Title of Paper: Burger King
Name: Holly Rhoades, Shu Ou-Yang, Apivai Chatpimolkul, Patrick Hill
University of Texas at Arlington
12/7/2012
Executive Summary
Burger King has traditionally been the second largest chain of fast food restaurants in the
U.S. for several decades. However, the chain has been struggling financially; it recently
ceded the title of second largest fast food chain to Wendys (Patton, 2012). This can be
attributed to several things, including changing consumer preferences, a non-competitive
customer value proposition, and ineffective internal processes.
As a result, in 2011, the company introduced a $750 million turnaround strategy (Bhasin,
2012). This analysis of Burger King, beginning with the 3rdquarter of 2011, explains the
components of this turnaround strategy from the processes within the learning and growth,
internal, customer, and financial perspectives, and how Burger King believes these
improvements will ultimately lead to improved financial performance. The analysis covers
the following areas:
Customer Value Proposition
Strategy Mapping
Balanced Scorecard
Overall Critical Strategic Analysis of Burger King
We found that the turnaround strategy focused on improving shareholder value by creating
a new Customer Value Proposition (CVP) supported by a new menu and marketing
communications campaign, as well as overhauling their internal operations to successfully
fulfill this new CVP. Learning and growth measures were also implemented to further
empower franchisees to improve their internal operations and serve the customer better.
In their 3rdquarter report, Burger King stated that for the 3 months ending on September
30, 2012, system wide sales growth was 1.3%, compared to negative 0.4% at the same
point last year (Burger King, 2012, p. 1). In addition, Burger King completed several
international development agreements that are an important part of their financial growth
strategy. It appears then that the strategy is working, but time will tell if this increase is due
to a truly successful turnaround strategy or just a temporary fix due to customer curiosity.
Customer Value Proposition
The fast food industry is extremely competitive and has low barriers to entry. Because of
this, standing out in the marketplace and offering a good Customer Value Proposition
(CVP), something that is seen as unique and valuable among consumers, is crucial for
Burger King. Unfortunately, the lackluster financial performance of Burger King in recent
years can be tied to their lack of an effective CVP. Like many fast food chains, Burger
King had long targeted young men with their hamburgers, most notably the Whopper
(Morrison, 2012). The companys 2011 financial statement quotes The strength of our
menu has been built on the brand equities of allowing consumers to customize their
hamburgers their way and using our distinct flame-grilled cooking platform to make better
tasting hamburgers (2011 Form 10-K Annual Report, 2011).
However, this CVP has faltered in recent years as the nations dismal economic
performance has affected the incomes of this target group. In terms of U.S. sales, the chain
lost their position as the #2 hamburger chain to Wendys in 2011, even though Burger King
has far more stores. According to Horovitz (2012), McDonalds has been aggressively
introducing new menu items while Wendys has been attempting to reinvent themselves as
a higher-end hamburger chain. Burger King, on the other hand, has been lagging in menu
innovations according to Morrison (2012).
One of the biggest focuses of the $750 million turnaround strategy was the CVP. In order
to determine what customer value, Burger King conducted extensive survey research.
According to Horovitz (2012), Steve Wiborg, the executive vice president and president of
North America operations, stated that consumers said they wanted more choices at Burger
King, but that they wanted them to be best in class. Over the course of a year, the company
tested out many potential new products, ultimately settling on 10 new items to introduce.
The company sought to create a CVP focusing on a diverse and healthy product selection
with the introduction of many new menu items including smoothies, frappes, and salads.
One of the new products, the chicken strips, differentiate themselves from the competition
in the fact that they are the only fast food chicken strips made with 100% white tenderloin
chicken (Horovitz, 2012). Some of the new products, such as the snack wraps, were made
to give customers snacking options at non-meal times.
The new product introductions were supported with new marketing communications,
primarily commercials featuring celebrities such as Steven Tyler, Mary J Blige, and Sofia
Vergara. Slogans like Exciting Things Are Happening at Burger King as well as the
replacement of the Have it Your Way slogan with Taste is King sought to reinforce this
new CVP.
In addition, Burger King has attempted to enhance the in-store customer experience
through a complete renovation of their stores, including enhancements like digital menu
boards, new uniforms and new packaging. (Bhasin, 2012). A big part of this store
renovation was a focus on store cleanliness, as there had been extensive customer
complaints. In addition, upgrades to improve the dining experience itself, such as softer
tables and chairs that can move instead of being cemented to the ground, were
implemented. Though these things are secondary to the food, the in-store experience is
something that many consumers take into consideration when choosing a fast food
restaurant, and should be considered as an improvement in customer value.
Burger King is also in the preliminary stages of developing a secondary CVP of
convenience with the rollout of the BK Delivers delivery service earlier this year. Initially
offered in Houston, Miami, and Washington D.C., the service is unique among the leading
