Case Study

Burger King Beefs Up Global Operations Rosalind Fields Columbia Southern University

Burger King Beefs Up Global Operations by Rosalind Fields February 2012

Burger King leads the world in flame­broiled fast food restaurant chains and operates in all 50 states and 74 countries and territories of the United States. Daniels, Radebaugh, & Sullivan (2011) Burger King’s official websites states that it was founded in 1954 and currently serves over 11 million guests. Known as the Home of the Whopper, the same source explains that approximately 90 percent of Burger King restaurants are owned and operated by independent franchisees. Further explanation is given to the October 2010 purchase of the company by 3G Capital. 3G Capital is described as a firm that focuses on long term value creation. (www.bk.com ) Burger King’s is known for letting customers “have it their way; its core competencies are its flame­broiled burgers and the choices that it gives to customers for their burgers. This differentiates Burger King from the competition. (Daniels, J., Radebugh, L., & Sullivan, D. 2011 p.463) The company seems to have maintained its initial chosen strategy. Daniels, Radebaugh, & Sullivan (2011) supports this by explaining that although their menu has expanded over time, Burger King has been consistent with offering its flame­broiled burger and its signature product: The Whopper sandwich, which is more than fifty years old. Daniels, J., Radebugh, L., & Sullivan, D. (2011) define value chain as the sum of activities that happen as a product moves from its beginning stage to final distribution in order to create value. Burger King’s marketing campaign has contributed most to its value. The use of the Burger King logo is known in its origin country of the United States as well as internationally. Burger King operates with a strong and innovative marketing campaign. For example, the infamous “Whopper Virgin” campaign included a taste test of the Burger King Whopper and the McDonald’s big Mac sandwich. Participants were selected based on the fact that they had never eaten a burger. (Daniels, Radebaugh, & Sullivan 2011) According to Euromonitor International,
Burger King Beefs Up Global Operations by Rosalind Fields February 2012

the world’s leading provider of global consumer market intelligence Burger King has really stepped up its marketing efforts and is ready for more growth. Further details explain that the chain has also designed a convincing store layout that may lower start­up costs and increase profitability for franchisees. Burger King currently operates in over 70 countries. Operations include company­owned and franchised locations. It s initial international expansion occurred in the early 1960’s in the Bahamas and Puerto Rico. It is true that Burger King’s expansion outside of the United States was after McDonald’s, its main competitor. Daniels, Radebaugh, & Sullivan (2011) describe this late international arrival as both and advantage and disadvantage. One primary advantage is that the demand for fast food outside of the United States has increased. Additionally, the supply chain has also been established. Moreover, if the market has been set up, Burger King’s late show means that it can focus on its marketing and service plan rather than start up initiatives. On the other hand, the disadvantage of arriving on the scene late is that the availability for distributors may not be plentiful. For example, if the established fast food chains are in an area where Burger King enters and the established chain has an agreement with a supplier or distributor, the supplier or distributor may only want to deal with one restaurant. In this example, relationship has been established with the existing restaurant and the other key players in the area. There are also advantages and disadvantages to for Burger King entering another company to do business. The Food Market Watch explains that “expanding its presence in existing and new markets will allow the company to enhance its brand value and establish a global footprint, which in turn should favorably impact its financial position.” This is further supported in the class text book in that one advantage for Burger King is that it is able to offer
Burger King Beefs Up Global Operations by Rosalind Fields February 2012

local distributors and suppliers work. This helps Burger King and the local supplier. The biggest disadvantage is adapting to local customs and food preferences. For examples, some cultures may not be sold on eating a flame­broiled hamburger. The company may have to custom the menu to its signature products and the demand of the country in order to satisfy customers and maintain visibility. Yes, Burger King should change its ratio of US operations vs. operations abroad. Burger King should be aggressive and enter any market where McDonald’s is located. Their presence would give them a piece of the success pie that McDonald’s currently enjoys. According to the Food Market Watch “The restaurant business in the US is slowly gaining traction after the recessionary decline. US restaurant industry sales reached $604 billion in 2011, up 3.6% over 2010, with the industry employing 12.8 million individuals in 960,000 restaurant and foodservice outlets nationwide.” With this thought, it is advantageous for Burger King to move forward and expand internationally. This move will increase profits and at the same time provide international customers with a choice where McDonald’s may be the only fast food option in the area. Youth and shopping center are perfect targets for fast food locations. Fast food menus are generally low budget and will be affordable for youths. Also, youth are more apt to not be as health conscience and do not have restricted diets like older people. In most cases youth are able to get to fast food locations by car, local transportation and even walk. This makes the restaurants popular for this population. Additionally, shopping centers are good magnets in that customers are usually on the go and the easy access of drive thru restaurants and quick menus are very attractive to customers and can increase sales. Burger King’s headquarters are located in Miami Florida in the United States. Miami is a diverse city in the southern United States and includes people and business of various

Burger King Beefs Up Global Operations by Rosalind Fields February 2012

backgrounds and cultures. For example, Miami residents include Cubans, Haitians, and Americans. The company’s presence here speaks volumes and states that it is able to play on the international field and be committed to the people that it serves. With so many groups of people, the Burger king brand is familiar and can be shared with people across the globe. For instance, Latinos living in Miami are able to share their experiences with friends and family back home. This is a way to make the Burger King idea a familiar idea to the people in other countries. I consider this a huge advantage for Burger King. Another note worthy point is the highly visible Miami airport with route to and from Caribbean, European, and Latin American destinations. I am in support of Burger King’s innovative marketing strategies. As CEO of the company, I would do market research on the international location where my strongest competitor is located. I believe it would enhance expansion if the home team is familiar with the local customs, languages, and activities of the country selected to be the next new location. For example, if the new location is in Buenos Aires, I would have my team visit the area and become familiar with the area and its people. I would suggest catering the menu to the local area while still including the signature whopper and the flame­broiled cooking style. I also believe a partnership with local officials is a plus to a successful business relationship. In a Bloomberg Business week article, Diane Brady writes “When it comes to the pitfalls of operating a fast­food chain, Burger King has experienced them all: falling profits and sales, angry franchise owners, mediocre innovation, growing competition, and a razor like focus on the very customers who have been hardest hit during the recession.” Furthermore, the case implies that Burger King must not make the same mistakes when venturing into new territory. The company should consider the same strategy that it used to enter Russia. (Daniels, Radebaugh, & Sullivan 2011) Fast forwarding to present day activities, Burger King remains the number two

Burger King Beefs Up Global Operations by Rosalind Fields February 2012

fast food chain in the world and a far distance behind McDonald’s (Brady 2011) Going forward, there are many countries for expansion for /Burger King and room to grow.

References About BK Retrieved from http://www.bk.com/en/us/company­info/press/index.html

Brady, D. (2010) The Challenges Facing Burger King Buyer 3G Capital Retrieved from http://www.businessweek.com/magazine/content/

Daniels, J., Radebugh, L., & Sullivan, D. (2011). International Business. (13 ed) Saddle River, NJ: Prentice Hall.

Euromonitor International: Building Value in Burger King Retrieved from http://www.marketresearchworld.net/index.php?option=com_content&task=view&id=121

Food Market Watch: Company Spotlight: Burger King Corporation. Nov2 011, Vol. 10 Issue 11, (p 20­25) Retrieved from www.EBSCOhost.com

Burger King Beefs Up Global Operations by Rosalind Fields February 2012

Burger King Beefs Up Global Operations by Rosalind Fields February 2012