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Burger King eyes breakfast as a 'long-term play'

The company has opened 701 net new restaurants in a trailing 12-month basis, its highest level ever and an 18-percent year-over-year increase.

November 4, 2014 by Alicia Kelso — Editor, QSRWeb.com

Burger King’s third quarter included a global comp sales increase of 2.4 percent, including a 3.6-percent rise in US and Canada systems.

During the company's earnings call Monday, executives avoided specifics about the Tim Hortons transaction for now and will continue to do so until it’s official in 2015. However, CEO Daniel Schwartz said that move will position the company for continued sustainable growth for “many years.”

Executives also attributed the company's positive quarter — the company’s best since early 2012 — to a number of strategies anchored on discipline. Here are five strategies that worked in Q3:

A more disciplined approach to the menu

Earlier this year, Burger King announced it was going to shift its strategy to feature fewer, more impactful product launches alongside continued value offerings. This move came after numerous full menu launches in 2012 and 2013.

The quarter featured four new entree introductions, including the A1 Ultimate Bacon Cheeseburger, the Mushroom and Swiss Bacon Whopper, the Mushroom and Swiss Big King and the return of the brand’s Chicken Fries. Burger King also continued to focus on its King Deals value menu to help drive sales and traffic.

“The most important part about all of these initiatives is that they are operationally simple to execute and enable our franchisees to grow restaurant profitability,” Schwartz said.

Alex Macedo, EVP and President of North America, said this approach has also led to improved margins for franchisees.

Simplification of operations

A simpler menu means simpler operations. Macedo added that the company’s initiative has led to the reduction of waste, easier crew training and the overall improvement of restaurant operations metrics.

Coupled with the Restaurant Excellence Visit program and the coaches initiative, overall guest satisfaction scores have improved by 6 percent, and speed of service has improved by 8 percent, Macedo said.

“Our coaches continue to work with restaurant teams and managers to share best practices, while restaurant auditing is performed by outside specialists. This structure allows our coaches to focus their efforts entirely on supporting restaurant teams and managers,” he said. “With this refined field structure in place, we have seen positive traction and are seeing tangible results.”

Digital marketing efforts

With the relaunch of the Chicken Fries, which were originally introduced in 2005, Burger King also stepped up its digital marketing efforts. Macedo said the product was removed from restaurants in 2012 to “make way for other chicken products.” But the digital marketing team’s research found that there was a continued conversation about the fries on social channels.

“Our guests were mentioning Chicken Fries all the time on the Internet. To be exact, there was one social mention to bring back Chicken Fries every 40 seconds in January of this year. So we gave guests exactly what they wanted,” Macedo said. “The relaunch strategy was centered on an almost exclusively digital and social media campaign.”

In August, Burger King used Twitter, Facebook and Instagram to announce the comeback. Within the first 24 hours, the hashtag #chickenfriesareback was used more than any of the brand’s previous multi-week digital and social media campaigns combined, Macedo said.

“Within the first 10 days of the campaign, Chicken Fries had been mentioned over 1 million times on Twitter. The Chicken Fries campaign represents yet another successful step in our strategy to leverage digital and social channels to reach our guests in innovative ways,” he said.

Slow and steady on breakfast

With the Taco Bell breakfast launch and its corresponding ad campaign taking aim at McDonald’s, there has been plenty of morning activity in QSR so far this year. Burger King intends to be a major player in this space, and Macedo calls breakfast a “long-term play.”

“We’re very confident that we have a lot of room to grow in breakfast, and we've been very disciplined over the last year making sure that we have consistent investment behind our main platforms in breakfast,” he said.

The focus includes coffee and the brand’s signature Crossan’wich. Burger King will continue to “talk consistently” about these platforms to get consumers to buy into the brand as part of their morning routine.

“To date, breakfast is the daypart in which we're having the best same-store sales comps over the previous year, which means that we're growing breakfast faster than any other daypart,” Macedo said. “We don't see much room at this time for a very significant innovation in breakfast. We just want to make sure that we build a habit with our guests, get them to come to our restaurants in the morning.”

International growth

Burger King also continued to expand its footprint beyond North America, and opened 152 net new restaurants in international markets during Q3. This puts the company just below 14,000 total restaurants worldwide.

Burger King has opened 701 net new restaurants in a trailing 12-month basis, its highest level ever. This represents 18-percent year-over-year growth in net new units from the third quarter of 2013.

Later this month, the chain will plant its flag in India, its 100th country, with a special vegetarian-focused menu.

“We’ve spent the last 9 months developing a primarily vegetarian menu that has been taste-tested by over 5,000 guests in 16 cities across India,” Schwartz said.

He added that there has also been a quick ramp up in countries such as South Africa and France.

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