Fast food chain Burger King Worldwide Inc (NYSE:BKW) reported better-than-expected third quarter results on Monday. The Miami-based company’s earnings for the quarter ending September 30 rose to $68.2 million or 19 cents per share, up from $6.6 million or 2 cents in the same period last year. Excluding one-time charges, earnings stood at 23 cents a share. Analysts polled by Thompson Reuters were expecting 21 cents in earnings.

burger king

Burger King cuts expenses by 90%

Burger King Worldwide Inc (NYSE:BKW) benefited from refranchising its restaurants and strong overseas demand. The third-largest U.S. hamburger chain has franchised almost all of its restaurants. Burger King Worldwide Inc (NYSE:BKW) refranchised 519 company-owned restaurants. Now the company collects franchise fees from those restaurants instead of booking sales.

Refranchising helped the company lower its restaurant expenses from $216.3 million to $22.9 million in the three months ending September 30. The company also cut its operating, selling and administrative expenses during the quarter. Brazil’s 3G Capital acquired Burger King Worldwide Inc (NYSE:BKW) in 2010. Since then, the company has been restructuring its business and selling restaurants to franchisees. Billionaire hedge fund manager Bill Ackman also holds a large stake in the company. Investors have been betting on the company’s restructuring to unfold value.

Burger King Worldwide Inc (NYSE:BKW)’s revenues slumped from $455.7 million to $275.1 million, mainly due to refranchising restaurants. Despite the decline, its revenues were better than the Wall Street consensus of $264.5 million. Excluding the impact of refranchising and currency fluctuations, sales soared 8.1% during the quarter. Same-store sales were up 0.9%.

Sales in Asia Pacific region jumped 3.7%. Latin America and the Caribbean sales rose 2.1%. Revenues from Europe, the Middle East and Africa were up 2.4%. However, North America sales were down 0.3% due to tight consumer spending. The company raised its quarterly dividend from 6 cents to 7 cents a share. The company will pay dividends on November 26 to shareholders of record on November 12.

Burger King’s value-focused promotions attracted traffic

In a research note to investors, Citi Research analysts Alvin C. Concepcion and Gregory R. Badishkanian said that the better than expected earnings were offset by soft same-store sales. So, it will have a neutral impact on the stock.

Citi Research said that value-focused promotions like $1 fry burger and premium products such as the Angry Whopper attracted customers during the quarter. Though Satisfries was not launched until the last week of September, it also helped drive traffic. Analysts said the October same-store sales trends will be crucial. A positive or flat trend will encourage investors. Citi Research has a Buy rating on the stock with a $23 price target.

Burger King Worldwide Inc (NYSE:BKW) shares surged 4% to $20.55 at 10:33 AM EDT. The stock has gained 27.97% this year so far.