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MINI CASE 21
Burger King
I. CASE ABSTRACT
Burger King was the second largest fast food hamburger restaurant chain
in the world as measured by the total number of restaurants and system–wide
sales. As of June 30, 2010, the company owned or franchised 12,174
restaurants in seventy–six countries and U.S. territories, of which 1,387
were company–owned and 10,787 were owned by franchisees. Of Burger King’s
restaurant total, 7,258 or 60 percent were located in the United States. The
restaurants featured flame–broiled hamburgers, chicken and other specialties
sandwiches, french fries, soft drinks, and other low–priced food items.
Burger King successfully differentiated itself from McDonald’s, its
primary rival, when it launched the Have It Your Way advertising campaign in
1974. Unlike McDonald’s, which had made it difficult and time–consuming for
customers to special–order standard items (such as a plain hamburger), Burger
King restaurants allowed people to change the way a food item was prepared
without a long wait.
Pillsbury (including Burger King) was purchased in 1989 by Grand
Metropolitan, which in turn, merged with Guinness to form Diageo, a British
spirits company. Diageo’s management neglected the Burger King business,
leading to poor operating performance. Burger King was damaged to the point
that major franchises went out of business and the total value of the firm
declined. Diageo’s management decided to divest the money–losing chain by
selling it to a partnership private equity firms led by TPG Capital in 2002.
II. CASE ISSUES AND SUBJECTS
FRANCHISING
RETAIL SALES AND MARKETING