Burger King, Starbucks Sign Deal

Burger King Corporation, a subsidiary of Burger King Holdings, Inc. (BKC), the world’s second largest fast food hamburger chain announced recently that it has signed an agreement with Seattle's Best Coffee, a subsidiary of Starbucks Corporation (SBUX - Analyst Report), the leading roaster and retailer of specialty coffee in the world. As per the agreement, Starbucks will supply Seattle’s Best Coffee in Burger King restaurants in Canada this fall.

In response to McDonald's Corporation (MCD - Analyst Report) McCafe coffee products, in the month of February Burger King announced that by September 2010 it would begin selling Starbucks Seattle's Best Coffee in about 7,250 U.S. outlets. The new drinks will sell for $1 to $2.79 and will replace Burger King's BK Joe brew, which was introduced in 2005.

Starbucks acquired the Seattle's Best brand in 2003, and since then has been renewing the brand to broaden its customer base. The coffee is already available in Alaska Airlines, Borders bookstores and Royal Caribbean Cruise Lines, and Starbucks is further expanding it through franchises and retailers.

Burger King is well positioned to sustain growth in the existing and new markets through new product introductions, an upgraded prototype design, and expanded restaurant hours. Nearly 200 company-owned restaurants operate around the clock in the U.S. We think this will bolster comps and average unit volumes. Moreover, to enhance the perception of value and drive sales, particularly at the premium end, Burger King is remodeling its restaurants to give an up-market feel

Besides McDonald's, Burger King faces intense competition from Yum! Brands, Inc. (YUM - Analyst Report) and Wendy's/Arby's Group, Inc. (WEN - Analyst Report).

As of March 31, 2010, Miami-based Burger King owned or franchised 12,115 restaurants in 74 countries and U.S.  territories. Nearly 90% of Burger King restaurants are franchised.

Read the full analyst report on BKC

Read the full analyst report on SBUX

Read the full analyst report on MCD

Read the full analyst report on YUM

Read the full analyst report on WEN