Burger King Executive Summary

Burger King is the 3rd largest burger chain (by US system sales) built upon an iconic “home of the Whopper” brand equity which emphasizes flame grilling (over an open flame) that represents a clear difference from griddling – consistent with its tag line “Your way, way better.” The current goal is to improve its menu strategy by better highlighting innovation around its Whopper core equity (100% real Whopper with no artificial flavors or preservatives) as evident by the following iterations: Southwest Bacon Whopper Jr.; Southwest Bacon Whopper; Double Southwest Bacon Whopper; Impossible Bacon Whopper (veggie); Whopper Melts (including a spicy version); and the Bacon Whopper Melt. Notably, the Whopper will no longer be offered on value platforms. Rather, the brand will focus on introducing fewer, more impactful value promotions like its $5 Your Way Value Meal which was designed to compete with Wendy’s $5 Biggie Bag. The chain’s core drive-thru channel benefits from a completed digital menu board rollout with a migration to double lanes when possible. An 8% digital sales mix is mostly driven by delivery and by BK’s app which includes mobile order & pay functionality. 80% of registered digital users have converted to BK’s new loyalty program which is now integrated with the system’s outdoor digital menu boards and a new creative agency will hopefully bring some insights into driving long-term traffic and sales. BK is focused on improving its customer experience which benefits from process/equipment improvements and tighter quality control initiatives. This is key as efforts to strengthen the system’s weaker performing units will certainly improve average unit economic metrics. Having said all that, BK’s long lasting comp underperformance reflects the brand’s challenge to expand beyond its orientation towards a lower income demo that has been struggling from before covid (but especially post-covid). This demo orientation requires a strong emphasis on price point value, making it difficult for the brand to drive check. Resultantly, Burger King had been providing 3x the amount of value offerings relative to its competitors, diluting its marketing firepower and driving significant COGs underperformance. In conclusion, Burger King is challenged to find ways to expand its market reach towards new, more affluent consumers who are willing to pay for the brand’s strong core equities and quality upgrades at a time when its core lower-income demo needs more value than ever.