Burger King

Burger King
Type Private
Industry Restaurants
Predecessor Insta-Burger King
Founded Insta-Burger King - July 28, 1953 in Jacksonville, Florida
Current company - January 1955 in Miami, Florida
Founder(s) Insta-Burger King - Kieth J. Kramer and Matthew Burns
Current company - David Edgerton and James McLamore
Headquarters 5505 Blue Lagoon Drive,
Miami-Dade Co, Florida (near Miami)
Area served Global
Key people John W. Chidsey (CEO/Chairman)
Ben K. Wells (CFO)
Products Fast Food
(hamburgers • chicken • french fries • soft drinks • milkshakes • salads • desserts • breakfast)
Revenue increase US$2.54 Billion (FY 2009)[1]
Operating income increase US$348 Million (FY 2009)[1]
Net income increase US$200 Million (FY 2009)[1]
Total assets increase US$2.71 Billion (FY 2009)[2]
Total equity increase US$975 Million (FY 2009)[2]
Employees 41,000 (2008)[3]
Parent Burger King Holdings Inc.
Website burgerking.com
A typical Burger King restaurant in Durham, North Carolina.

Burger King (NYSE: BKC), often abbreviated as BK, is a global chain of hamburger fast food restaurants headquartered in unincorporated Miami-Dade County, Florida, United States. The company began as a franchise restaurant chain, based in Jacksonville, Florida in 1953, named Insta-Burger King, and operated by Kieth J. Kramer and Matthew Burns. After the company ran into financial difficulties in 1955, its two Miami-based franchisees, David Edgerton and James McLamore, purchased the company and rechristened it Burger King. Since that time, the company has used several variations of franchising to expand its operations. Burger King Holdings Corporation is the parent company of Burger King; in the United States it operates under the Burger King Brands title while internationally it operates under the Burger King Corporation banner. It is a publicly traded company with investment firms of TPG Capital, Bain Capital, and Goldman Sachs Capital Partners each owning about 25% of the company. On 2 September 2010, it was announced that the company had been sold to 3G Capital, a company backed by the Brazilian billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira, in a deal valued at $3.26bn.[4]

At the end of fiscal year 2009, Burger King reported that there are more than 12,000 outlets in 73 countries; 66% are in the United States and 90% are privately owned and operated. The company has more than 37,000 employees serving approximately 11.4 million customers daily.[5] In North America, franchises are licensed on a per store basis, while in several international locations licenses are sold on a regional basis with franchises owning exclusive development rights for the region or country. These regional franchises are known as master franchises, and are responsible for opening new restaurants, licensing new third party operators, and performing standards oversight of all restaurant locations in these countries; the largest example of a master franchise is Hungry Jack's, which exclusively owns, operates or sub-licenses over 300 restaurants in Australia.

The Burger King menu has evolved from a basic offering of burgers, fries, sodas and milkshakes in 1954, to a larger, more diverse set of offerings that includes several variations of chicken, fish, salads and breakfast. The Whopper, a sandwich that has since become Burger King's signature product, was the first major addition to the menu by McLamore in 1957. Not all introductions have had the success of the Whopper; BK has introduced many products which failed to catch hold in the marketplace. Some products that have failed in the US have seen success in foreign markets, where BK has also tailored its menu for regional tastes.

The company's "Golden Age" of advertising was during the 1970s when it introduced its mascot the Magical Burger King, a memorable jingle, and several well known and parodied slogans. Beginning in the early 1980s, its advertising began to lose focus; a series of less successful ad campaigns created by various agencies continued for the next two decades. In 2003, Burger King set about resuscitating its moribund advertising with the hiring of the Miami-based advertising agency of Crispin Porter + Bogusky (CP+B). They completely reorganized Burger King's advertising with a series of new advertisements centered on a resuscitated Magical Burger King character.

Contents

History

Main article: History of Burger King
Burger King
Type Private
Industry Restaurants
Predecessor Insta-Burger King
Founded Insta-Burger King - July 28, 1953 in Jacksonville, Florida
Current company - January 1955 in Miami, Florida
Founder(s) Insta-Burger King - Kieth J. Kramer and Matthew Burns
Current company - David Edgerton and James McLamore
Headquarters 5505 Blue Lagoon Drive,
Miami-Dade Co, Florida (near Miami)
Area served Global
Key people John W. Chidsey (CEO/Chairman)
Ben K. Wells (CFO)
Products Fast Food
(hamburgers • chicken • french fries • soft drinks • milkshakes • salads • desserts • breakfast)
Revenue increase US$2.54 Billion (FY 2009)[1]
Operating income increase US$348 Million (FY 2009)[1]
Net income increase US$200 Million (FY 2009)[1]
Total assets increase US$2.71 Billion (FY 2009)[2]
Total equity increase US$975 Million (FY 2009)[2]
Employees 41,000 (2008)[3]
Parent Burger King Holdings Inc.
Website burgerking.com

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. The original founders and owners, Kieth J. Kramer and his wife's uncle Matthew Burns, opened their first stores around a piece of equipment 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 1959, it was purchased by the Miami, Florida franchisees James McLamore and David R. Edgerton who renamed 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.

Under Pillsbury, the company underwent several attempts at reorganization or restructuring in the late 1970s and early 1980s. While these efforts were effective in the short term, many of them were eventually discarded resulting in Burger King falling into a fiscal slump that damaged 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 money-losing chain and put the company up for sale in 2000.

In 2002, a troika of private equity firms led by TPG Capital, L.P with associates Bain Capital and Goldman Sachs Capital Partners agreed to purchase BK from Diageo for $1.5 billion (USD), with the sale becoming complete in December of that year. The new owners, through several new CEOs, have since moved to revitalize and reorganize the company, the first major move was to re-name the BK parent as Burger King Brands. The investment group initially planned to take BK public within the two years of the acquisition, however this action was delayed until 2006 due to several reasons. On 1 February 2006, it was announced that TPG planned to take Burger King public by issuing an Initial Public Offering (IPO). Between March 2004 and March 2009, the company experienced a score of consecutive profitable quarters that were credited with successfully re-energizing the company, however with the slowing of the economy during the financial crisis of 2007-2010 the company's business has declined while its immediate competitions, McDonald's, has grown. On September 2, 2010, Burger King Holdings Inc. announced it will sell out to private equity company 3G Capital for $24 per share, or $3.26 billion.

United States

Insta-Burger King

1950-60s era Burger King logo

The predecessor to what is now called Burger King was founded in 1953 in Jacksonville, Florida as Insta-Burger King. The original founders and owners, Kieth J. Kramer and his wife's uncle Matthew Burns, opened their first stores around a piece of equipment 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.[6]

While the Jacksonville chain was expanding, two friends named James McLamore and David R. Edgerton, both alumni of the Cornell University School of Hotel Administration, were seeking an opportunity to open their own business. McLamore had visited the original McDonald's hamburger stand belonging to Dick and Mac McDonald in San Bernardino, California; sensing potential in their innovative assembly line-based production system, he decided he wanted to open a similar operation of his own.[6][7]

Upon McLamore's return to Miami, the pair purchased a license to operate an Insta-Burger King franchise and opened their first location on 4 December 1954 at 3090 NW 36th Street in Miami, Florida. By 1959 McLamore and Edgarton were operating several locations within the Miami-Dade area and growing at a fast clip. Despite the success of their operation, the partners discovered that the design of the insta-broiler made the units heating elements prone to degradation from the drippings of the beef patties. The pair eventually created a mechanized gas grill that avoided the problems by changing the way the meat patties were cooked in the unit. The new cooking appliance, which they called a flame broiler, moved the patties over the flame vertically on a chain link conveyor over the heating elements, a design that imparted grill lines on the meat similar to those made on a charcoal grill. The new unit worked so well, that they made the decision to replace all of their Insta-Broilers with the newly designed unit.[6][7]

Even though the company had rapidly expanded throughout the state until its operations totaled more than 40 locations in 1955, the original Insta-Burger King ran into financial difficulties and the pair of McLamore and Edgarton purchased the national rights to the chain in 1959 and rechristened the company as Burger King of Miami.[8] The company eventually became known as Burger King Corporation and began selling territorial franchise licenses to private owners across the US by 1961.[9]

Pillsbury Company

One of Minneapolis-based Pillsbury Company buildings, part of the company's home facility.

In 1967, after eight years of private operation, the Pillsbury Company acquired Burger King and its parent company Burger King Corporation. At the time of the purchase, BK had grown to 274 restaurants in the United States and had an estimated value of $18 million dollars (USD). One of the main issues that Pillsbury had to control was the lack of consistency within the franchise framework. McLamore and Edgerton's franchise system allowed the company to expand a great clip, however it lacked a system of checks and controls on its franchises which in turn created a poor reputation for the chain in regards to its products and image. Additionally, the agreements gave the company little power to prevent its franchises from exercising power of the company itself.[9]

One of the prime examples of the deficiencies in its former franchise structure was the relationship between Burger King and Louisiana-based franchisee Chart House. Chart House started out its history as Self Service Restaurants Inc. when two businessmen brothers Billy and Jimmy Trotter opened their own BK franchise group in that state in 1963. By 1970 the company had grown to over 350 store across the country, with its own purchasing system, training program and inspection system. In 1973 Chart House attempted to purchase the chain from Pillsbury for 100 million (USD), an offer which Pillsbury declined. After Chart House's bid failed, its owners Billy and Jimmy Trotter put forth a second plan that would have Pillsbury and Chart House spin off their respective holdings and merge the two entities into a separate company; again Pillsbury declined the proposed divestiture. After the failed attempts to acquire the company, the relationship between Chart House and the Trotters soured; when Chart House purchased several restaurants in Boston and Houston in 1979, Burger King sued the selling franchisees for failing to comply with the right of first refusal clause in their contracts - Burger King won the case, successfully preventing the sale. The two parties did eventually reach a settlement where Chart House kept the Houston locations in their portfolio.[9] In the early 1980s Chart House spun off its Burger King holdings and re-focused on its higher end chains; its Burger King holding company, DiversiFoods, was eventually acquired by Pillsbury 390 million (USD) in 1984 and folded into Burger King's operations.[10][11]

The Original Chicken Sandwich, one of the products introduced under Donald Smith in the 1970s

With the ongoing conflict with Chart House on the mind of the company's board in 1978, Burger King hired McDonald's executive Donald N. Smith to help revamp the company. Smith initiated a restructuring of all future franchising agreements, disallowing new owners from living more than an hour's drive from their restaurants, preventing corporations from owning franchises and prohibiting franchisees from operating other chains. This new policy effectively limited the size of franchisees and prevented larger franchises from challenging Burger King as Chart House had.[12] Smith also altered the way the company dealt with new properties by making the company the primary owner of new locations and rent or lease the restaurants to its franchises. This policy would allow the company to take over the operations of failing stores or evict those owners who would not conform to the company guidelines and policies.[9] Beyond the changes to the franchise system, Smith also restructured Burger King's corporate operations in order to better compete against his former company as well as then up and coming chain Wendy's. One of his first changes was to modify the menu with the addition of the Burger King specialty sandwich line in 1979, which significantly expanded the breadth of the BK menu with many non-hamburger sandwiches including new chicken and fish offerings. The new line was one of the first attempts by a major fast food chain to target a specific demographic, in this case adults aged between 18 and 34 years, members of which were presumably willing spend more on a higher quality product.[8] The new products were successful and the company's sales increased by 15%.[9]

After Smith's departure from the company for soft drinks producer PepsiCo in 1980,[13] the company began to see a system-wide decline in sales. Pillsbury executive vice president of restaurant operations Norman E. Brinker was tasked with turning the brand around and strengthening its position against its main rival, McDonald's. One of his first acts was to initiate an advertising plan emphasizing claims that Burger King's flame-broiled burgers were better and larger than its rival's. The program, arguably the first attack ads on a food chain by a competitor, was controversial in that before it fast food ads only made allusions to the competition in a vague manner, never mentioning them by name. McDonald's sued Burger King, their ad agency at the time the J. Walter Thompson Company. The child actress Sarah Michelle Gellar was also implicated in the lawsuit because of her appearance in these television commercials. The suit was settled the following year on undisclosed terms.[14] Despite the controversy, the ad plan boosted same store sales when sales took off. The whole situation at the time became known as the Burger Wars.[15] Brinker continued working for the company in this capacity until 1982 when he was promoted to president of Pillsbury's food service division. His new role expanded his oversight to include the company's other chains beyond Burger King.[16] Brinker left the company in 1984 to take over Dallas-based gourmet burger chain Chili's.

With the departure of Smith and Brinker, Pillsbury allowed many of their changes to be relaxed, as well as scaled back on construction of new locations which had the effect of stalling corporate growth.[17] By failing to follow through on the changes of the two men, Pillsbury caused its own value to diminish as it derived more than one third of its sales and two thirds of its profits from the burger chain. When the British alcoholic beverages company Grand Metropolitan PLC made a hostile bid for Pillsbury, the company devised a plan to spin off the financially flailing restaurant unit in hopes to raise an estimated US$2 billion that could be used to fend off the unwanted suitor. The complex, potentially tax-free stock split plan would have led to the chain, along with its distribution system Distron, becoming a separate entity for the first time in over twenty years.[18]

Hoping that the special dividends created by the spin-off would have convinced shareholders not to accept the hostile bid, Pillsbury had its plans partially scuttled when the company's franchisees rejected the plan despite parts of which that would have given the franchises part ownership in the company and a seat on its new board. In a letter to Pillsbury chairman Phillip L. Smith, franchise representative Bill N. Pothitos stated that franchisees disapproved of the transaction on the grounds that they "strongly oppose this proposed course of conduct for one reason and one reason alone: It so restricts the ability of the Burger King Corporation to engage in future competitive growth and reinvestment in the Burger King system that our economic interests and investments will be placed in jeopardy."[19][20] Another option floated by the company in December 1988 was to sell Burger King to a third party, a proposal that drew a favorable response from its franchises, never came to fruition.[21]

On top of the failure of the franchises to approve the spin-off, a series of lawsuits complicated the divestiture.[22] Two legal challenges to the parent company were filed by investors, one in Pillsbury's home state of Minnesota and another in the state where it was incorporated, Delaware, in which the legality of the stock tender plan was questioned.[22] These three events eventually forced Pillsbury to give up its bid to fend off Grand Metropolitan and agree to be acquired in November 1988.[22]

Grand Metropolitan

A shuttered Burger King in Bradford, West Yorkshire

Between the time of the initial sales agreement in November 1988 and the finalization of the acquisition of Pillsbury in January 1989, Grand Metropolitan set about putting its own corporate stamp on Burger King; the stated goal of Grand Met CEO Allen Sheppard was to upgrade the overall performance of the chain and improve its standing as the second largest fast-food burger chain globally. To that end, he had the company initiate a three-prong strategy of evaluation of operations, personnel moves, and structural changes and improvements to fortify the company.[23]

Following through on the CEO's opinion that the company needed a consistent marketing plan and management team to succeed,[24] the company began its moves by replacing its chairman and CEO Jerry W. Levin with its own choice of executives, Barry J. Gibbons, chairman and managing director of Grand Metropolitan Retailing, Ltd., as chief executive and Ian A. Martin, Grand Met's top executive in the United States, as chairman. The moves came to no surprise to Wall Street analysts and franchisees, as they were expected due to reservations about Levin after his appointment by the outgoing management at Pillsbury.[25] Grand Met's first major restructuring move was the dismantling of Burger Kings 50-year-old purchasing and distribution arm, Distron. Unhappy with the distribution group, the company originally thought to dispose of the division after the purchase but instead decided to reorganize it into two separate groups, one for procurement (Burger King Purchasing or BKPS) and another for distribution (Burger King Distribution Services or BKDS). With the restructuring, the company eliminated many positions and ended up laying off over a hundred staff members as a consequence.[26][27][28]

During the five years that led up to the purchase, the restaurant chain had a series of a half dozen ad programs accompanied by even more marketing directors, a situation that led Adweek to describe it as "ill-conceived marketing and downright sloppy strategic planning" in 1987. In order to reverse the trend, in December 1988 Grand Met set about reevaluating all aspects of the programs from the messages the company was sending to the customer through its commercials to the possibility of dropping its advertising agency of record, N. W. Ayer.[29] After a six-month evaluation, BK dropped Ayer in favor of a two-way combination of D'Arcy Masius Benton & Bowles (DMB&B) for overall programs and Saatchi & Saatchi for specific advertising programs such as the introduction of new products. The company hoped that the "dual-agency partnership" would provide a synergy that would bring together "some of the best minds in the advertising business" to establish a brand identity, or as a company spokesman stated, "what the consumers take away with them after they visit us--what we stand for..."[30]

Grand Met also made several moves in an attempt to broaden BK's business operations while expanding its presence globally. The first move by the company was the creation of the BK Expressway business concept, a new store store format designed for locations where a traditional stand-alone restaurant was impractical. The company introduced two separate formats designed to operate in different business environments; the first concept was intended as a kiosk-type store that would be placed in locations such as sports venues and airports. The second concept store, designed with two drive-thrus and a minimal or even non-existent dining room, was designed to go in locations that were limited by high land costs or limited space. Both types of these new, smaller stores operated with a condensed menu prepared on new equipment designed specifically for the more compact footprints of the new locations. Expressway locations were also designed with lower start-up costs in mind; franchisees were wooed with the promise of a much smaller investment, approximately one third as much, than would be required to open a more traditional location.[31][32] In August of the same year, Grand Met set about expanding Burger King's operations in Europe by acquiring UK-based United Biscuits restaurant operations, including the nearly 400-location burger chain Wimpy. With the purchase, described as a "rare opportunity" by CEO Sheppard, Grand Met set about converting certain Wimpy locations that employed a counter service system into Burger King locations.[33] The merger of the United Biscuits properties with BK grew the company from about 30 restaurants in the UK to more than 60 within a year of the purchase, with another 30 locations added in early 1990.[34] While other "Wimpy" locations are still in operation presently, they are now independent from BK and no longer have the presence they once did.[9]

The 1990s led off with Grand Met taking Burger King's soft drink contract to Coca-Cola from Pepsi.[35] Traditionally Burger King had sold soft drinks from the Coca-Cola Company in its home market, however in 1983 PepsiCo was able to garner the US$444 million beverage supplier contract from its rival. Despite extreme market debate over the future of the contract, it was renewed for a second term in 1987.[36] A sweetened contract that strengthened marketing and advertising program ties between Burger King and itself allowed Pepsi to keep supplying soft drinks to BK. Leading up to the decision, Pepsi had sponsored over 100 separate cross-promotions and product tie-ins, including a Fourth of July promotion where BK gave away a free Pepsi with each purchase. This fit into the goals of BK, which was looking for a partner that would provide "outstanding, impactful promotional support."[37][38] However, the contract only lasted three more years when, partially based upon Pepsi's growth as a restaurant operator with its Tricon Restaurants division, Burger King moved its beverage contract back to Coca-Cola.[39][40] Accompanying the reintroduction of Coca-Cola, BK introduced its first major chicken sandwich since 1977; the new BK Broiler sandwich was a broiled sandwich targeting more health-conscious customers. The BK Broiler was a rapid hit and within six months of its introduction was selling more than a million units daily system wide.[9]

The company made an advertising coup that same year when it signed a 10-picture contract with the Walt Disney Company.[9] The deal, which included such Disney films as The Lion King, Aladdin and Toy Story, came at the height of Disney's commercial rebirth. Accompanied with the new BK Kid's Club program, the company saw an impressive growth within the children's market. The company's new Kid's Club, its first major foray into a children's targeted ad campaign since the Burger King/Burger King Kingdom program of the 1970s, saw phenomenal growth with more than one million children signing up for the program within two moths of its introduction.[9]

While many of the moves made by Grand Met were successful in generating additional sales and growth, the company continued to experience problems. While Fortune Magazine named CEO Gibbons as its Turnaround Champion for his success in reversing the fortunes of the company,[41][42] several news outlets claimed that the changes he introduced were problematic because they deprived the company of valuable assets.

The interior of Burger King's headquarters after Hurricane Andrew in 1992

In 1992, Hurricane Andrew destroyed the company headquarters.

In 1993 Gibbons decided to leave the company and was replaced by James B. Adamson.

Adamson left in early 1995 after making more improvements as well as fixing deficiencies left by Gibbons, and was replaced with David Nash as CEO.[43] He was elevated to Chairman in July, with Robert Lowes as CEO. Lowes became chairman in November.[44]

Diageo

In 1997, Grand Metropolitan merged with Guinness to form a company called Diageo. Franchisees alleged that Diageo ignored the chain in favor of its liquor business; there were two more CEOs in the time Diageo owned the company.

Diageo maintained ownership of BK until 2000 when Diageo decided to focus solely on their beverage products and divest itself of the chain.[45]

This institutionalized neglect further hurt the standing of the brand, in turn causing significant financial damage to Burger King's franchisees.[46] By the time of the sale, Burger King's revenues and market share had declined significantly, and the company had fallen to a near tie for second place with rival Wendy's in the US market for hamburger chain restaurants.[47] For many years leading into the early 2000s, Burger King and its various owners plus many of its larger franchisees closed many under-performing stores.[48] Several of its largest franchisees entered bankruptcy due to the issues surrounding the performance of the brand.[49][50]

TPG Capital and partners

Burger King's current global headquarters in suburban Miami-Dade county.

In 2002, a troika of private equity firms led by TPG Capital, L.P with associates Bain Capital and Goldman Sachs Capital Partners agreed to purchase BK from Diageo for $1.5 billion (USD),[9] with the sale becoming complete in December of that year.[51] The new owners, through several new CEOs, moved to revitalize and reorganize the company, the first major move was to re-name the BK parent as Burger King Brands.[52] The investment group initially planned to take BK public within the two years of the acquisition, this was delayed until 2006. On 1 February 2006, Out-going CEO Greg Brenneman announced TPG's plans to turn Burger King into a publicly traded company by issuing an Initial Public Offering (IPO).

On 16 February, the company announced it had filed its registration for the IPO with the Securities and Exchange Commission. Burger King began trading on the New York Stock Exchange under the ticker symbol BKC on 18 May 2006. The stock sale generated $425 million in revenue, the largest IPO of a US-based restaurant chain on record. The proceeds from the sale waere used by the company help pay back a loan taken out taken by the company in February used to pay dividends to the investment firms. According to one analyst at Renaissance Capital, Wall Street investors were not alarmed by the large payout due to the increased financial stability of the company resulting from changes made by the investor groups during the interim between the purchase in 2002 and the stock offering. Incoming CEO John W. Chidsey backed the payouts, stating that the financial firms spent considerable time and capital turning the company around.[53]

By the middle of its fiscal year 2008, the company had seen significant domestic growth for the first time in several years; for more than a dozen financial quarters, the company showed revenue increases and domestic expansion. During the first half of the calendar year 2008, the company initiated a plan to revitalize its stores with a program to replace or remodel almost all of its North American locations by the beginning of its fiscal year 2009 in July 2008.[54] The renovation plan was credited with helping the company increase same-store sales by as much as 5.4% over the previous fiscal year versus its competitors McDonald's and Yum Brand's 3% increase, but the total costs of the renovation program affected the company's revenue stream for the final quarters of its 2008 fiscal year. Wall Street analysts had originally projected net income to be approximately 27¢ per share, but the company only reported a 25¢ per share profit. The smaller profit announcement temporarily drove Burger King's stock prices down after the announcement. Despite the lower than expected profit and small decline in stock value, Wall Street analysts were upbeat about Burger King's future earnings because it was felt that the renovations would contribute to future profits; one such analyst stated that the renovations would "pay for themselves".[55]

Further modernization plans were introduced in 2009 with the company's "20/20" store designs and its "BK Whopper Bar" concept. The 20/20 concept, officially unveiled in Amsterdam on 10 October, featured a radical new design that featured bright colors, corrugated metal accents and plain brick walls that are designed to compete with chains in the fast casual restaurant market segment. A new system of in-store advertising was also introduced as part of the new format, static menu boards are to be replaced with high definition video displays. With the introduction of the 20/20 format, all future Burger King locations will be constructed using the design framework. Additionally, any future restaurant renovations must also conform to the new standard. The primary drawback of the design is its costs to the individual owners of BK restaurants; franchises must pay between $300,000-$600,000 USD to renovate their buildings to Burger King specs.[56]

The Whopper Bar is a concept from the company that upends its traditional fast food operations with a newer high end concept designed to compete with fast casual and casual dining restaurants. The new format is described by the company as a more "playful" variation on the standard Burger King location. The locations feature an open kitchen with a semi-circular metal counter top designed to allow customers to watch as its "Whopperistas" put together the order.[57] The exposed kitchen concept allows customers to view the preparation of their foods. Decoration of the new locations is limited to plasma televisions playing looped videos of open flames. The concept is similar to the McCafe concept from rival McDonald's, and like the McCafe locations they are designed to go into malls, airports and casinos and other areas with limited amounts of space.[58]

With the opening of its Whopper Bar locations in the United States during 2010, Burger King reported that it would be the first time in its North American locations that beer would be available for purchase. Although beer is available at fast food restaurants throughout Europe, including Burger King, this is the first time a major fast food chain has attempted to sell beer in the United States. The company will be selling products from SABMiller and Anheuser-Busch including Budweiser, Bud Lite and Miller Lite in aluminum bottles designed to maintain temperature. The move, designed to target the important 30-and-under demographic, has been called risky by industry analysts because of the company is known as a fast food purveyor and not as an alcoholic beverages seller. Other industry consultants have disagreed with the assessment, believing that the move is a practical one because the company is growing with its aging customer base.[59][60][61]

3G Capital

The latest chapter in the company's ownership history began on September 2, 2010 when TPG and its partners announced it would sell their 31% stake in Burger King to another private equity company, 3G Capital, for $24 per share, or $3.26 billion.[62][63] Between March 2004 and March 2009, the company experienced a score of consecutive profitable quarters that were credited with successfully re-energizing the company, however with the slowing of the economy during the financial crisis of 2007-2010 the company's business has declined while its immediate competitions, McDonald's, has grown.[64] Analysts, including John Glass of Morgan Stanley and David Tarantino of Robert W. Baird & Co., part of the reasons for the company's slowed performance is its continue reliance on the super fan.[64] Market-research firm Sandelman & Associates reported that this segment had seen a decline in visits by this demographic group by more than 50% during the recession, while restaurant industry analyst Bonnie Riggs at market-research firm NPD Group reported the 18-24 transferred much of its business from the fast food segment to the fast casual segment, compounding the decline.[64]

The offer, representing a 46% premium over the stocks selling price at the time, came as a surprise to Burger King CEO John Chidsey. The proposed sale is expected to help the company repair its fundamental business structures and continue working to close the gap with McDonald's.[65] Analysts commenting on the transaction stated that 3G will have to invest heavily in the company to help reverse its fortunes. David Palmer from UBS stated the company will need to work with its large group of franchise owners to brighten its locations and stabilize sales which could take several years and require significant reinvestment,[63] while Steve West of Stifel Nicolaus stated that Burger King will need at least a year to right its fundamentals.[65]

Key dates

Key dates include:

Industry innovations

See also


References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 Burger King Holdings (BKC) annual SEC income statement filing via Wikinvest
  2. ↑ 2.0 2.1 2.2 2.3 Burger King Holdings (BKC) annual SEC balance sheet filing via Wikinvest
  3. ↑ 3.0 3.1 "Burger King Holdings Inc (BKC)". Morningstar, Inc.. http://quote.morningstar.com/Quote/Quote.aspx?pgid=hetopquote&ticker=BKC. Retrieved 2008-10-03. 
  4. ↑ "Burger King sold to buy-out firm for $3.26bn (£2.1bn)". BBC News. http://www.bbc.co.uk/news/business-11168720. Retrieved 2 September 2010. 
  5. ↑ BKC publication (October 2007). "BKC 2008 Annual Report" (PDF). Burger King Holdings. http://media.corporate-ir.net/media_files/irol/87/87140/BurgerKing_2008_AR_FINAL.pdf. Retrieved 2008-12-23. "11,550 Restaurants in 71 countries and territories" 
  6. ↑ 6.0 6.1 6.2 Smith, Andrew F. (30 August 2006). Encyclopedia of junk food and fast food (1st ed.). Greenwood Publishing Group. pp. 27–28. ISBN 0313335273. http://books.google.com/?id=mYc4aw7tnekC&pg=PA172&lpg=PA172&dq=In+1952,+Matthew+Burns+of+Long+Beach,+California,+invited+his+stepson,+Keith+G.+Cramer. Retrieved 2009-06-14. 
  7. ↑ 7.0 7.1 Carlino, Bill (19 August 1996). "BK co-founder McLamore dead at 70". Nation's Restaurant News. http://findarticles.com/p/articles/mi_m3190/is_n32_v30/ai_18609870/. Retrieved 25 January 2010. 
  8. ↑ 8.0 8.1 John A. Jakle; Keith A. Sculle (27 March 2002). Fast Food (1st ed.). JHU Press. pp. 116–119. ISBN 080186920X. http://books.google.com/?id=0nYcgnWKWXgC&printsec=frontcover. Retrieved 2009-06-15. 
  9. ↑ 9.00 9.01 9.02 9.03 9.04 9.05 9.06 9.07 9.08 9.09 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 FundingUniverse.com. "History of Burger King Corporation". Answers.com. http://www.answers.com/topic/burger-king. Retrieved 2007-10-24. 
  10. ↑ Rick Telberg (1985-09-09). "How Pillsbury 'stole' DiversiFoods for just $390 million". Nation's Restaurant News. http://findarticles.com/p/articles/mi_m3190/is_v19/ai_3930610/. Retrieved 2007-08-24. 
  11. ↑ "DiversiFoods Net". The New York Times. 1984-12-12. Archived from the original on 2007-10-30. http://web.archive.org/web/20071030031352/http://query.nytimes.com/gst/fullpage.html?res=9A02EFDA1238F931A25751C1A962948260. Retrieved 2007-08-24. 
  12. ↑ Ester Reiter (March 1996). Making Fast Food: From the Frying Pan Into the Fryer, 2nd edition. McGill-Queen's University Press. p. 64. ISBN 0773513876. http://books.google.com/?id=oBj-sPpJDQcC&pg=PA64&lpg=PA64&dq=donald+smith+burger+king. Retrieved 2008-04-06. "Burger King's early franchising arrangements proved to be troublesome" 
  13. ↑ Siler, Julia Flynn (11 August 1988). "BUSINESS PEOPLE; Deal for Friendly Offers Official Chance to Shine". The New York Times. http://www.nytimes.com/1988/08/11/business/business-people-deal-for-friendly-offers-official-chance-to-shine.html?pagewanted=1. Retrieved 25 January 2010. 
  14. ↑ "Sarah Michelle Gellar". NNDB.com. http://www.nndb.com/people/511/000023442/. Retrieved 2007-10-02. 
  15. ↑ Romeo, Peter (1988-12-19). "Brinker: a man with a vision". Nation's Restaurant News. http://findarticles.com/p/articles/mi_m3190/is_n51_v22/ai_6935546/pg_2/?tag=content;col1. Retrieved 2008-03-03. 
  16. ↑ Ruggless, Ron (2009-06-09). "Industry icon Norman Brinker dies". Nation's Restaurant News. http://www.nrn.com/article/industry-icon-norman-brinker-dies. Retrieved 2010-10-19. 
  17. ↑ Eric N. Berg (1988-11-04). "Burger King's Angry Franchises". The New York Times. http://query.nytimes.com/gst/fullpage.html?res=940DE0DD1530F937A25752C1A96E948260&sec=&spon=&pagewanted=print. Retrieved 2008-04-06. "The franchisees complain that, in recent years, the chain's growth has come almost entirely from the franchisees, not from the corporation." 
  18. ↑ "Pillsbury to spin off Burger King". Spokane Chronicle (Associated Press): pp. A13. 17 November 1988. http://news.google.com/newspapers?nid=1345&dat=19881107&id=6bUSAAAAIBAJ&sjid=4fkDAAAAIBAJ&pg=6765,838805. Retrieved 25 January 2010. 
  19. ↑ Berg, Eric N. (7 November 1988). "Pillsbury Planning a Revamping". New York Times. http://www.nytimes.com/1988/11/08/business/pillsbury-planning-a-revamping.html?pagewanted=all. Retrieved 25 January 2010. 
  20. ↑ Berg, Eric N. (19 November 1988). "Burger King Franchisees Reject Spinoff". New York Times. http://www.nytimes.com/1988/11/19/business/burger-king-franchisees-reject-spinoff.html?pagewanted=1. Retrieved 25 January 2010. 
  21. ↑ Romeo, Peter (19 December 1998). "Burger King shifts marketing chiefs: irate franchisees spark latest upheaval". Nations Restaurant News. http://findarticles.com/p/articles/mi_m3190/is_n51_v22/ai_6935524/. Retrieved 25 January 2010. 
  22. ↑ 22.0 22.1 22.2 Lipton, Martin; Erica H. Steinberger (2003). Takeovers and Freezeouts. 2 (Lslf ed.). Law Journal Press. pp. 6–134. ISBN 1588520056. http://books.google.com/?id=C_ZJsagLzCQC&pg=SA6-PA134&lpg=SA6-PA134&dq=Burger+King+Pillsbury+Spin+off&q=Burger%20King%20Pillsbury%20Spin%20off. Retrieved 25 November 2009. 
  23. ↑ Howard, Theresa (January 1995). "Lord Allen Sheppard: chairman, Grand Metropolitan PLC, London". Nation's Restaurant News. BNet.com. http://findarticles.com/p/articles/mi_m3190/is_nSPEISS_v29/ai_16376439/. Retrieved 10 February 2010. 
  24. ↑ Reuters (21 December 1988). "Burger King's crown slipping". Sydney Morning Herald. http://news.google.com/newspapers?nid=1301&dat=19881221&id=21cVAAAAIBAJ&sjid=qOQDAAAAIBAJ&pg=2460,259233. Retrieved 24 February 2010. 
  25. ↑ Siler, Julia Lynn (17 January 1989). "Grand Met Picks 2 to Head Burger King". New York Times. http://www.nytimes.com/1989/01/17/business/grand-met-picks-2-to-head-burger-king.html?pagewanted=1. Retrieved 25 January 2010. 
  26. ↑ Reuters (1989-08-11). "Grand Met to Retain A Burger King Unit". New York Times. http://www.nytimes.com/1989/04/11/business/company-news-grand-met-to-retain-a-burger-king-unit.html. Retrieved 2009-10-28. 
  27. ↑ Prewitt, Milford (1992-04-06). "Burger King launches new purchasing co-op". Nation's Restaurant News. BNet.com. http://findarticles.com/p/articles/mi_m3190/is_n14_v26/ai_12120987/pg_2/?tag=content;col1. Retrieved 2009-10-28. 
  28. ↑ "Burger King to sell Burger King Dist. to Canadian firm". Nation's Restaurant News. BNet.com. 1992-04-20. http://findarticles.com/p/articles/mi_m3190/is_n16_v26/ai_12092600/. Retrieved 2009-10-28. 
  29. ↑ Rothberg, Randall (24 December 1988). "Grand Met reviewing Burger King's ads" (in (English)). New York Times (Lakeland Ledger): pp. D1, D4. http://news.google.com/newspapers?nid=1346&dat=19881224&id=IJUsAAAAIBAJ&sjid=APwDAAAAIBAJ&pg=1100,4909338. Retrieved 24 February 2010. 
  30. ↑ Romeo, Peter (29 May 1989). "Burger King taps 2 agencies for ad strategy". Nation's Restaurant News. BNet.com. http://findarticles.com/p/articles/mi_m3190/is_n22_v23/ai_7653539/. Retrieved 25 February 2010. 
  31. ↑ Prewitt, Milford (15 June 1992). "BK charting new expansion with 'Expressway' concepts". Nation's Restaurant News. BNet.com. http://findarticles.com/p/articles/mi_m3190/is_n24_v26/ai_12378909/. Retrieved 22 February 2010. 
  32. ↑ "Sarah Chapin, Past CEO Enersyst Development Center, Inc.". http://www.cfs.purdue.edu/HTM/darden/sarah_chapin.htm. Retrieved 8 February 2010. 
  33. ↑ Martin, Robert (9 August 1989). "Burger King Swallows Wimpy". Glasgow Herald. http://news.google.com/newspapers?nid=2507&dat=19890809&id=Ahk1AAAAIBAJ&sjid=JqYLAAAAIBAJ&pg=4866,2635238. Retrieved 22 February 2010. 
  34. ↑ "COMPANY NEWS; Grand Met Deal". New York Times (New York edition): pp. D4. 9 January 1990. http://www.nytimes.com/1990/01/09/business/company-news-grand-met-deal.html?scp=3&sq=Wimpy%20Grand%20met&st=cse. Retrieved 22 February 2010. 
  35. ↑ Ramirez, Anthony (2 May 1990). "New Coke Conquest: Burger King". New York Times: pp. D1. http://www.nytimes.com/1990/05/02/business/new-coke-conquest-burger-king.html?pagewanted=1. Retrieved 1 March 2010. 
  36. ↑ Associated Press (1987-08-12). "Burger King Picks Pepsi". AP Newswire (New York Times). http://www.nytimes.com/1987/08/12/business/company-news-burger-king-picks-pepsi.html. Retrieved 2009-11-03. 
  37. ↑ Alva, Marilyn (1987-08-27). "Tie-in promotions: the glue that made BK stick with Pepsi". Nation's Restaurant News. BNet.com. http://findarticles.com/p/articles/mi_m3190/is_v21/ai_5170360/. Retrieved 2009-11-03. 
  38. ↑ Alva, Marilyn (1987-08-03). "Burger King reviews contract with Pepsi-Cola syrup supplier". Nation's Restaurant News. BNet.com. http://findarticles.com/p/articles/mi_m3190/is_v21/ai_5129622. Retrieved 2007-05-28. 
  39. ↑ Ramirez, Anthony (1990-08-12). "New Coke Conquest: Burger King". New York Times. http://www.nytimes.com/1990/05/02/business/new-coke-conquest-burger-king.html. Retrieved 2009-11-03. 
  40. ↑ Carlino, Bill (1990-05-14). "Cola wars: Burger King switches from Pepsi to Coke; cost, Pepsico's rival concepts sway decision". Nation's Restaurant News. BNet.com. http://findarticles.com/p/articles/mi_m3190/is_n20_v24/ai_9019135. Retrieved 2007-05-28. 
  41. ↑ Dumaine, Brian; Sandra L. Kirsch and William E. Sheeline (16 July 1990). "The Turnaround Champs". Fortune Magazine (CNN Money). http://money.cnn.com/magazines/fortune/fortune_archive/1990/07/16/73796/index.htm. Retrieved 9 March 2010. 
  42. ↑ "London Business Forum News" (in en) (pdf). London, England: London Business Forum. February 2009. pp. 14. http://www.londonbusinessforum.com/news/pdf/lbf_2009-02.pdf. Retrieved 9 March 2010. 
  43. ↑ Gilpin, Kenneth (13 January 1995). "Chief Stuns Burger King In Shift to Denny's Parent". New York Times: pp. D3. http://www.nytimes.com/1995/01/13/business/company-news-chief-stuns-burger-king-in-shift-to-denny-s-parent.html?pagewanted=1. Retrieved 9 March 2010. 
  44. ↑ "BK chief Lowes takes on chairman title". Nation's Restaurant News. BNet.com. 13 November 1995. http://findarticles.com/p/articles/mi_m3190/is_n45_v29/ai_17590712/. Retrieved 13 March 2010. 
  45. ↑ Day, Sherri (26 July 2002). U.S. "Investors Agree to Buy Burger King From Diageo for $2.26 Billion". New York Times: pp. C5. http://www.nytimes.com/2002/07/26/business/us-investors-agree-to-buy-burger-king-from-diageo-for-2.26-billion.html?pagewanted=1 U.S.. 
  46. ↑ Reese, Shelly (2005-02-04). "It was broken, and new owner's fixing it". the Cincinnati Enquirer. http://www.boj.com/articles/franchise/burger_king_fixed.htm. Retrieved 2008-04-12. 
  47. ↑ Gross, Daniel (2004-06-24). "What's wrong with Burger King". Slate.com. http://www.slate.com/id/2102906/. Retrieved 2007-10-24. 
  48. ↑ Sims, Calvin (1988-01-08). "Pillsbury restaurants cutbacks set". The New York Times. Archived from the original on 2007-10-30. http://web.archive.org/web/20071030031316/http://query.nytimes.com/gst/fullpage.html?res=940DE7DE123EF93BA35752C0A96E948260. Retrieved 2007-10-24. 
  49. ↑ Palazzo, Anthony (2001-08-21). "Franchisee of Burger Chain Files Chap. 11". Los Angeles Business Journal. Archived from the original on 2007-10-31. http://web.archive.org/web/20071031034318/http://findarticles.com/p/articles/mi_m5072/is_33_23/ai_77757921. Retrieved 2007-10-24. 
  50. ↑ "Big Burger King Franchise chain files for bankruptcy". The New York Times. 2002-12-05. Archived from the original on 2007-10-30. http://web.archive.org/web/20071030031347/http://query.nytimes.com/gst/fullpage.html?res=9A01E7D6153BF936A35751C1A9649C8B63&n=Top/Reference/Times+Topics/Subjects/F/Fast+Food+Industry. Retrieved 2007-10-24. 
  51. ↑ Mark Trumbull (2006-11-13). "Are private buyouts good for the economy?". Christian Science Monitor. http://www.csmonitor.com/2006/1113/p01s01-usec.html. Retrieved 2007-10-24. 
  52. ↑ Grace Wong (2006-05-12). "Burger King IPO set to fire up". CNN Money. http://money.cnn.com/2006/05/12/markets/ipo/burger_king/index.htm. Retrieved 2007-09-30. 
  53. ↑ Matt Krantz (2006-05-19). "Burger King's IPO declared 'a success'". USA Today. http://www.usatoday.com/money/industries/food/2006-05-18-bk-ipo_x.htm. Retrieved 2007-09-30. 
  54. ↑ "Revived and Remodelling Burger King Sees Long-Term Growth". FlexNews.com (Global Data Systems). 2008-07-10. http://www.flex-news-food.com/console/PageViewer.aspx?page=17719. Retrieved 19 October 2010. 
  55. ↑ Baertlein, Lisa (1 May 2008). "Burger King beats estimates, but renovations weigh". UK: Reuters. http://uk.reuters.com/article/idUKN0129259520080501?pageNumber=2&virtualBrandChannel=0&sp=true. Retrieved 24 January 2010. 
  56. ↑ Heher, Ashley M. (7 October 2009). "Burger King revamp aims for an 'edgy, futuristic' restaurant look". USA Today (Associated Press). http://www.usatoday.com/money/industries/food/2009-10-06-burger-king-revamp_N.htm. Retrieved 24 January 2010. 
  57. ↑ Grynbaum, Michael (2009-03-29). "A Half-Century Old, the Whopper to Get a Younger Image". New York Times (New York: NYT.com). http://www.nytimes.com/2008/03/29/business/29whopper.html. Retrieved 2009-10-10. 
  58. ↑ Klingele, Lindsey. "Burger King Unveils Whopper Bar". The Food Channel. Glam Networks, LLC. http://www.foodchannel.com/stories/288-burger-king-unveils-whopper-bar. Retrieved 2009-10-10. 
  59. ↑ Horovitz, Bruce (2009-01-22). "Burger King plans beer-selling Whopper Bar in South Beach". USAToday (Miami, Florida). http://www.usatoday.com/money/industries/food/2010-01-21-burger-king-beer_N.htm. Retrieved 23 January 2010. 
  60. ↑ Phillips, David (25 January 2010). "Burger King Says "Have It Your Way:" Beer With That Whopper and Fries?". BNet.com. http://industry.bnet.com/food/10001287/burger-king-says-have-it-your-way-beer-with-that-whopper-and-fries/. Retrieved 8 February 2010. 
  61. ↑ Ruggless, Ron (22 January 2010). "BK to sell beer at new Whopper Bar". Nation's Restaurant News. http://www.nrn.com/article/bk-sell-beer-new-whopper-bar. Retrieved 19 October 2010. 
  62. ↑ Heher, Ashley M.; Fredrix, Emily (03 September 2010). "Burger King OKs $3.2 billion buyout". The Sun News. Associated Press. http://www.thesunnews.com/2010/09/03/1671710/burger-king-oks-32-billion-buyout.html. Retrieved 03 September 2010. 
  63. ↑ 63.0 63.1 "Burger King sold to buy-out firm for $3.26bn (£2.1bn)". BBC News. 02 September 2010. http://www.bbc.co.uk/news/business-11168720. Retrieved 2 September 2010. 
  64. ↑ 64.0 64.1 64.2 Julie Jargon (1 February 2010). "As Sales Drop, Burger King Draws Critics for Courting 'Super Fans". Wall Street Journal. Yahoo.com. http://finance.yahoo.com/career-work/article/108728/burger-king-draws-critics. Retrieved 1 February 2010. 
  65. ↑ 65.0 65.1 Baertlein, Lisa. "Burger King agrees to $3.3 billion sale to 3G Capital". Rueters. http://www.reuters.com/article/idUSTRE6801CB20100902. 
  66. ↑ History of Branding. "History of Burger King". Inkblot Communications. Archived from the original on 2007-10-12. http://web.archive.org/web/20071012035854/http://www.historyofbranding.com/burgerking.html. Retrieved 2007-10-24. 
  67. ↑ Burger King (2009-12-04). "Burger King Corp. Reaches Significant Milestone with Opening of 12,000th Restaurant". Press release. http://investor.bk.com/phoenix.zhtml?c=87140&p=irol-newsArticle&ID=1362065&highlight=. Retrieved 2009-12-08. 
  68. ↑ "Big Burger Business: McDonald's and Burger King". "Heavyweights". Archived from the original on 2008-03-19. http://web.archive.org/web/20080319011734/http://www.foodnetwork.com/food/show_iz/0,3195,FOOD_31138,00.html. . Food Network. 2008-04-21. No. 3, season 2.

Franchises

Burger King restaurant in Leicester Square, London
A Burger King franchise adapted to operate in the historic district of Oaxaca, Mexico

When Burger King Corporation began franchising in 1959, it relied on a regional franchising model where franchisees would purchase the right to open stores within a defined geographic region. These franchise agreements granted BKC very little oversight control over its franchisees and resulted in issues of product quality control, store image and design and operations procedures.[1][2]

This model remained in place until 1978 when the company hired McDonald's executive Donald N. Smith to help revamp the company. Smith initiated a restructuring of all future franchising agreements, disallowing new owners from living more than one hour from their restaurants, preventing corporations from owning franchises and prohibiting franchisees from operating other chains. This new policy effectively limited the size of franchisees and prevented larger franchises from challenging Burger King Corporation as Chart House had.[2] Smith also sought to have BKC be the primary owner of new locations and rent or lease the restaurants to its franchises. This policy would allow the company to take over the operations of failing stores or evict those owners who would not conform to the company guidelines and policies.[1] However, by 1988 BKC parent Pillsbury had relaxed many of Smith's changes, scaled back on construction of new locations and stalled growth.[3] Neglect of Burger King by new owner Grand Met, and its successor Diageo, further hurt the standing of the brand, causing yet more financial damage to BK franchises.[4]

By 2001 and after nearly eighteen years of stagnant growth, many of the franchises were in some sort of financial distress. The lack of growth severely impacted BKC's largest franchise, the nearly 400 store AmeriKing; by 2001 the company, which until this point had been struggling under a nearly $300 million debt load and been shedding store across the US, was forced to enter Chapter 11 bankruptcy.[5] The failure of AmeriKing deeply affected the value of BKC, and put negotiations between Diaego and the TPC Capital-lead group on hold. The developments eventually forced Diaego to lower the total selling price of BKC by almost three quarters of a billion dollars.[6] After the sale, newly appointed CEO Bradley Blum initiated a program to help roughly 20% of its franchises, including its four largest, who were in financial distress, bankruptcy or had ceased operations altogether.[7] Partnering with the California-based Trinity Capital, LLC, the company established the Franchisee Financial Restructuring Initiative, a program to address the financial issues facing BK's financially distressed franchisees. The initiative was designed to assist franchisees in restructuring their businesses in order to meet financial obligations, focus on restaurant operational excellence, reinvest in their operations and return to profitability.[8]

Individual owners took advantage of the AmeriKing failure; one of BK's regional owners, Miami-based Al Cabrera, purchased 130 stores located primarily in the Chicago and the upper mid-west region, from the failed company for a price of $16 million, approximately 88% of their original value. The new company, which started out as Core Value Partners and eventually became Heartland Foods, also purchased 120 additional stores from distressed owners and revamped them. The resulting purchases made Mr. Cabrerra BKB's largest minority franchisee and Heartland one of BKH's top franchises.[9] By 2006, the company was valued at over $150 million, and was sold to New York–based GSO Capital Partners.[10] Other purchasers included a three way group of NFL athletes Kevin Faulk, Marcus Allen and Michael Strahan who collectively purchased 17 stores in the cities of Norfolk and Richmond, Virginia;[11] and Cincinnati-based franchisee Dave Devoy, who purchased 32 AmeriKing stores. After investing in new decor, equipment and staff retraining, many of the formerly failing stores have shown growth upwards of 20%.[4]

Legal issues

The Hoots' family Burger King restaurant in Mattoon, Illinois, one subject of major litigation by Burger King.

Burger King has been involved in several legal disputes and cases, as both plaintiff and defendant, in the years since its founding in 1954. Situations involving these many legal topics have affected almost every aspect of the company's operations. Depending on the ownership and executive staff at the time of these incidents, the company's responses to these challenges have ranged from a conciliatory dialog with its critics and litigants to a more aggressive opposition with questionable tactics and negative consequences.[12][13][14][15] The company's response to these various issues has drawn praise [16][17] as well as accusations of political appeasement from different parties over the years.[18]

Controversies and disputes with groups such as People for the Ethical Treatment of Animals (PETA) over the welfare of animals, governmental and social agencies over health issues and compliance with nutritional labeling laws, and unions and trade groups over labor relations and laws. These situations have touched on legal and moral concepts such as animal rights,[19] corporate responsibility,[20] ethics,[21] and social justice.[21] While the majority of the disputes did not result in lawsuits, in many of the cases the situations raised legal questions, dealt with legal compliance, or resulted in legal remedies such as changes in contractual procedure or binding agreements between parties. The resolutions to these legal matters have often altered the way the company interacts and negotiates contracts with its suppliers and franchisees or how it does business with the public.

Further controversies have occurred during the company's expansion in the Middle East. The opening of a Burger King location in the Israeli-occupied territories lead to a breach of contract dispute between Burger King and its Israeli franchise; the dispute eventually erupted into a geopolitical conflagration involving Muslim and Jewish groups on multiple continents over the application of and adherence to international law.[22][23][24] The case eventually elicited reactions from the members of the 22-nation Arab League; the Islamic countries within the League made a joint threat to the company of legal sanctions including the revocation of Burger King's business licenses within the member states' territories.[23][24][25] A related issue involving members of the Islamic faith over the interpretation of the Muslim version of canon law, Shariah, regarding the promotional artwork on a dessert package in the United Kingdom raised issues of cultural sensitivity,[26] and, with the former example, posed a larger question about the lengths that companies must go to insure the smooth operation of their businesses in the communities they serve.[27]

A trademark dispute involving the owners of the identically named Burger King in Mattoon, Illinois led to a federal lawsuit; the case's outcome helped define the scope of the Lanham act and trademark law in the United States.[28] An existing trademark held by a shop of the same name in South Australia forced the company to change its name in Australia,[29] while another state trademark in Texas forced the company to abandon its signature product, the Whopper, in several counties around San Antonio.[30] Legal decisions from other suits have set contractual law precedents in regards to long-arm statutes, the limitations of franchise agreements, and ethical business practices;[31][32] many of these decisions have helped define general business dealings that continue to shape the entire marketplace.

Charitable contributions and services

Burger King has two of its own in-house national charitable organizations and programs. One is the Have It Your Way Foundation, a U.S.-based non-profit, 501(c)(3) corporation with multiple focuses on hunger alleviation, disease prevention and community education through scholarship programs at colleges in the US. The other charitable organization is the McLamore Foundation, also a non-profit, 501(c)(3) corporation that provides scholarships to students in the US and its territories.[33][34] Additionally, there is an optional literacy program that partners individual restaurants with community schools in the US.

In various regions across the United States, Burger King and its franchises have aligned themselves with several charitable organizations that support research and treatment of juvenile cancer. Each year these coalitions hold a fund raising drive called A Chance for Kids, in which Burger King restaurants sell lottery-style scratch cards for $1. Each card produces a winning prize that is usually a food or beverage product, but includes (rarer) items such as shopping sprees or trips. In the Northeast, BK has affiliated itself with the Major League Baseball team the Boston Red Sox and its charitable foundation, the Jimmy Fund. The group runs the contest in Boston. In the New York city area it operates the contest in association with the Burger King Children's Charities of Metro New York and the New York Yankees. Funds raised in these areas go to support the Dana-Farber Cancer Institute located in Boston.[35][36] In Nebraska, the company is affiliated with the Liz's Legacy Cancer Fund BK Beat Cancer for Kids program at the UNMC Eppley Cancer Center at the University of Nebraska Medical Center in Omaha.[37] In the Pittsburgh region it funded the establishment of the Burger King Cancer Caring Center, a support organization for the families and friends of cancer patients.[38]

Products

The Whopper sandwich, Burger King's signature product

When the company began, its menu consisted predominantly of hamburgers, French fries, soft drinks, and desserts. In 1957, BK added its signature item, the Whopper. This quarter pound hamburger was created by Burger King founders James McLamore and David Edgerton as a way to differentiate BK from other burger outlets at the time. The sandwich became famous enough that BK eventually adopted the motto "Home of the Whopper".

One of Donald N. Smith's first changes to the menu was the addition of the Burger King Specialty sandwich line in 1979, which significantly expanded the breadth of the BK menu with many non-hamburger sandwiches including new chicken and fish offerings. The new specialty sandwich line was one of the first attempts to target a specific demographic, in this case adults 18-34, members of which would be willing to spend more on a higher quality product.[39] One of Smith's other significant contributions to the menu was the addition of a breakfast product line, which until this time was not a market Burger King had entered.[39] Besides the addition of the Croissan'Wich in 1983, the breakfast menu remained almost identical to the McDonald's offerings until a menu revamp in 1985.[1] This expansion introduced BK's Am Express product line which added new products such as French toast sticks and Mini-muffins.

As the company expanded both inside and outside the US, it introduced localized versions of its products that conform to regional tastes and cultural or religious beliefs. International variations add ingredients such as teriyaki or beetroot and fried egg to the Whopper,[40] beer in Germany, Italy and Spain, and halal or kosher products in the middle East and Israel.[41][42][43] To generate additional sales, BK will occasionally introduce limited time offers (LTOs) that are versions of its core products or new products intended for either long or short term sales. Items such as the Texas Double Whopper and various sandwiches made with mushrooms and Swiss cheese have been rotated in and out of its menu for several years while products such as its 1993 offering, a Meatloaf Specialty Sandwich and limited table service along with special dinner platters, failed to generate interest and were discontinued.[44]

A meal including small french fries, a Whopper, Jr., a drink, and packets of Heinz ketchup

In order to appeal to as many demographic groups as possible and better compete with its fast food restaurant competitor Wendy's, Burger King added a multi-tiered value menu in 1993 with items priced at 99¢, $1.99 and $2.99 (USD). The project, called Operation Phoenix, was an attempt to add not only a value menu but a line of value meals. The tiered menu was replaced with a more standard value menu in 1998, while the value meals were separated into their own menu segment.[45] This value menu featured seven products: Whopper Jr., 5 piece Chicken Tenders, a bacon cheeseburger, medium sized french fries, medium soft drink, medium onion rings and small shake. In 2002 and 2006, BK revamped its value menu adding and removing several different products such as chili and its Rodeo Cheeseburger.[46] Many of these items have since been discontinued, modified or relegated to a regional menu option.[47] To better appeal to a more adult palate and demographic, BK introduced several new products to its menu in 2003, including several new or revamped chicken products, a new salad line and its BK Joe brand of coffee. Some of the new products, including its Enormous Omelet Sandwich line and the BK Stacker line, brought negative attention due the large portion size, amounts of unhealthy fats and trans-fats.[48][49][50] Many of these products feature higher quality ingredients like whole chicken breast, Angus beef, natural cheeses such as Cheddar and pepper jack.[51][52] Again, not all these products, such as the BK Baguette line, have met corporate sales expectations.[53]

Advertising

The iconic Burger King "crown", worn by Nick Van Eede.

Burger King has employed varied advertising programs, both successful and unsuccessful, since its foundation in 1954. During the 1970s, output included a memorable jingle, the inspiration for its current mascot the Burger King and several well known and parodied slogans such as Have it your way and It takes two hands to handle a Whopper.[54][55][56] Burger King introduced the first attack ad in the fast food industry with the help of then unknown Sarah Michelle Gellar in 1981. The television spot, which claimed BK burgers were larger than competitor McDonald's, so enraged executives at McDonald's parent company, they sued all parties involved.[57] Starting in the early 1980s and running through approximately 2001, BK engaged a series of ad agencies that produced many unsuccessful slogans and programs, including its biggest advertising flop Where's Herb?.[58][59]

Burger King was a pioneer in the advertising practice known as the product tie-in with a successful partnering with George Lucas' Lucasfilm, Ltd. to promote the 1977 film Star Wars in which BK sold a set of glasses featuring the main characters from the film. This promotion was one of the first in the fast food industry and set the pattern that continues to the present. BK's early success in the field was overshadowed by a 1982 deal between McDonald's and the Walt Disney Company to promote Disney's animated films beginning in the mid 1980s and running through the early 1990s. In 1994 Disney switched from McDonald's to Burger King, signing a ten film promotional contract which would include such top ten films as Aladdin (1992), Beauty and the Beast (1991), The Lion King (1994) and Toy Story (1995).[60] A partnership in association with the Pokémon franchise at the height of its popularity in 1999 was one of the most successful in the industry, rivaled only by McDonald's/Ty Beanie Babies cross-promotion in 1999–2000.[61]

Shortly after the acquisition of Burger King by TPG Capital, L.P. in 2002, its newly hired CEO Bradley (Brad) Blum set about turning around the fortunes of the company by initiating an overhaul of its flailing advertising programs. One of the first moves by the company was to reinstate its famous Have it your way slogan as the corporate motto. BK handed the effort off to its new advertising agency, Miami-based Crispin Porter + Bogusky (abbreviated as CP+B). CP+B was known for having a hip, subversive tack when creating campaigns for its clients, exactly what BK was looking for.[53][62] One of CP+B strategies was to revive the Burger King character used during BKs 1970s/1980s Burger King Kingdom children's advertising campaign as a caricatured variation now simply called "the King". The farcical nature of the Burger King centered advertisements inspired an internet meme where the King is photoshopped into unusual situations that are either comical or menacing, many times followed with the phrase Where is your God now?.

Additionally, CP+B created a series new characters like the Subservient Chicken and the faux nu metal band Coq Roq featured in a series of viral web-based advertisements on sites such as MySpace and various BK corporate pages to compliment the various television and print promotional campaigns.[63][64][65] One of the unique promotions that CP+B devised was the creation of a series of three advergames for the Xbox 360. Featuring company celebrity spokesman Brooke Burke, the games sold more than 2 million copies, placing them as one of the top selling games along with another Xbox 360 hit, Gears of War.[66] These ad campaigns, coupled with other new promotions and a series of new product introductions, drew positive and negative attention to BK and helped TPG and its partners realize about $367 million in dividends.[67][68]

Headquarters

Company headquarters in unincorporated Miami-Dade County, Florida

Burger King is headquartered in a nine-story office tower by Miami International Airport in unincorporated Miami-Dade County, Florida.[69] Elaine Walker of the Miami Herald stated that the headquarters has a "Burger King" sign that drivers on Florida State Road 836 "can't miss." In addition the chain planned to build a neon sign on the roof to advertise the brand to passengers landing at the airport. 130 employees began working at the Burger King headquarters on Monday July 8, 2002, with the remainder to move in phrases in August 2002. Prior to the moving to its current headquarters in 2002, Burger King had considered moving away from the Miami area; Miami-Dade County politicians and leaders lobbied against this, and Burger King stayed in the area.[70]

The company's previous headquarters were in a southern Dade County campus described by Walker as "sprawling" and "virtually hidden away."[70] The former headquarters were located in the Cutler census-designated place;[71][72] since then the area incorporated into the Village of Palmetto Bay.[73] The former Burger King headquarters as of 2007 houses rental offices for several companies.[74]

By 2006 Burger King had announced that it planned to move its headquarters to a proposed office building in Coral Gables.[75] By 2007 Burger King instead renewed the lease in its existing headquarters for 15 years. Burger King planned to consolidate employees working at an area near Miami International Airport and at a Dadeland Mall-area facility into the current headquarters by June of that year. Instead Bacardi USA leased the headquarter complex, a 15-story building.[74]

Global operations

Burger King has a longstanding presence at U.S. Army and U.S. Air Force installations worldwide, dating back to the 1980s under a contract with Army and Air Force Exchange Service. Today, while other chains such as Taco Bell, Popeye's, and Subway have a presence on military bases, virtually every major Army and Air Force installation hosts a BK restaurant.[76]

See also


References

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  2. ↑ 2.0 2.1 Ester Reiter (March 1996). Making Fast Food: From the Frying Pan Into the Fryer, 2nd edition. McGill-Queen's University Press. p. 64. ISBN 0773513876. http://books.google.com/?id=oBj-sPpJDQcC&pg=PA64&lpg=PA64&dq=donald+smith+burger+king. Retrieved 2008-04-06. "Burger King's early franchising arrangements proved to be troublesome" 
  3. ↑ Eric N. Berg (1988-11-04). "Burger King's Angry Franchises". The New York Times. http://query.nytimes.com/gst/fullpage.html?res=940DE0DD1530F937A25752C1A96E948260&sec=&spon=&pagewanted=print. Retrieved 2008-04-06. "The franchisees complain that, in recent years, the chain's growth has come almost entirely from the franchisees, not from the corporation." 
  4. ↑ 4.0 4.1 Shelly Reese (2005-02-04). "It was broken, and new owner's fixing it". The Cincinnati Enquirer. http://www.boj.com/articles/franchise/burger_king_fixed.htm. Retrieved 2008-04-12. 
  5. ↑ Jo Napolitano (2002-12-22). "A Fighter for Burgers and Fries". The New York Times. http://query.nytimes.com/gst/fullpage.html?res=9C03E5D81E3DF931A15751C1A9649C8B63&sec=&spon=&pagewanted=all. Retrieved 2008-04-06. "The AmeriKing bankruptcy has added uncertainty to the prospects for Burger King, which relies heavily on franchise owners of its restaurants." 
  6. ↑ Phyllis Berman (2003-04-15). "Burger King's Flame-Broiled Future". Forbes Magazine. http://www.forbes.com/2003/04/15/cz_pb_0415burger.html. Retrieved 2006-04-06. "The all-cash deal was originally pegged at $2.2 billion but got negotiated down to just $1.5 billion." 
  7. ↑ Elaine Walker (2002-01-03). "Burger King bolstering its many weak franchisees.". Knight-Ridder. http://www.highbeam.com/doc/1G1-81297863.html. Retrieved 2008-04-06. 
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  9. ↑ "BK franchisee-led group buys 131 AmeriKing units" (Subscription required). Nations Restaurant News. 2003-12-15. http://findarticles.com/p/articles/mi_m3190/is_50_37/ai_111507745/. Retrieved 2008-04-12. 
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  13. ↑ Amy Bennett Williams (2008-04-28). "Burger King gets farm workers petition; Daughter of Burger King VP says dad wrote anti-coalition postings". The Fort Meyers News-Press. http://www.news-press.com/article/20080704/NEWS01/107040011/1014/business. Retrieved 2008-04-28. "At Senate hearings on farm conditions held by U.S. Sen. Bernie Sanders, I-Vt., earlier this month, Eric Schlosser, author of the best-selling "Fast Food Nation", praised Yum! and McDonald's for working with the coalition and urged Burger King to do the same. "The admirable behavior of these two industry giants makes the behavior of Burger King ... seem completely unjustifiable."" 
  14. ↑ Amy Bennett Williams (2008-04-12). "Tomato pickers feeling spied on". The Fort Meyers News-Press. http://www.news-press.com/article/20080704/NEWS01/107050001. Retrieved 2008-06-09. "In recent months, they’ve [the CIW and supporter Student/Farmworker Alliance] been vilified online and in e-mails that can be traced to the Miami headquarters of Burger King, a company that's opposed the groups’ efforts." 
  15. ↑ Catherine Cobb (2008-06-02). "Burger King relents, agrees to extra penny-per-pound payment to aid Fla. tomato pickers". Nation's Restaurant News. http://www.nrn.com/article/burger-king-relents-agrees-extra-penny-pound-payment-aid-fla-tomato-pickers. Retrieved 2010-08-14. "The agreement followed closely the firings of two BK executives who were linked to what the company said were unauthorized Internet postings ..." 
  16. ↑ Andrew Martin (2007-03-28). "Burger King Shifts Policy on Animals". The New York Times. http://www.nytimes.com/2007/03/28/business/28burger.html. Retrieved 2008-03-09. "In what animal welfare advocates are describing as a "historic advance", Burger King, the world's second-largest hamburger chain, said yesterday that it would begin buying eggs and pork from suppliers that did not confine their animals in cages and crates." 
  17. ↑ AP Wire (2007-03-28). "Burger King Offers Cage-Free Food.". Fox News. http://www.foxnews.com/story/0,2933,261903,00.html. Retrieved 2007-08-21. ""Suppliers will hopefully respond by producing more of these types of products", [PETA spokesman Matt] Prescott said." 
  18. ↑ James Joyner (2005-09-18). "Burger King Stops Selling Anti-Muslim Ice Cream". Outside the Beltway. http://www.outsidethebeltway.com/archives/_burger_king_recalls_sacrilegious_desserts/. Retrieved 2008-06-04. "Burger King has stopped selling ice cream cones after a single idiot Muslim was offended by the shape of the swirl on the lid." 
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  20. ↑ AP Wire (2007-05-17). "Burger King responds to trans-fat cooking oil suit". CTV. http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070517/burgerking_transfat_070517/20070517?hub=Health. Retrieved 2007-09-28. 
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  76. ↑ Cite error: Invalid <ref> tag; no text was provided for refs named 2008report

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Bagel Nash · Baskin-Robbins · Burger King · Chicken Cottage · Dixy Chicken · Domino's Pizza · EasyPizza · Favorite Chicken · Giraffe · KFC · Krispy Kreme · Little Chef · McDonald's · Millie's Cookies · Oporto · Papa John's Pizza · Pizza Hut · Shakeaway · Spudulike · Subway · Taco Bell · The West Cornwall Pasty Company · Wimpy · Yogen Früz
Casual dining:
Aberdeen Angus Steak Houses · Beefeater · Bella Italia · Brewers Fayre · Café Rouge · Carluccio's · Chiquito · Damon's · Fine Burger Company · Frankie & Benny's · Gourmet Burger Kitchen · Hard Rock Cafe · Harry Ramsden's · Harvester · Hooters · Hungry Horse · Loch Fyne · Nando's · OK Diner · Outback Steakhouse · PizzaExpress · Pizza Hut · Planet Hollywood · Prezzo · Rainforest Cafe · Romano's Macaroni Grill · Strada · Taybarns · T.G.I. Friday's · Wagamama · YO! Sushi · Zizzi
Sandwich shops:
Cooks the Bakery · EAT. · Greggs · O'Briens · Pret A Manger · Quiznos · Sayers  · Tastte! · Upper Crust
Pub chains:
All Bar One · Firkin Brewery · Scream Pubs · Slug and Lettuce · Walkabout · J D Wetherspoon · Yates's
Former chains:
ABC · Arby's · A&W Restaurants · Bakers Oven · Benjys · Berni Inn · Blimpie · Chili's · Dunkin' Donuts · Happy Eater · Long John Silver's · Lyons Corner Houses · Pasta Hut · Pizzaland · Popeyes Chicken & Biscuits · Quick · Schlotzsky's · Three Cooks · Wendy's
Food chains in the Republic of Ireland
Coffeehouse
Butlers Chocolate Café · Caffè Ritazza · Costa Coffee · Insomnia Coffee Company · Starbucks
Fast food restaurants
Abrakebabra · Apache Pizza · Burger King · Domino's Pizza · Four Star Pizza · KFC · McDonald's · Supermac's · Wimpy
Casual dining
Captain America's · Eddie Rocket's · Gourmet Burger Kitchen · Hard Rock Café · Harry Ramsden's · Metzo · Milano · Pizza Hut · Spur Steakhouse · T.G.I. Friday's · YO! Sushi
Sandwich shops
O'Briens · Quiznos · Subway · Upper Crust