment. Our sales are flat but we don't agree that the market is stagnant,” he said.

Argentina's gross domestic product contracted 3.2% last year and is expected to expand less than one percent in 2000. Consumers and investors -- fearing still worse times ahead -- are spending only as much as they need to.

Casarotti said Burger King expected year-end sales of $50 million for its 25 domestic stores. The figure is similar to last year's sales.

McDonald's, the world's number one restaurant group, said its Argentina operations had also been affected by the country's economic woes.

“Argentina is going through a difficult moment and we are being prudent. Our growth will slow a little but we're still growing,” said Woods Staton, president of McDonald's Argentina.

“We see a lot of future for the fast-food business in this country,” he said. McDonald's has 210 stores in Argentina.

The company expects sales of $250-$300 million in 2000, higher than some $240 million posted last year.

Besides a sluggish economy, the burger chains must also contend with a traditional national cuisine based on steak and pasta.

Casarotti said Burger King's grilled hamburgers were well received by a country well versed in the art of weekend barbecues.

McDonald's Stanton said Argentines were demanding fast-food alternatives given the fast pace of workday life in the country.

RETURN TO HOME PAGE

E-mail: sflanagan@sprintmail.com