The second-largest fast-food hamburger chain in the world, Burger King is the original home of the Whopper. It serves more than 11 million guests each day in over 18,800 locations in 100 countries. This American chain has a majority of its franchise restaurants in the United States, but makes a global impact with its heart. In December 2020, Burger King UK publicly urged its customers to patronize smaller restaurants instead of Burger King to help the small businesses make it through the Covid-19 pandemic.
Here we look at Burger King’s strengths, weaknesses, opportunities and threats.
1. Burger King is within the top 10 most recognized fast food restaurant brands in the world.
Burger King has one of the world’s most iconic brands and came in at number 7 with a brand value of just over $6.6 million in 2019. Effective marketing strategies ensure that the chain remains popular. Its advertisements include one of a preservative-free burger, deteriorating over days, as evidence that its brand is all-natural.
More recently, Burger King in Brazil decided to create a “less than desirable” burger that exemplifies the overall feeling of 2020. Needless to say, it didn’t make it to the menu.
2. Burger King is owned by a company with strong financials.
Burger King is owned by Restaurant Brands International Inc. (RBI). RBI was established in 2014 by the merger between Burger King and Tim Hortons, a Canadian coffee shop. It expanded in 2017, following the acquisition of Popeyes Louisiana Kitchen.
RBI is now the fifth-largest operator of fast-food restaurants in the world. (Forbes)
3. Its locations continue to grow while keeping its pricing competitive.
The number of locations worldwide is continuing to grow, so the chain has a robust global presence. The majority of locations outside of the U.S. are owned by franchisees, so this keeps costs down for Burger King Corporation. The company provides administrative, advertising and training support to the local franchise holders to ensure effective models are maintained.
The company’s principal economic strategy is cost leadership. This involves minimizing costs, which leads to competitive prices.
4. Customers are consistently satisfied with its food and service.
Burger King’s score on the ASCI (American Customer Satisfaction Index) has remained consistent for the last three years at 76 out of a possible 100. This score is based on customers’ evaluations of the quality of the food and service provided. In the Limited-Service Restaurants category, the average score was 78.
To provide a comparison, one of its main competitors, McDonald’s, has a score of just 70. (Statista, ACSI)
5. Local menu options cater to the tastes and cultural individualities of various regions.
Although the food is prepared the same worldwide to ensure it remains consistent with the Burger King standard, individual restaurants have also introduced localized versions of Burger King’s products to conform to regional tastes or cultural and religious beliefs. Burger King is regionally popular for its wide menu selection.
For example, it has a Paneer King vegetarian option in India and snack-sized mini pancakes in Germany. Burger King is looking to expand into sub-Saharan Africa, adding further locations to the current six countries on the African continent.
1. The Burger King brand lacks global diversity.
Although Burger King is seen as a global brand, its outlet location and reach do not replicate this. The vast majority of the Burger King restaurants are located in the United States, with its main domain being Florida, where the company was initially founded as Insta-Burger in 1953. While this currently is a weakness, it offers Burger King a great opportunity to expand its offering to territories across the globe on the back of its strong brand awareness.
The United States is home to 7,237 Burger Kings, which represents nearly 38% of its stores worldwide. (Reader’s Digest)
2. Burger King is not seen as a value offering among its competitors.
Burger King’s lack of value on its menu is seeing the brand lose out on market share and value growth compared to its competitors. Although initiatives have been put in place to increase foot traffic in its restaurants, like the meatless “Impossible Whopper,” the growth in sales continues to be stunted due to its lack of value. Recent market analysis has attributed a drop in market share to be directly related to a lack of promotional offerings or value meals available at its restaurants.
United States same-store Burger King sales grew by only 0.8% in the fourth quarter of 2019, well under the expected sales growth of 3.1% for the same quarter. (CNBC)
3. Burger King has gone through a prolonged period of instability.
Through its existence, Burger King has been under the leadership of over 20 chief executive officers and many owners. Under its recent owners, 3G Capital and new leadership, the company’s stock value has soared. The current Chief Executive Officer, Daniel Schwartz, became the youngest CEO of a major restaurant chain at the age of 32.
Through international growth and drastic cost-cutting measures, Burger King has seen incredible growth in its share value, an increased international presence in its store footprint and a stronger positioning and presence in the market.
Burger King’s stock doubled in CEO Daniel Schwartz’s first 18 months, while Mcdonald’s lost 8% during the same period. (Forbes)
4. Fast food restaurants are seen as unhealthy.
Fast food is seen as a driving factor in the United States’ health epidemic. This is due to the relatively cost-effective options on offer at a vast network of locations across the country. The main issues are the caloric content of meals, as well as the high sodium content, which greatly contributes to heart disease. Sugar content is also higher than the recommended daily allowances, leading to a prevalence of diabetes.
71.6% of Americans over the age of 20 are overweight. (Centers for Disease Control and Prevention)
5. Burger King’s advertising strategy repeatedly falls short.
Although it is said that there is no such thing as bad publicity, Burger King would likely rethink a few of its campaigns if it could. For example, it has run sexist campaigns excluding women, and advertisements that were banned for their false claims that the Vegetarian Burger is 100% plant-based. (It contained mayonnaise and was cooked on the same grill as the meat menu items).
Furthermore, the brand often embarks on competitive advertising antics, with the main focus on its competitor, McDonald’s. Interestingly, during the Coronavirus pandemic, Burger King actively encouraged its consumers to purchase Mcdonald’s to boost the industry.
Burger King’s advertising budget sits at $372 million. (Statista)
6. Burger King’s corporate structure is inefficient and cumbersome.
Although the company has expanded drastically over the years and its franchising system is seen largely as a success, the vast majority of its locations are owned by franchisees. This franchisee system results in an operationally cumbersome and difficult environment. Although the franchise structure was designed to cut down on operating costs, it makes for an expensive and somewhat slow operation.
Out of the 18,800 Burger King restaurants worldwide, only 52 (about 0.3%) remain owned and operated by the Corporation, with the rest franchised to independent owners. (Statista)
1. There is an increasing desire for more sustainable menu items.
Younger clientele are increasingly aware of their impact on the environment, and their purchasing choices and trends are reflecting this. Burger King’s entry into meat-alternatives with the “Impossible Whopper” is a great start to this, but there is opportunity to further develop an earth-friendly menu. Meat-alternatives address Burger King’s over-reliance on meat products, as well as its sustainability initiatives, with meat-alternatives much kinder to the environment.
41% of Generation Z (those born between 1996 and 2009), and 32% of millennials (born between 1980 and 2000) have stated that they would pay a premium for sustainably-sourced ingredients in their dining choices. (Commetric)
2. Burger King could diversify its meat-replacement offerings.
With conscious eating becoming increasingly popular, the demand for products that exclude animal-derived products is showing potential. Burger King entered this segment with the Impossible Whopper, which promised to deliver a 100% meat-free offering that is similar to the traditional flagship Whopper.
Since then, the Meat-Replacement movement has grown to include products such as mince products like sausage, and meat-free sandwiches – the Impossible Croissan-wich. This ties in well with the modern imperative to mitigate global warming, as livestock maintenance is a key contributor to greenhouse gas emissions.
45% of the earth’s land surface is used to grow feed to support livestock. (MarketWatch)
3. Burger King’s concentration in the United States means a big opportunity in the East.
Burger King has historically focused on its home soil, with the vast majority of its outlets based in the United States. The international strength of the Burger King brand will make global expansion relatively easy compared to a brand with lesser awareness. Although some regional expansions have been unsuccessful, for instance, Burger King pulling out of New Zealand, major opportunities remain.
60% of Burger King’s net growth comes from international markets. (QSR)
4. Home delivery rollout and increased tech usage could provide upside.
Consumers’ purchasing patterns have developed to place more importance and reliance on the technology that is available to them. If utilized correctly, this offers restaurant chains the opportunity to further engage with their client-base, as well as bring further efficiencies to their product offerings. This can be in the form of a self-service kiosk, order and collection points (instead of normal restaurants), app-based ordering, as well as varying home-delivery methods.
A redesign of the standard Burger King layout and design has reduced building footprint by 60%. (Restaurant Technology News)
5. Hyper localization offers a way for Burger King to further engage with its customers and gain the trust of markets that it wishes to enter.
As Burger King expands its offering through various regions around the world, the opportunity exists to pivot its offering to the local consumer base throughout its geographical reach by offering local specialties and favorites. This has been a successful way to gain trust and acceptance for many outlets looking to break into a segment, gaining credibility along the way.
Burger King operates in 100 countries across the world. (The Guardian)
1. Climate Change is a big threat to the viability of the food production value chain.
The impact that animal production has on climate change is becoming a bigger societal issue. A lead contributor to this is that of the fast-food market and the impact that this industry has on global meats and fresh produce supply. Fast food restaurants have over 120,000 outlets worldwide, each with its own supply chain contributing to climate change.
15% of global greenhouse gas emissions are produced by animal agriculture alone. (Thomson Reuters Foundation News)
2. The quick-service restaurant industry has exceptionally strong competition.
As the world population grows, so does the demand for convenient, well-priced food options. This has seen the market for fast food offerings explode over the last four decades. In a world where time is money, convenience is king. Major growth has been seen in Asian countries, where convenience has always been important when selecting a food vendor.
Burger King is the 8th most valuable quick service restaurant with a valuation of $6.36 billion. (Statista)
3. Burger King is seeing a drop in younger consumers due to an increased emphasis on healthy eating.
Traditionally, “quick serve restaurants” have been labeled as junk food, where ingredient quality and nutritional value are compromised in favor of a low price, speed and convenience. In recent years, there has been a growing trend of conscious eating, with many younger consumers emphasizing healthy dietary options and sustainable sourcing practices.
60% of Millennials believe that their generation is healthier than other generations, and 48% consider themselves “foodies.” (USA TODAY)
4. The higher prices of Burger King’s inputs are threatening its operating model.
With an ever-increasing demand for food production due to a growing global population, pressure is being exerted on our farming systems. In turn, this pressure is resulting in higher prices for food. Water scarcity is a major consideration for the future of our food security, and beef production is a water-intensive activity. In order to secure growth in the food industry going forward, new production methodologies will have to be invented and implemented with sustainability as the primary driving factor.
In order to generate one pound of beef, more than 2,400 gallons of water are used – enough to fill 50 bathtubs. (The Atlantic)
5. The changing regulatory environment for Burger King brings uncertainty to its business model.
Burger King remains at the mercy of the policymakers, politicians and lawmakers in the geographical regions where it operates. This poses a risk as a change in law or regulation may decrease the profitability of the fast-food sector of a region, which may impact the viability of a business model like that of Burger King. Should policymakers choose to tax certain food products, like diabetes-causing sugar, or sodium-rich foods, this will have a direct impact on Burger King’s profitability.
The United States Food and Drug Administration regulates 78% of the United States’ food supply, regulating over 300,000 restaurant chain establishments and 35,000 fresh produce farms. (U.S. Food and Drug Administration)
Burger King retains an exceptionally strong market position in the global fast-food industry. Going forward, the global trends are moving toward cleaner eating habits, and the market is seeking a more sustainable solution to its nutritional requirements. It’s evident that through its product expansion, Burger King has its finger on the pulse, and is well-positioned to move forward with the times.
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