Burger King franchisee Gowrings has put the brake on new restaurant openings, saying that 2001 was its most difficult year since the BSE crisis in 1996.
Operating profits at Gowrings' restaurants division fell by 27% to £1.35m in the year to 31 December 2001, compared with £1.85m in 2000. Overall sales in the division were up by 14% to £33m, but like-for-like sales were down by 1%.
Gowrings chief executive Derek Coulson said that, after poor trading in the first half of the year caused by foot-and-mouth and "a short-term trend away from red meat", the group had concentrated its efforts on promotions and national advertising.
This helped lift like-for-like sales in the second half of the year by 7%. But discounts offered to customers had reduced profit margins.
Gowrings opened four new Burger King restaurants during the year, and is due to open a drive-through in Havant, Hampshire, in April. But it said it was holding back from any further openings "until we see a recovery in the market".
Since the year-end, trading has remained difficult for the Burger King restaurants, Gowrings said. Despite good trading in early January, comparable sales since then are down on last year.
The group said it was confident that it would recover from the downturn in business, especially after Burger King's forthcoming separation from its parent company Diageo.
Gowrings has a total of 43 Burger King restaurants located throughout the UK.
by Samantha McClary