Can resurgent Burger King sell investors on its future?

MIAMI — The difference at Burger King since Greg Brenneman took over in 2004 is clear: profits are small but growing, the company and its franchisees are in better financial health and the world's second-largest hamburger chain has lots of advertising buzz and popular new products.

The details from the chain's initial public offering filing show that the CEO and chairman's turnaround plans have been making slow but steady progress.

The question now is whether the man known for rescuing troubled companies can sell investors on Burger King Corp.'s future. The Miami-based company's parent, Burger King Holdings Inc., is still far from the financial success and profit margins of its two main rivals, McDonald's and Wendy's.

Burger King hasn't specified too many details of its IPO plans. It hopes to raise up to $400 million, which would be the top U.S. restaurant IPO, according to Thomson Financial. But it hasn't said how much each share would cost, what percentage of the company would be offered or when the sale would happen. Some of the proceeds will be used to pay debt, but the company hasn't spelled out specific plans for the rest.

The chain is optimistic that its rebound from the losses in the early part of the decade will continue, although sales are still off highs in the 1990s. The Feb. 16 filing touts the brand's progress since Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners bought it from Diageo PLC in 2002.

But some outsiders wonder whether it can continue and doubt investors will be eager to buy the shares, which won't pay dividends.

"I think Burger King hit bottom around two years ago, and they are improving off of that bottom, but to equate them to McDonald's or even think that they are going to be a force to be reckoned with . . . is a mistake," said Scott Rothbort, president and founder of LakeView Asset Management, which owns McDonald's Corp. shares.

Brenneman declined comment through a spokeswoman because of securities rules that prevent companies from talking about their performance in the period immediately surrounding an IPO.

Last calendar year, Burger King reported net income of $51 million on revenues of $1.99 billion, while McDonald's reported earnings of $2.6 billion on revenues of $20.46 billion and Wendy's International Inc. had $224 million in net income on revenues of $3.78 billion. That works out to profit margins of 12.7 percent for McDonald's, 5.9 percent for Wendy's and 2.6 percent for Burger King.