Mind the gap: Burger King playing catch up in the U.S.

by Keith Nunes
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MIAMI – With average U.S. per store sales of $1.2 million, Burger King Worldwide, Inc. is trying to close the gap with its peers in America that have average per store sales in the range of $1.5 million to north of $2 million, said Dan Schwartz, executive vice-president and chief financial officer. To narrow the gap, the quick-service chain is focusing on a four pillar strategy of menu, marketing communications, image and operations.

Mr. Schwartz spoke Dec. 3 at the Bank of America Merrill Lynch Leveraged Finance Conference in Boca Raton, Fla., and said in the United States “it’s all about turnaround for us.”

With regard to menu, Mr. Schwartz said the focus since the fall of 2012 has been to put platforms in place in order to address “major gaps” in the company’s line of offerings.

“I wouldn’t say the platforms that we introduced are innovative,” he said. “It was more filling the holes. If we look at what we’ve done, we introduced ice cream, salads, wraps, smoothies, new french fries (and) chicken strips. We put in place the products to address the holes in our menu, to address the snacking day-parts, to be more appealing to women, to children where we were lacking in the past. And having these platforms in place now will allow us to innovate into the future.”

Mr. Schwartz said Burger King did a good job in the United States of building a foundation with the new menu platforms that it has installed, but the company is far from closing the gap.

“We are nowhere near penetrated with respect to the sales per day or products per day in any of these (efforts),” he said.

Burger King is also working to grow its audience through marketing communications. In the past, the company has focused on the 18- to 35-year old male demographic. But the company has learned its guest base is actually composed of a third 18- to 35-year old males and females, a third parties with children, and a third seniors.

“We’ve broadened the messaging to be much more inclusive and to address the whole Q.S.R. industry,” Mr. Schwartz said. “Our marketing is much more food-centric now to capitalize on the differentiated flame grilling tastes that we have.

“On the marketing side, you are going to see a lot of continued limited-time offerings in terms of premium, like you saw with the Angry Whopper now, the barbecue window over the summer, combined with good value offerings like the $1 fruit smoothie on a temporary basis.”

From a store imaging and operations perspective, the focus of Burger King has been to reduce the cost of reimaging stores in the United States, which historically have averaged $600,000. The company has brought that cost down to $300,000 and created additional incentives for its franchisees to reimage their restaurants.

In store operations Mr. Schwartz said the focus will be on grading franchisees in speed of service, friendliness and cleanliness, and providing the resources to help those that do not make the grade improve.

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