Burger King: Changing or Imitating?

Master's Thesis from the year 2012 in the subject Business economics - Offline Marketing and Online Marketing, grade: A-, Santa Clara University, language: English, abstract: Purchased in 2010 by 3G Capital Management, BK became privately owned with a single business corporate strategy. Immediately, the new ownership group set out to make impactful company-wide changes. The first change was the elimination of the firm's 'King' mascot in 2011, which was seen as edgy and targeted towards young men in their teens and twenties. The new phase, which began earlier this year, consists of a drastic change in overall brand strategy to reposition BK as a broad and appealing restaurant in the QSR industry. To attract a wider audience, such as women and health-conscious customers, BK has added a significant amount of menu items including smoothies, coffee drinks, and salads. Furthermore, it has set out to remodel around 1,500 restaurants. In place of the previous mascot, BK has enlisted A-list celebrities (i.e., David Beckham and Selma Hayek) to advertise its products. Another strategy that they plan to implement is to sell almost all of its 1,300 corporate stores to franchise stores in an effort to protect itself from commodity-cost swings and fixed costs. With significant competition from both current as well as fast-growing QSRs (i.e., Five Guys Burgers and Fries, Panera Bread, and Chipotle Mexican Grill), BK's recent moves have been perceived as imitating the leader, McDonald's, rather than differentiating the company. While it remains to be seen whether or not the strategy is enough to grow the business, a potential concern is whether 3G Capital Management is looking for long-term growth or settling for marginal growth in the short-term to fund their exit from the company by going back to a public entity. The current strategy conveys that BK is in 'catch-up' mode instead of trying to distinguish itself as a premier QSR. Considering both internal and external factors, the firm needs to win back and increase its customer base as the way to grow its business. To do this, some recommendations for BK in the short-term are to introduce a happy hour that includes an accommodating menu of new products, offer nutritious kid's meals that are part of a healthy, balanced diet, and launch an online ordering system for customers to pre-order meals for pick-up. In the longer-term, we suggest BK buy out the highest performing franchises to gain additional streams of revenue, implement an incentive program to reward the best franchise stores, and start a high density delivery service.