Article

Burger King's 'fewer, more impactful' menu launch strategy lifts sales

The brand will introduce its mobile app, including couponing, payments and geotargeting, nationwide at the end of this month.

August 1, 2014 by Alicia Kelso — Editor, QSRWeb.com

Burger King executives cited consistency and simplicity as the main drivers behind the company's 5.4-percent systemwide sales growth in Q2. During this morning's earnings call, CEO Daniel Schwartz said the strategy of introducing fewer, more impactful menu items is also paying off.

"This is operationally simple. We introduced five new items during the second quarter, which is a significant decrease year over year. Those five new products only required one new SKU," he said. "We believe this simplification is the key to increasing franchisee profits."

Alex Macedo, EVP and President of North America, added that the "fewer, more impactful" launch strategy has been in place for a little over one year and has yielded tangible results. The brand introduced four new sandwiches during the Q2 positioned across the value spectrum – from value to premium (Extra Long BBQ Cheeseburger).

"All four drove traffic and solidified our strength in the large sandwich category," Macedo said. "These four sandwiches are operationally simple and offer compelling value." They are also a major driver of July's comps, which have been the best all year so far, he said.

Other areas of focus for the brand include:

Reimaging. About 30 percent of the North American system is now in the modern image, or more than 2,200 restaurants. Macedo said Burger King will reach 40 percent by the end of 2015. "Reimaging is a focus area; it is a proven avenue for growing the top line," he said. Reimaged restaurants are experiencing sales uplifts of 10 to 15 percent, executives said.

Operations. Burger King launched a new "restaurant excellence" program designed to complement its coaches initiative. Whereas the coaches work with restaurant managers and staff to share best practices, the new program includes third party audits that provide an objective analysis of restaurant-level operations. Since this new program was put into place, guest satisfaction scores are up 11 percent, and speed of service scores are up 9 percent.

Digital.The company's mobile app will be introduced nationwide at the end of august. The digital platform has been in test for a few months in "five or six markets" across the country with "very good results," Macedo said.

The app will include capabilities such as mobile couponing, mobile payments and geotargeting: "All the great stuff you can do with an app," Macedo said.

Cost control.As has been the central theme to these leaders, Burger King continues to cut costs on inefficiencies.

"We don't have control over commodities so we make sure we can reduce everything we do have control over," Schwartz said. "We look at everything, from the paper cups and wrappers to how we cook our products. That is what we can control." This is also why the company is relying more on simplicity in its operations and menu introductions. "All of this effort in the last 12 months has helped increase franchise profitability despite high commodity prices, specifically beef," Schwartz said.

International

Internationally, the brand "leveraged a balanced marketing approach" of premium and value, Schwartz said. It also dedicated time into ensuring the brand has a consistent identity around the world, which will drive global growth, he added.

Burger King, executives say, is one of the fastest growing QSRs in the world, adding 131 net new restaurants during Q2, and 682 in the trailing 12 months.

Schwartz said the last 12 months, in particular, have been active for global development and the brand is experiencing momentum in both its existing markets, but also newer markets such as France, South Africa and India.

_{Photo provided by Fotopia.}

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