https://www.ciim.
in/burger-king-success-story-case-study Burger King Success Story
and Case Study
Burger King Success Story and Case Study – A Short History of Burger King
The world’s one of the leading hamburger chain was founded in 1953.The company have been
operating in over 70 countries and 90% are privately owned franchises.This executive
summary demonstrates the brand value of Burger King and how the company has
revolutionized itself over the years.
Despite of the challenges and intense competition in the market, the Burger King holds a
strong position with the help of its successful marketing strategies. The tastes of its
hamburgers are much better than McDonalds but they are unable to make the brand perception
as strong as McDonalds globally.For Burger King, the move to merge with the Canadian
market will bring out a potential hook for those millennial who love coffee and breakfast
sandwiches.
How was Burger King founded?
The company began in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant
chain. After Insta-Burger King ran into financial difficulties in 1954, its two Miami-based
franchisees, David Edgerton and James McLamore, purchased the company and renamed it
Burger King.
The predecessor to what is now the international fast food restaurant chain Burger King was
founded in 1953 in Jacksonville, Florida, as Insta-Burger King. Inspired by the McDonald
brothers’ original store location in San Bernardino, California, the founders and owners, Keith
J. Kramer and his wife’s uncle Matthew Burns, began searching for a concept. After
purchasing the rights to two pieces of equipment called “Insta” machines, the two opened their
first stores around a cooking device known as the Insta-Broiler.
The Insta-Broiler oven proved so successful at cooking burgers, they required all of their
franchises to carry the device. After the original company began to falter in 1954, it was
purchased by its Miami, Florida, franchisees James McLamore and David R. Edgerton.
The two initiated a corporate restructuring of the chain; the first step being to rename the
company Burger King. The duo ran the company as an independent entity for eight years,
eventually expanding to over 250 locations in the United States, when they sold it to the
Pillsbury Company in 1967.
Pillsbury’s management made several attempts at reorganization or restructuring of the
restaurant chain in the late 1970s and early 1980s. The most prominent change came in 1978
when Burger King hired McDonald’s executive Donald N. Smith to help revamp the
company. In a plan called Operation Phoenix, Smith initiated a restructuring of corporate
business practices at all levels of the company.
Changes to the company included updated franchise agreements, a broadening of the menu,
and new store designs to standardize the look and feel of the company. While these efforts
were initially effective, many of them were eventually discarded, resulting in Burger King
falling into a fiscal slump that damaged the financial performance of both Burger King and its
parent. Poor operating performance and ineffectual leadership continued to bog the company
down for many years, even after it was acquired in 1989 by the British entertainment
conglomerate Grand Metropolitan and its successor Diageo. Eventually, the institutional
neglect of the brand by Diageo damaged the company to the point where major franchises
were driven out of business and its total value was significantly decreased. Diageo eventually
decided to divest itself of the loss-making chain and put the company up for sale in 2000.
In the twenty-first century the company returned to independence when it was purchased from
Diageo by a group of investment firms led by TPG Capital for $1.5 billion (USD) in 2002.
The new owners rapidly moved to revitalize and reorganize the company, culminating with
the company being taken public in 2006 with a highly successful initial public offering.
The firms’ strategy for turning the chain around included a new advertising agency and new
ad campaigns, a revamped menu strategy, a series of programs designed to revamp individual
stores, and a new restaurant concept called the BK Whopper Bar. These changes re-energized
the company. Despite the successes of the new owners, the effects of the financial crisis of
2007–2010 weakened the company’s financial outlooks while those of its immediate
competitor McDonald’s grew.
The falling value of Burger King eventually lead to TPG and its partners divesting their
interest in the chain in a $3.26 billion (USD) sale to 3G Capital of Brazil. Analysts from
financial firms UBSand Stifel Nicolaus agreed that 3G will have to invest heavily in the
company to help reverse its fortunes. After the deal was completed, the company’s stock was
removed from the New York Stock Exchange, ending a four-year period as a public company.
The delisting of its stock was designed to help the company repair its fundamental business
structures and continue working to close the gap with McDonald’s without having to worry
about pleasing shareholders. 3G later took the company public again after a series of changes
to its operations and structure. Burger King would eventually be merged with Canadian-based
donut and coffee chain Tim Hortons, igniting a political controversy in the United States over
tax inversions.
Is Burger King a public company?
Burger King shares are up nearly 90% since the company returned to the public market in the
summer of 2012. Individual franchisees may vary, but shares of Carrols Restaurant Group, a
relatively large, publicly traded Burger King franchisee, are up better than 22% over the same
period of time.
Burger King Marketing Strategies
THE CHALLENGES AND GOALS
The organizational goal of Burger King is to serve its customers with the best quality fast
food. The brand is known to be the second largest burger chain in the US. The recent most
strategic goal adopted by the company is to buy Tim Hortons (THI) .The aim is to merge with
the Canada’s biggest seller of Coffee and Doughnuts.
SITUATIONAL ANALYSIS
COMPANY ANALYSIS
Burger King World wide Inc is a global chain corporation that works as franchises and
operates fast food hamburger restaurants under the brand name of Burger King. The company
offers a diversified menu item from burgers, milk shakes, soda etc. The company achieve
revenue from three sources i.e. franchise revenues, the property income that they receive from
leasing or subleases to franchises and retail sales.
1.GOALS
The Burger King and Tim Hortons made an agreement under which the two companies will
establish a new global powerhouse in the quick service restaurant sector.
2.FOCUS
The Company constantly focuses on the menu development, market penetration and basically
works on an establishment based model.
3.CULTURE
The Burger King adopts a specific culture and values that is noticeable in the form of
diversified menu items they offer. They advocate the culture of “Have it your way” to attract
the customers.
4.STRENGTHS
The biggest strength of the Burger King lies in their geographic expansion by operating
11,500 fast food restaurants mostly located in over 70 countries.
5.WEAKNESSES
The product line is highly focused on the fast foods which may withdraw those customers who
are conscious about their health especially children.
6.MARKET SHARE
The current earnings growth rate is +15.96%.and the annual revenue gained last year was up
to $1.1bn.
CUSTOMER ANALYSIS
The company has a strong product offering to attract and retain the loyal customers.
According to the recent news, the company acclaimed that they have been attracting more
customers after the launch of Satisfries, in North America. The Satisfries are low calories
French fries which have got 20% lower calories than a regular fries. This brought an
incremental change in the customers who would not think of Burger King before.
COLLOBARATORS
JOINT VENTURES
A huge joint venture between Tim Hortons and Burger King will take place that aims to
achieve $23billion sales.
DISTRIBUTERS
US, UK, Canada etc.
SOCIAL AND CULTURAL ENVIRONMENT
The Social-cultural factors vary from country to country. In an Islamic Country the company
has to be careful about the content of food such as the burger king only serves halaal food to
the Muslim countries and refrain from pork meat.
TECHNOLOGICAL ENVIRONMENT
The Company has recently planned to add a mobile payment option in all its domestic stores.
The application will help to provide coupons and nutrition facts.
SWOT ANALYSIS
STRENGTHS
• Geographic Diversification: Burger King has adopted a geographical strategy by expanding
its business in over 70 countries where 4538 are located internationally in Asia, Middle East
etc.
• Strong brand presence
• Diversified product offerings.
• Advertising campaigns are appealing.
WEAKNESSES
• Some people avoid Burger King because of its unhealthy food items.
• International appeal is quite low.
• Franchise management is weak.
OPPORTUNITIES
• Market expansion.
• New Product Development, catering to the needs of the consumers like new healthy menu
etc.
THREATS
• Food costs get high during inflation period.
• Fierce Competition with McDonalds, Hardees, KFC.
MARKETING SEGMENTATION
The Burger King has developed three market segments for its customers such as Kids,
African- American teenage crowd, working women. For kids, they have formed a full
developed integrated new products, menus, media and advertising. The working women
segment is specifically based on the menu products like chicken tenders, chicken sandwiches,
and salads.
GROWTH STRATEGY
Burger king’s new move to merge with Tim Hortons is considered to be a growth strategy
from both the brands. However, some people have disapproved this stance of Burger King as
it’s a tax aversion strategy by the company. The company denied this rumor and stated that
they want to bring together both the companies under one flag to serve even better.
INTEGRATED DIGITAL MARKETING STRATEGY
The digital marketing is a new target move and the company has been constantly innovating
through enhancing all the channels of communication to serve the customers with the best
possible experience.
MARKETING MIX (4P’S)
PRODUCT
• Began the business with burger and fries.
• Adaptive strategy.
• Diversification strategy tailoring the needs of the customers.
PRICE
• Psychological marketing strategy.
• The company continues to sell the new premium burgers, the Steakhouse XT at $3.99.
PLACE
• Burger King receives its revenues from three sources: sales at its own restaurants, property
income and the franchise fees.
• The company is operating in various prime locations mostly in the form of franchises.
PROMOTIONS
• The launch of $1 big value meal.
• The company used the term of “Next big move” to showcase the scheduled promotional
tours in urban communities around the country.
FINANCIAL PROJECTIONS
In the first half of 2014, the Burger King’s global unit count grew to more than 5%, previously
expanding into 682 locations and to more than 13,808 units in 2013.
Burger King’s Operations Management, 10 Decisions, Productivity
Burger King’s operations management (OM) involves strategies to increase the company’s
status toward the top position in the global quick service restaurant industry. As one of the
major players in the industry, Burger King must address the 10 strategic decision areas of
operations management. These 10 areas are the most basic considerations in strategic
formulation for streamlined and unified organizational development. Burger King has
appropriate strategies and tactics for the 10 strategic decisions of operations management.
These strategies and tactics are based on Burger King’s business nature and market conditions.
The 10 strategic decisions of operations management (OM) are carefully included in Burger
King’s strategies for high productivity and performance. These strategies are a result of
Burger King’s organizational development through the years.
Burger King’s Operations Management, 10 Decision Areas
1. Design of Goods and Services. Burger King’s focus in this strategic decision area of
operations management is to differentiate its products from those of competitors. For example,
the company offers flame-grilled burgers, which are relatively unique in the market. This
approach to operations management supports Burger King’s generic strategy and intensive
growth strategies.
2. Quality Management. This strategic decision area involves satisfying the quality
expectations of target customers. To address this concern, Burger King’s operations
management maintains product tests. The company also collects customer feedback through
the My BK Experience website.
3. Process and Capacity Design. Burger King’s objective in this strategic decision area is to
implement operations management programs to maximize capacity utilization and
productivity. For example, the company continuously monitors demand and sales at its
restaurants worldwide. Burger King adjusts its production facilities’ operations accordingly.
4. Location Strategy. The primary operations management concern regarding location is to
strategically optimize market reach. Burger King’s strategy to address this decision area
involves market penetration, with focus on town centers and urban centers. Restaurant
location is used as a criterion for evaluating franchise proposals.
5. Layout Design and Strategy. Burger King’s operations management emphasizes
efficiency. For example, the company’s kitchen design is as compact as possible to save space
while enabling worker productivity. Thus, Burger King addresses this strategic decision area
through efficient layouts and workflows.
6. Job Design and Human Resources. Sufficient and effective human resources are the
objective in this strategic decision area of operations management. Burger King satisfies this
concern through standardized training programs. The firm has field teams and Restaurant
Support Centers for this purpose.
7. Supply Chain Management. Burger King has a global supply chain. In this strategic
decision area, the objective is to ensure adequacy of supply at all times. Burger King’s
operations management strategy involves consolidating all supply chain activities under
Restaurant Services, Inc. (RSI). Burger King’s materials and ingredients are supplied through
RSI.
8. Inventory Management. This strategic decision area highlights the need for operations
management practices that maximize capacity and satisfaction, and minimize inventory
management costs. Burger King addresses this need through localized inventory practices
based on restaurant performance, as well as global inventory management for moving
products to various restaurant locations.
9. Scheduling. Burger King’s approach for this strategic decision area is based on industry
standards. For example, the company’s operations management uses automated scheduling for
human resources. In addition, manual scheduling is used, especially at individual Burger King
restaurants.
10. Maintenance. Optimal operating conditions are the main concern in this strategic decision
area of operations management. For this purpose, Burger King also uses industry standards.
The company has dedicated maintenance teams for corporate operations, and Restaurant
Support Centers for franchisees, as well as third party service providers in various localities.
Productivity at Burger King
Burger King’s operations management measures productivity from different angles, such as
those of the franchisees, corporate headquarters, and regional facilities. The goal is to
maximize productivity while minimizing corresponding costs. The following are some notable
productivity criteria at Burger King:
1. Revenues per restaurant (restaurant productivity)
2. Revenues per region (productivity in the regional market)
3. Meals served (general productivity for process evaluation)
4. Documents processed per year (Burger King’s corporate productivity)
Some of the Strategic Operation Decisions
In the products and services design section, as mentioned earlier, Burger King has designed
the products which meet the customers’ expectations and needs such as the BK Veggie, halal
food and others. Burger King also has designed the efficient services such as the drive
through.
After that, when going into the process, Burger King adopts the make-to-order approach to
produce the goods and provide the services. Burger King can customize the products because
it builds sandwich one at a time rather than batch-process them. For instance, meat patties will
be holding in the steamer after being grilled until an order comes in. Then, the patty is taken
out from the steamer and then is added the requested condiments. Finally, the completed
sandwich chutes to a counter worker, who gives it to the customer.
In contrast, many of Burger King’s competitors, such as McDonald’s, apply the make-to-
stock. They made a batch of sandwiches in one time with the same ingredients. If a customer
wants a sandwich without lettuce, he or she needs to wait for another batch of sandwiches for
extra several minutes; however, Burger King can make it in several seconds.
Besides that, as a service provider, one must unceasingly look for ways to improve operational
efficiency. Burger King has introduced a series of innovations that have helped make the
company more efficient and profitable throughout the half century history. For example,
Burger King was the first who initiated the drive through service.
Location selection is the most important issue when starting or expanding a service business.
A poor location can cost the owners and customers because of inaccurate estimation for
demand and therefore influence the quality. The first consideration for selecting the location is
the ability to attract the customers.
The favorite catchphrase for looking a spot for expanding the business which is used by the
Burger King’s planners (United States) is “Through the light and to the right.” In picking a
location, Burger King’s planners execute a detailed analysis of demographics and traffic
patterns. The most important consideration is the number of cars or people pass by and the
population at the specific area. In the United States, Burger King finds for busy intersections,
interstate interchanges with easy off and on ramps. Besides that, crowded areas as shopping
malls, tourist attractions, downtown business areas, or movie theaters were also the primary
concentration for location selection. Public transportation which is very common in Europe
makes the planners focus on the subway, train, and bus stops also.
Furthermore, for the size and layout option, it is also important for the operation which the
size and layout must be designed to attract the customers and make them more convenient
while buying, serving, dining, storing and others. In the first three decades, each Burger
King’s restaurant had about four thousand square feet of space. Yet the planners decided to
reduce the space to continue growing and to meet the customers’ expectations because the
customers tended to be in hurry, and more customers preferred the convenience of drive-
through instead of dining in. So, the restaurant trims the size of a restaurant from four
thousand square feet to as little as one thousand. The reduction of size had enabled the
company to enter the markets that were once cost prohibitive such as airports, center-city areas
and even schools.
On the other hand, forecasting demand for capacity design is easier for Burger King. Burger
King can estimate the sales for a new restaurant by combining its knowledge of customer-
service patterns at existing restaurants with information collected about each new location,
including the number of cars or people passing the proposed site and the effect of nearby
competition.
Service organizations emphasize on scheduling workers because of the stability and
availability to handle the fluctuating demands. Burger King’s managers not only schedule the
workers for peak period such as the three main meal time which are breakfast, lunch and
dinner, but also arrange enough workers for other period in between. If the managers staff too
many people, labor cost per sales dollar will be too high. If there aren’t enough employees,
customers have to wait in lines. This phenomenon will discourage the customers and make the
owner loss the customers and sales. That will also influence the reputation of a company.
Scheduling is made easier by information provided by a point-of-sale device built into every
Burger King cash register. The register keeps track of every food items sold by the hour, every
hour of the day, every day of the week. Thus, to determining the staffing levels for a specific
time, managers can set it based on the data provided. Each manager can adjust this forecast to
account for other factors, such as current marketing promotions or a local sporting event that
will increase customer traffic.
Moreover, to do a business, everyone will worry about the inventory control problems such as
high holding cost or shortage of inventory that will alter the smoothness of operations. Burger
King Corporation has used the technology system which is the point-of-sale registers to track
everything sold during a given time and lets each store manager know how much of
everything should be kept in inventory. It also makes it possible to count the number of
burgers and buns, bags and racks of fries, and boxes of beverage mixes at the beginning or end
of each shift. Due to there be fixed numbers of materials or supplies in each box, employees
can count boxes and multiply easily. In a consequence, manager also can detect the theft
quickly.
