Burger King: a Whopping Strategy En Route to Recovery
Burger King: A Whopping Strategy En Route to Recovery
Siohong Tih
At the end of 2002, Burger King, the second largest fast food hamburger chain in the world, was in financial trouble. Sales were dropping and its franchisees were confronted with heavy debts. One after another, its franchisees including its largest independent franchisee, AmeriKing, filed for bankruptcy protection. Burger King US’ sales in 2003 dropped to US$7.9 billion from US$8.3 billion the previous year. Burger King’s introduction of salad and chicken baguette sandwiches in its menu as a response to fight obesity made no significant impact on sales. The CEO of Burger King, Brad Blum was then assigned to find ways to restore Burger King’s market position and image. The key concerns were the financial situation, the marketing strategies associated with the menu, and the promotion of best practices in management.
COMPANY BACKGROUND
In 1954, James McLamore and David Edgerton founded Burger King Corporation (BKC) in Miami. It started with a simple meal concept where families were served reasonably-priced broiled burgers. A drive-in facility made the eating-out experience highly convenient. Burger King also introduced dining rooms. Back then, it was the first, fast food outlet that offered such luxury. Three years later, Burger King introduced the “Whopper” burger in
This case was written entirely from published sources and was prepared as a basis for class discussion. It is not in any way intended to illustrate either effective or ineffective handling of a managerial situation. The author would like to thank New Fong Yen, a UKM MBA student, for her assistance in preparing this case and Encik Ahmad Ikram Abdullah (a Fellow at Institute of Strategic and International Studies Malaysia) for editing this case.
95
Proceedings of …Seminar 2009: Case Studies in Malaysia
its menu. As the name implies, Whopper is a big-sized burger with sauce, cheese, lettuce, pickles and tomatoes
Siohong Tih
At the end of 2002, Burger King, the second largest fast food hamburger chain in the world, was in financial trouble. Sales were dropping and its franchisees were confronted with heavy debts. One after another, its franchisees including its largest independent franchisee, AmeriKing, filed for bankruptcy protection. Burger King US’ sales in 2003 dropped to US$7.9 billion from US$8.3 billion the previous year. Burger King’s introduction of salad and chicken baguette sandwiches in its menu as a response to fight obesity made no significant impact on sales. The CEO of Burger King, Brad Blum was then assigned to find ways to restore Burger King’s market position and image. The key concerns were the financial situation, the marketing strategies associated with the menu, and the promotion of best practices in management.
COMPANY BACKGROUND
In 1954, James McLamore and David Edgerton founded Burger King Corporation (BKC) in Miami. It started with a simple meal concept where families were served reasonably-priced broiled burgers. A drive-in facility made the eating-out experience highly convenient. Burger King also introduced dining rooms. Back then, it was the first, fast food outlet that offered such luxury. Three years later, Burger King introduced the “Whopper” burger in
This case was written entirely from published sources and was prepared as a basis for class discussion. It is not in any way intended to illustrate either effective or ineffective handling of a managerial situation. The author would like to thank New Fong Yen, a UKM MBA student, for her assistance in preparing this case and Encik Ahmad Ikram Abdullah (a Fellow at Institute of Strategic and International Studies Malaysia) for editing this case.
95
Proceedings of …Seminar 2009: Case Studies in Malaysia
its menu. As the name implies, Whopper is a big-sized burger with sauce, cheese, lettuce, pickles and tomatoes
References: [1] Company News: Big Burger King Franchise Chain Files for Bankruptcy (2002, Dec 5) [2] Domestic and Global Facts (2008) Harrington, J. (2000, October 16). The Burger That Would Be King. Times Publishing Company Business; Cover Story, 10E. [4] Unhappy Meal: What’s wrong with Burger King? (2004, Jun 24) [8] Thin times ahead for Burger King? (August 1, 2002) [14] Can the Whopper flip BK’s fortunes? (2001, May 3) [15] Can Burger King Rekindle the Sizzle? (2004, May 3) [17] Coultan, M. (2005, July 23). Catering to fast-food addicts reaps fat profits. The Age Online. Retrieved from http://www.theage.com.au/news/world/catering-to-fastfoodaddicts-reaps-fat-profits/2005/07/22/1121539147017.html [18] The Associated Press. (2008, Feb 27). Burger King discusses new items for 2008 growth strategies. Retrieved Aug 6, 2008 from International Herald Tribune Website: http://www.iht.com/articles/ap/2008/02/27/business/NA-FIN-COM-US-Burger-KingOutlook.php [19] Reuter. (2007, Jan 30). Xbox promotion, value menu lift Burger King Earnings. Retrieved Aug 6, 2008 from http://www.usatoday.com/money/companies/earnings/2007-01-30-burgerking_x.htm [21] Jargon, J. (2006, September 25). The King is Lurking: McDonald’s archrival Burger King is waking up, threatening the Golden Arches. Carin’s Chicago Business, 3.