Burger King

Sep 4, 2021 | Report Announcements

Burger King is the 3rd largest burger chain (by US system sales) with a well-established brand equity around flame grilling (over an open flame), highlighting a clear difference from griddling. Its burger platforms include the signature Whopper configurations and various “King” varieties. Management plans to focus on driving innovation in its core menu while accelerating permanent daypart and category extensions. To this end, the June 2021 launch of its hand-breaded Ch’King Sandwich helps BK enter into the chicken sandwich war with a new platform that will be used to generate new news going forward. Menu quality upgrades (85% of its permanent menu is now free from artificial flavors or preservatives) are designed to help the brand upscale its market reach while $1 value emphasis (BOGO for $1 & $1 Your Way Menu) is intended to sustain traffic from core customers. Funny TV ads feature: compelling food shots; humorous testimonies from actors that look like real customers; and use of “King” mascot (with a big-headed mask). Value ads feature the King mascot wearing a thick gold chain and sporting a money gun that rains dollar bills, supporting the notion that BK’s cash strapped customers can feel rich with their dollar deals. The system is currently testing a new rewards-based loyalty platform for digital customers (Royal Perks) and the rollout of its outdoor digital menu boards improve service speed while integrating with the app, facilitating its loyalty program. In any case, BK’s comp underperformance since 2018 reflects the brand’s challenge to expand beyond its orientation towards a lower income demo that has been struggling from before the lockdown (but especially post-lockdown). This demo orientation requires a strong emphasis on price point value, making it difficult for the brand to drive check. During 2Q21, corporate reported that is not satisfied with its current performance as it relates to focusing sufficiently on its few, key priorities and moving at a sufficiently fast pace which led to the departure of the president of BK Americas. In conclusion, Burger King must continue 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.

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