Burger King Holdings reported a higher quarterly profit on Tuesday, helped by lower costs for food and paper, and shares rose 8.6 percent after executives said traffic appeared to have bottomed in May.
The world's No. 2 hamburger chain after McDonald's Corp , said it expects softer sales at existing restaurants in the first half, with a better second half if consumer sentiment improves.
But, given the ongoing economic uncertainty, the company declined to forecast earnings for the current fiscal year.
Chief Executive John Chidsey said the July unemployment rate for its chief 18-to 39-year-old customers in the United States is 12 percent.
Even more disconcerting is the 20 percent unemployment rate among ethnic groups in this age group, which represents a disproportionate amount of the heavy user and super fan base, Chidsey said on a conference call.
Burger King has been extending business hours, sprucing up older eateries and introducing premium sandwiches and a new fast broiler cooker that will allow it to expand its menu with dishes like ribs and thick burgers.
The seller of the Whopper hamburger said net income was $58.9 million, or 43 cents per share, in the fourth quarter that ended on June 30, compared with $50.6 million, or 37 cents per share, a year earlier.
Earnings were boosted by 7 cents a share as the dissolution of some foreign entities helped lower the company's tax rate.
Analysts on average forecast earnings of 33 cents a share, according to Reuters Estimates.
The results landed amid expectations that were severely depressed going into the quarter, Oppenheimer analyst Matthew DiFrisco said in a client note.
Revenue slid 2.4 percent to $629.9 million.
Worldwide, sales at Burger King restaurants open at least one year fell 2.4 percent.
Fast-food chains generally have outperformed rivals during the current economic downturn, but the chains are not created equal.
Earlier this month, McDonald's reported a second-quarter profit that matched Wall Street's view.
McDonald's June sales at established U.S. restaurants disappointed investors, but its shares rose after it reported that global July same-store sales were aided by improvements in Britain, France and the United States.
Burger King shares rose $1.52 to $19.18 in late morning trade on the New York Stock Exchange.
(Additional reporting by Brad Dorfman in Chicago; Editing by Derek Caney, Maureen Bavdek and Gunna Dickson)