- WHITE PAPERS
Burger King just introduced a new limited-time promotion where guests can choose any two of its three signature sandwiches — Whopper, Original Chicken and Premium Alaskan fish — for $5.
Typically, the Whopper retails for $3.59, the chicken sandwich retails for $3.99 and the fish sandwich is regularly $3.19.
At last week's J.P. Morgan Gaming, Lodging, Restaurant and Leisure Management Access Forum in Las Vegas, Josh Kobza, BK's senior vice president of Finance, provided a glimpse of why the company is offering such value promotions.
During the first six weeks of the year, QSR burger chains focused heavily on these offerings (McDonald's marketed its Dollar Menu and Wendy's introduced its revamped Right Size, Right Price menu, for example), which may have led to modestly negative same-store sales at BK, Kobza said.
"We think (the negative sales were) a combination of a number of factors — higher gas prices, payroll taxes, on the macro side. And on the micro side, within the QSR sector, our peers had a meaningful increase on value," he said. "We are now better positioned on the value side than we were in the beginning of the year."
Still, although Burger King may be getting a later start on the trend, the company anticipates keeping its menu promotions balanced between value and premium.
"The consumer has less money to spend and that hurts us and the industry by definition. What we have to do is keep focusing on the same strategy, improve our operations and remodel our restaurants so they see a brand new, smart-looking Burger King," Kobza said. "We can't impact how much money the consumer has to spend, but we can impact the experience they have in our restaurants."
As part of its effort to impact the customer experience, Burger King will continue to add new items to build on its broadest menu rollout in history last April. LINK. This includes adding to new platforms such as salads and wraps that help the brand reach new consumer demographics like seniors and women.
"We put in a lot of media to let people know that something different is happening," Kobza said. "It's a process, though. You don't launch salads and see everyone immediately change their perception of Burger King."
Kobza added that more new items will be introduced this year, but not nearly as many as in 2012, when company execs believed they had a lot of catching up to do in the QSR category. Right now, the focus is on the coffee platform to try and bridge its perceived gap in the breakfast daypart.
The company also considers operational consistency with new product launches. For example, its popcorn chicken launched last year, but it took longer to cook than other signature items and slowed down service. Because the item's unit counts fell below expectations, the company took it off the menu.
Burger King's operational focus is also being refined by new coach teams — an investment that was made last year and completed in December. Coach teams are focused on restaurants that aren't performing as well as the rest of the system.
"If we identify our better and our worst operators in our system, we'll know who we need to focus on to drive consolidation," Kobza said.
Coaches grade restaurants on everything from customer satisfaction to speed of service and cleanliness. The company ranks operators from top to bottom and internally publishes the results to influence better performances.
The final component Kobza discussed was the company's progress made abroad. For example, Burger King doubled its pace of net new international restaurants in 2012 from 2011, mostly through joint venture agreements. Key markets include Brazil and Russia. Additionally, he said the company plans to open about 1,000 restaurants in China in the next five to seven years.
There is also a focus on smaller, new markets such as South Africa and Colombia.
"About 40 percent of our restaurants are outside of the U.S. and Canada and we expect that to grow over time," Kobza said. "We have such great brand awareness around the world and a lot of our partners see a lot of opportunities."
Read more about operations management.