NEW YORK - Burger King Holdings Inc said on Wednesday it saw a surprise drop in customer visits to its restaurants in March and its shares plunged more than 16 percent.
Burger King also said its fiscal third-quarter profit should meet or exceed Wall Street's expectations, though it would be largely due to a lower tax rate.
Fast-food chains such as Burger King and rivals McDonald's Corp (MCD.N) and Yum Brands' (YUM.N) KFC and Pizza Hut chains have benefited recently as the economic slowdown has sent customers looking for lower-priced fare.
But Burger King, best known for its Whopper hamburgers, said it faced an unanticipated traffic slowdown in March across most company-owned restaurants, which hurt its margins for the quarter.
The declines were steepest in Mexico and Germany. Burger King said it has taken steps to woo customers in those two markets, which include relaunching a 99-cents value menu, promoting new combo meals and longer hours of operation during breakfast time in Germany.
In Mexico, Burger King is focusing on its Come Como Rey, or Eat Like a King value menu and launched a national coupon campaign with laundry detergent brand VIVA to refresh demand.
It has stepped up advertising efforts in both markets.
Burger King said it expects to report a profit of 33 cents a share to 35 cents a share for the fiscal third quarter, which ended on March 31.
Analysts, on average, expect a profit of 33 cents a share, according to Reuters Estimates.
Burger King said it was helped during the quarter by better cost controls, a decline in interest expense and a lower-than-expected tax expense. Its tax rate, which is expected to be significantly lower than a year earlier, boosted earnings by about 5 cents per share, the company said.
The hamburger chain said its quarterly sales rose 1 percent to $600 million. Worldwide sales at stores open at least one year were up 1 percent, while U.S. and Canada same-store sales were up 1.6 percent.
Burger King said that so far in April, same-store sales have improved, mostly due to the shift of the Easter holiday into the month and its efforts in Germany and Mexico.
Its shares plunged more than 16 percent to $19.05 in morning trade. (Reporting by Aarthi Sivaraman; Editing by Lisa Von Ahn, Dave Zimmerman)