Burger King’s Turnaround Strategy, 4 Things You Need to Know
For a while there was a noticeable rivalry between McDonald’s and Burger King but at some point McDonald’s pulled ahead and hasn’t looked back since. Burger King is now struggling to keep up with Wendy’s who became the second largest burger chain in the United States by sales in 2020. Chick fil-A also generates more sales in the United States than Burger King and the average Chick-fil-A restaurant generates four times as much as the average Burger King restaurant. Not wanting to be left behind Burger King is embarking on a transformation plan it hopes will win over the hearts of customers at home and abroad. If you are curious about what Burger King is doing to get back its lustre then consider these four aspects of its turnaround strategy.
1. Optimized pricing and simplified menus. Burger King got into a habit of discounting its flagship Whopper burger. As part of its turnaround plan Burger King has taken the Whopper off its discount menu which should improve profitability. Previously the Whopper was part of a discount where customers could get two Whoppers for $5.00. "At the end of December [2021], we rolled out our first of two waves of menu simplification, removing low-volume items," said Tom Curtis, Burger King’s North American President. "We'll look for opportunity for some incremental discounting there in the future, but it won't be every single day," said Curtis.
Burger King is also simplifying its menu by removing items such as certain salads, sundaes, whipped toppings, and chocolate milk. “We, in fact, complicated things,” said Jose Cil CEO of Restaurant Brands International. “We added menu items … that were more difficult and not necessarily intuitive and typical for us to serve.” Removing these items should enable Burger King to reduce customer service times.
2. More marketing spend. Burger King is investing $120 million into advertising which is a 30% increase over what Burger King previously spent annually in advertising. This is part of a multi year strategy called Reclaim the Flame which Burger King announced in September that focuses on boosting sales in the United States. Reclaim the Flame will invest a total over $400 million over a two year period into Burger King. This $400 million investment is the largest investment Restaurant Brands has made in one of its portfolio brands. Restaurant Brands also owns Tim Hortons and Popeyes.
With the increased advertising spend Burger King is hoping to add “meaning and relevance to historical brand anchors like ‘Flame Grilling’ and ‘Have it Your Way,’ while also introducing new brand elements to broaden its attraction for a younger and more diverse base of guests,”
Burger King wants to use the increased advertising spend to get customers to fall in love with the Whopper again by reminding them that it is flame grilled and customizable. “I don’t think we’ve talked about it enough. I just don’t think we’ve celebrated it enough,” says Curtis.
3. Updated stores. To keep up with the competition Burger King is investing $200 million to remodel 800 stores and at least $50 million will be used to upgrade the technology and kitchens inside of its restaurants. With this investment Burger King is hoping to attract a younger customer with more modern looking restaurants. "Historically, remodeling efforts have generated average year one sales uplifts of approximately 12%," said Burger King. In the updated stores customers can expect to see: triple-lane drive-thrus, burger pickup lockers and takeout counters.
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4. Greater international growth. "The success of our global development playbook is readily apparent when looking at Burger King's international growth, which includes a doubling of the brand's international store count since 2012 to nearly 12,000 locations and roughly 60% of the brand’s worldwide systemwide sales," said Restaurant Brands International COO Joshua Kobza. “Basically, Burger King has focused on growing its global footprint rather than making its key goal unseating McDonald's in the U.S.,” writes the The Street.
“Despite this robust international development, Burger King still has only half the number of restaurants globally versus the leading competitor, including only a third of the number of restaurants in Asia-Pacific, where we are building a strong foothold," said Kobza. "As a result, we continue to see Burger King as a significant growth engine, and based on our current pipeline, we expect it to be the largest contributor to our net restaurant growth for the foreseeable future."