Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Reza Vahabzedah – Barclay’s Capital.
Reza Vahabzedah – Barclay’s Capital
Paul you went over the October same store sales and I missed the Pollo part of it.
Paul Flanders
What I said was that Burger King in October was running about 5% and obviously that does not include Double Cheeseburger. Pollo Tropical was running slightly positive, a little bit under 1% and Taco Cabana is running about 3.5% negative in October.
Reza Vahabzedah – Barclay’s Capital
Speaking of the Double Cheeseburger promotion, obviously designed to help traffic. Can you make reasonable margins on that as a franchisee and do you think that that is going to be EBITDA accretive product or is that just an initiative to help traffic and rebuild some share and then you go from there?
Daniel Accordino
Because of the leverage in the P&L from the sales that we expect from this Double Cheeseburger, we absolutely think it’s going to be EBITDA accretive.
Reza Vahabzedah – Barclay’s Capital
What type of sales?
Daniel Accordino
You might find some pressure on margin, a little bit of pressure on margin but it’s clearly we’re pretty optimistic with respect to its effect on the bottom line.
Reza Vahabzedah – Barclay’s Capital
Alan, you’ve been around this space for awhile. Where are we as far as price promotion in the fast food burger segment? It seems like price competition has escalated dramatically in the last three or four months. Are we going to much more intense levels or have we reached the peak level of competition?
Alan Vituli
I think what you’re going to see is a bit of shift. You’ve now got value menu initiatives with dollar Double Cheeseburger and dollar Whopper Jr. and corresponding products at Mac Donald’s and those items are every day value so you will see that in place and you’ll see less coupon discounting and promotional discounting.
Reza Vahabzedah – Barclay’s Capital
The Double Cheeseburger as mentioned is dilutive and you wonder what the cannibalization impact will be on the rest of the business, right?
Alan Vituli
Again, we’ve only had it for two weeks, but we know that not all of the cannibalization is negative. It seems to be cannibalizing hamburgers and cheeseburgers and that’s not necessarily a bad thing. There’s been a trade off on the Whopper Jr. which one would expect.
The question is going to be going forward what will be the impact on the ancillary items in terms of fries and drinks. We just don’t know that yet after only two weeks.
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