Burger King | Restaurant Brands International (US)

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Burger King is the world's #2 hamburger chain after McDonalds, but years of under-investment had left it struggling in its rival's shadow by the early 2000s. Many consumers argued that Burger King tasted better than McDonalds, but lacked the latter's polish, administrative strength and marketing muscle. A deal was finally agreed late in 2002 to free the chain from the corporate portfolio of of then-owner, the drinks giant Diageo. Independent again for the first time since the 1960s, the #2 finally had the chance to give Big M a run for its money. Performance improved slowly but steadily between 2002 and 2010, enhanced by offbeat and unusual marketing aimed at Burger King's core young male market in North America. In 2010, the business was acquired by investment fund 3G Capital, which vowed to ramp up the chain's previously uneven international presence. The group floated part of its equity again in 2012, and two years later agreed to acquire Canadian rival Tim Hortons for around $11bn. The enlarged group adopted the new corporate name of Restaurant Brands International. It added a third string to its bow in 2017 with the purchase of US chain Popeye's.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 15th Feb 2018: Restaurant Brands International, the group that owns Burger King, Tim Hortons and now Popeyes, took investors by surprise with 4Q figures that were well above expectations. BK delivered systemwide sales growth of over 12% in the final quarter, and over 10% for the year, as a result of rapid expansion of its retail estate. Combined sales topped $20bn for the first time. The same-store increase was almost 5% for 4Q and over 3% for the year. All BK outlets are now franchised, following a decision by the group to offload all company-owned stores. "The pace at which partners like these are opening around the world highlights the strength and scale potential of our master franchise development model," said CFO and chief technology & development officer Josh Kobza. Performance wasn't anything like as strong at Tim Hortons and Popeyes, where systemwide sales were up low to mid single digits for the year, and same-store comps were down slightly. Despite the sell-off of company outlets, the group notched up a 10% rise in total revenues to $4.6bn, while attributable net income soared by 80% to $626m.

Adbrands Weekly Update 25th Oct 2017: Ads of the Week: "Bullying Jr". Ogilvy satellite David Miami shows it can also do serious for Burger King, not just disruptive or cheeky. This in-store stunt supports the fast feeder's social responsibility campaign against bullying. The idea is actually a bit silly - it would be good to know whether the customers actually got the point of the stunt after making their complaints about mashed burgers - but the role play scenes are really quite upsetting. Most people don't get involved in situations like this for fear the aggressor might pull a knife or even, in the US, a gun. So big applause to these two customers who did step up to make a stand. 

Adbrands Weekly Update 24th Aug 2017: Ads of the Week: "Keeping It Real". Everyone likes to put the boot in on hipster chic, all that kale and artisan coffee, those beards and bicycles, it's just too hard to resist. The irony is all those ads poking fun are themselves conceived, written and directed by the very same hipsters they depict. Clemenger BBDO is the latest agency to satirise urban cool with an entertaining campaign for the Australian arm of Burger King, Hungry Jack's. You've seen ads like this before of course (most recently in Leo Burnett London's campaign for McDonald's coffee) but that doesn't make this any less funny. 

Adbrands Weekly Update 20th Apr 2017: Ads of the Week: "Eat". Burger King is a comparatively new introduction to France, only really launched there within the past couple of years, and now expanding rapidly through the absorption of old homegrown burger joint Quick. Like Burger King itself, indie agency Buzzman can also always be relied upon to deliver a tasty morsel. This latest is proof positive that not even French cuisine is always all it's cracked up to be.

Adbrands Weekly Update 20th Apr 2017: Signs are that Burger King's marketing department is getting a little too cocky ahead of this summer's Cannes Lions ad festival, when it will be awarded the prize for Creative Marketer of the Year. Late last week the fast feeder attempted to hijack US Google Home devices and Android phones across the US when its new ad featured a Burger King staffer leaning into camera and asking "OK Google...." - the wake-up phrase used by Android devices - "what is the Whopper burger?" That was designed to trigger all listening Android devices into reading out the first line from Burger King's Wikipedia entry. This was itself changed last week (apparently by BK's chief marketer personally, in strict contravention of Wikipedia rules) to feature a mouth-watering description rather than the old descriptive copy with which it has started for the past ten years. The stunt seems to have backfired: within a few hours of the ad's first airing, Google had blocked Android devices from responding and Wikipedia editors had reverted to the old copy and blocked further changes to the entry. They also demanded a formal apology. But that hasn't prevented the stunt from earning acres of media coverage. The Burger King stunt coincided with an odd viral campaign for McDonald's, also interacting with digital technology, but in a rather less sneaky fashion. There's no branding at all for McDonald's in any of the four new creative executions from Omnicom's We Are Unlimited unit. Instead, comic actress Mindy Kaling talks to camera, telling viewers simply to search Google for "the place where Coke tastes so good". We guess that's supposed to take US searchers to a specific dedicated page on the McDonald's USA website, but actually we UK searchers couldn't access it and found ourselves instead on a similar page on Thrillist.

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Background

Free for all users | see full profile for current activities: In the early 1950s "Insta Burger King" was one of numerous clones of the original McDonalds' hamburger restaurant in San Bernadino, California. The first Insta Burger King restaurant was founded in 1953 in Jacksonville, Florida by partners Keith Cramer and Matthew Burns, who developed a custom-built "Insta Burger" broiler to cook their burgers. A year later, James McLamore and David Edgerton acquired South Florida rights to the concept, and opened their first restaurant in Miami. Like McDonalds, they aimed to supply reasonably priced quality food, served quickly, but they quickly added a further benefit for customers by enclosing what was originally outdoor patio seating to create an internal dining room, a first for the fast-food industry. (McDonalds was at the time exclusively a drive-in service). However, after repeated faults with the Insta Burger broiler, McLamore and Edgerton designed their own more efficient version. They dropped the "Insta" tag to become Burger King and in 1957, a year before the Big Mac was invented by McDonalds, introduced their signature meal, the Whopper sandwich. Supported by local television advertising, the Whopper proved a huge success and the business was approached by several prospective franchisees. By 1961 there were 45 Burger King restaurants throughout Florida and the Southeast. That year, McLamore and Edgerton bought out Cramer and Burns and became exclusive agents for the Burger King franchise, just as Ray Kroc had done with McDonalds. 

But as the chain continued to expand, it gradually slipped further into the shadow of McDonalds. Kroc paid close attention to detail with each of his McDonalds franchisees, but McLamore and Edgerton were less painstaking, and this led to inconsistencies in both quality and menu choice from one branch to another. By 1967, the chain had 274 restaurants across the US, but its reputation was patchy, with some outlets considerably better than others. By contrast McDonalds was now a public company, with every outlet identical in menu and quality, and was taking its first steps into the international market. McLamore and Edgerton realised they didn't have the experience or funds to go it alone. In 1967 they sold out to food group Pillsbury for $18m, a handsome sum at the time.

A year later, BBDO was appointed to launch Burger King's first national ad campaign, promising "The Bigger The Burger The Better The Burger". The company continued to expand, but at a noticeably slower rate than McDonalds, as Pillsbury struggled to bring its various Burger King franchisees in line. In 1975 Burger King opened its first truly international outlet, in Madrid, Spain, and further countries followed. That year the company also established its hamburger USP for the first time, offering customers the opportunity to "Have It Your Way", rather than accept the standard menu offered by McDonalds. ("Hold the pickles, hold the lettuce / Special orders won't upset us / All we ask is that you let us... / Serve it your way!" went BBDO's jingle). Also in 1975, founder James McLamore retired as chairman, although he continued to tour outlets as chairman emeritus until his death in 1996.

By the end of 1986, a year in which the company opened a record 546 new restaurants worldwide, Burger King operated 4,743 restaurants, including 402 in 25 countries around the globe. In 1988, Pillsbury was the target of a hostile takeover by British food and restaurant group Grand Metropolitan. The following year Grand Met also acquired the UK's languishing chain of Wimpy Restaurants, which until the arrival of McDonalds in 1974 had been the closest thing in the UK to American-style hamburger joints (and that wasn't very close at all really!). Almost 100 Wimpy outlets were rebranded as Burger King the same year, making the UK at a single stroke the brand's biggest non-US outpost. International expansion was stepped up dramatically at the end of the decade, and in 1992 the group agreed an unprecedented (at the time) five-year promotional partnership with the newly rejuvenated Walt Disney Company, which had just scored its first animated hit in years with The Little Mermaid. In fact the 1990s were to prove perhaps the most successful period in the company's history, as the Burger King brand swept around the globe. By 1997 the system had expanded to almost 9,500 restaurants. However the company was unable to resolve management problems as a string of CEOs came and went, and this led to continuing problems of consistency, as well as slowly worsening relations with the chain's franchisees. 

From 1997, the momentum began to fail. That year, the promotional deal with Disney came up for renewal and Burger King was outbid by McDonalds. The same year Grand Met agreed to merge with rival drinks giant Guinness to form Diageo. The deal gave a new direction to the merged company, with drinks as the main priority. Pillsbury's food products came second in the new hierarchy with Burger King's restaurants taking lowly third place. It was to become increasingly apparent that BK no longer made a comfortable fit within the enlarged portfolio. The year was marked by a massive $70m marketing campaign to launch Burger King's hotter, crispier, and tastier French fries, but from that point onwards investment began to dwindle. Between 1996 and 2001 customer visits to US Burger King outlets dropped by more than 20%, and more than 10 franchisees filed for bankruptcy protection. Several also went public about their dissatisfaction with Diageo's lack of understanding, underinvestment, and inadequate marketing. Meanwhile a legal row between Burger King management and African-American franchisee Urban City Foods led to calls from radical black community leaders in New York to boycott the "racist" chain's outlets.

Despite strong growth in the fast-food market as a whole, BK's overall market share declined steadily between 1998 and 2004. According to consulting firm Technomic, Burger King's share of the burger sector peaked in 1998 at 20.4%, but fell steadily over the next six years, slipping to 14.2% by 2004, level pegging with Wendy’s which had steadily increased its penetration over the same period. 

Finally in 2000 Diageo confirmed plans to spin out Burger King, announcing it would float a small stake in 2001 with the intention of selling the remainder in 2003. But that plan was abandoned after the chain suffered a further dip in sales. Instead the group recruited new chairman John Dasburg to lead a buyout. After soliciting bids for the business, a consortium headed by investment group Texas Pacific and Bain Capital (which also owns Domino's Pizza) won the prize in July 2002 with an offer of $2.26bn. However, following a further downturn in business over the next few months, the consortium asked to renegotiate the deal. These negotiations were further hampered by the declaration of Chapter 11 by one of BK's main franchise operators, AmeriKing. The deal was finally completed in December 2002 for a reduced price of $1.5bn.

Brad Blum, CEO of Burger King at the time of its buyout, set out to change impressions of that job as the hottest seat in town - in its 50-year history, Burger King had already notched up 19 different CEOs, including 8 in just the previous 15 years. But history has a habit of repeating itself, and Blum made way for a 20th incumbent, Greg Brenneman, when he resigned in July 2004, blaming "strategic differences" with the board. The company's president, Robert Nilsen, had already resigned abruptly a few months earlier after just over a year in the job. Brenneman too stepped down less than two years later in April 2006. See full profile for current activities


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