Burger King is one of the most successful food chains in the world. In its 70 years of existence, Burger King has gone from being a modest Burger Outlet to becoming the second largest fast-food chain in the world, with more than 17000 Outlets all across the world. Even during the pandemic, It has been extremely profitable with a profit of 823 million dollars.
Burger King was in trouble
But while most of us are familiar with the glorified success of Burger King, very few of us know that In 2009, the brand image of Burger King was in deep trouble. While on the one side, McDonald’s was expanding rapidly capturing every inch of the market. On the other side, Burger King was in a mess.
They had changed 13 CEOs In just three decades. The stores were shutting down rapidly. The shares had dropped by 18% and profit had fallen by 10% to just 44 million dollars.
Burger King’s Game Changer CEO Daniel Schwartz
Something magical happened in 2010 when an investment firm called 3G Capital took over the company and appointed one of the youngest CEOs in fast food history, who went by the name Daniel Schwartz. Back then, Daniel was only 32 years old. And the weirdest thing was that he did not have any experience in the restaurant business. In fact, he spent most of his time in core Finance, but as usual, while most of the industry experts undermined his capabilities.
This guy did such an incredible job that when the same Burger King went public again in 2012. In just 18 months, the stock price shot up by 100%.
The question is,
- How did such a young man with no experience in the restaurant business achieve something so extraordinary?
- What exactly was his business strategy?
- What are the lessons that we need to learn from this incredible Businessman?
Understanding the Business at Ground Level
The first thing that Daniel did was something that no ordinary CEO would ever do. And that is, scrubbing the floors and cleaning the toilets. Yes, You heard that right.
When Daniel took over the leadership of the company, Since he had no experience in the restaurant business, He decided to get down to the ground and actually walk with the Burger King employees to try and understand what exactly was the fundamental problem with the operation. This involved doing everything from making burgers to cleaning the toilets. And in this wonderful process, Daniel learned that there were four fundamental problems with the operation of every Burger King Outlet.
4 Fundamental Problems with the operation
1. Confusing Menu
The menu was extremely cluttered with a lot of options that confused the customers. And in spite of having so many options, there was no signature dish that was popular enough to attract loyal customers.
2. Too much Chaos in Kitchen
Although Burgers as an individual product were a very good value addition to the menu, when the employees were actually making these burgers, the kitchen got cluttered. As a result, there were a lot of sauces and a lot of ingredients. Eventually, this reduced both the efficiency and the accuracy of making burgers.
3. Annoyed Drive Thru Customers
This inefficiency increased the wait times, and it gave the drive-thru customers a terrible experience. Now, this was a very, very big deal, because you see the drive-thru customers contributed to more than 60% of the revenue for both McDonald’s and Burger King. And from the consumer standpoint, if the order gets delayed by an average of just one minute three terrible things happen.
- The customer who’s fifth in line has to wait for 5 extra minutes in hunger, which is a terrible time to annoy anyone.
- During peak times, when the cars got lined up at the store, If another customer wants to eat at the Burger King store, He will skip and move on to the next Outlet merely by looking at the long line. As a result, The number of burgers sold decreased by a large extent at every single Outlet.
- In the race of having a diverse menu, in spite of all the inefficiency, very few products on the menu were actually high-profit margin products. Therefore, when these inefficient practices were repeated for a million orders all across the United States, it cost Burger King millions of dollars in profits.
How these problems are solved by Daniel Schwartz
Daniel Schwartz took a bold step and decided to eliminate a dozen items from the menu. And he presented only Whopper as the signature dish of Burger King. And since then, starting from the marketing campaigns, all the way up to the menu, even the Instagram post, Whopper has always been presented as the signature dish of Burger King.
The Professor always has a plan to save his Whopper.
— BurgerKingIndia (@burgerkingindia) December 3, 2021
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.#MoneyHeist #MoneyHeistFinalle #Netflix #Grill #Burger #chicken #flamegrill #Friends #Food pic.twitter.com/jtDf2OCXEd
This is the reason why, if I asked you to name two other burgers that Burger King sells other than the Whooper, you will have a hard time remembering them spite making countless visits to the Burger King store. Now this seemingly simple move, brought along an insane amount of benefits for the Burger King brand.
1. Out of the 2.4 billion hamburgers that were sold, 2.1 billion of them that is, more than 87% of the burgers that were sold at Burger King were just Whoppers.
2. Because 87% of the orders were of the same Burger, there were very less sauces and very less ingredients. As a result, There was no confusion inside the stores. This skyrocketed efficiency and brought down the wait times to a large extent. Apart from that, the supply chain inventory also became extremely lean and extremely efficient.
3. The most amazing thing about the Whooper is that it is a high-margin product. Now, although Burger King doesn’t reveal how much profit it makes with every Whopper, It is said to be around 50 to 80%.
Just like that, when such a high degree of efficiency and profit margins were repeated for millions of orders throughout the United States. It started to give out millions of dollars in profits. This is the primary reason why Burger King became an extremely successful brand after 2010.
How Burger King saved $5321 per online meeting
But Daniel Schwartz did not stop there. He further went deeper into the cause and found out every little cause the company was incurring. Starting with the office supplies to the executive travel. That is when he found out, that there were already two years of office supply, and there was a lot of unnecessary spending that needed to be cut down.
So he started cutting down on things as small as pen and paper also. Apart from that, He made a bold statement and sold the corporate Jet and ask ED executives to use Skype calls to do the meetings. And even by modest calculations, they have estimated saving was at least 5321 dollars per online meeting. That’s 3.9 lakhs per meeting.
How Burger King used Conflict Marketing Strategies to grow
After this groundwork was done, one final thing needed to be fixed, and that was the marketing of the Burger King brand. But at the outset, no company, especially after becoming as efficient as Burger King would ever think twice before shooting up their marketing budget, right? After all, marketing is one of the greatest investments a company can make.
But in the case of Burger King, they wanted to achieve external visibility and at the same time, spent very less on marketing. Now, this looks impossible, right?
Burger King deployed a marketing strategy that was based on a fundamental attribute of human psychology and that is, conflict breeds attention.
In simple words, the reason why Big Boss is a hit is that conflict breeds attention. The reason why Ekta Kapoor’s serials are a hit is that conflict breeds attention. And the reason why news anchors bully their guests during prime time is that conflict breeds attention.
Burger King purposefully started trolling and calling out their rival McDonald’s in the social media posts and the Billboards inviting a conflict. And soon enough, McDonald’s started to respond. As a result, The conflict started breeding attention. And not so surprisingly, hundreds of blogs started reporting about the marketing war that was happening between Burger King and McDonald’s. And people like you and me started retweeting their ads.
And a large chunk of the customer base even participated in the campaign like the burn the ad campaign and this participation of the customers indicated the extraordinary impact of this marketing campaign. This is how time and again, Burger King gets billions of dollars worth of publicity through organic blogs, International media, and social media Impressions. And the best part is they only have to spend a fraction of their marketing budget to create the conflict. And then, the attention that the conflict breeds eventually leads to the Snowball Effect, creating billions of Impressions on social media, eventually giving Burger King the publicity that it never paid for.
These are the reasons why Burger King today is not just one of the fastest-growing chains in the world, But also one of the most profitable food chains in the world.
Marketing Campaign of Burger King
Come Like a Clown, Eat like King
Burn That Ad
#IHaveAJoke
Meme Marketing
Guerilla Marketing
List of Burger King marketing campaigns. (2022, September 12). In Wikipedia. https://en.wikipedia.org/wiki/List_of_Burger_King_marketing_campaigns
Business Lesson
There are 3 important pointers that we need to learn from this case study.
1. Understand your Business at any level
Great leaders never shy away from getting their hands dirty, and they will go to any extent to understand their business to understand their company better. In this case, It was the humility and audacity of Daniel Schwartz to go and do the menial jobs at the store in spite of being the CEO.
2. Avoid Micro Inefficiencies. Keep the process lean.
Micro cause and micro inefficiencies are more often than not, the heaviest expenses that go unnoticed, and they often lead to a chain of expenses and inefficiencies that will drag your business down without even you knowing it. So always try to keep the processes lean and the cost low, no matter how big your company is.
For this, If you are at a sea-level position or at the management level, I would highly recommend you do a quarterly review of the micro expenses at your company. And when you are done calculating, show it to your employees and tell them how important it is to spend cautiously.
3. Use Conflict Marketing Superpower
Conflict is a marketing superpower that breeds attention. So as consumers make sure that you don’t become a spectator of someone else’s stupid conflict. And from the business standpoint, you really need to study Why big boss is a work of a genius.
Study Material
Read this article on Burger King’s CEO by Business Insider if you want to know more.
That’s all from my side, As usual, if you learn something valuable, write in the comment box.
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