News
Burger King enters coffee war, crafts $1 double cheeseburger alternate
February 16, 2010
In its effort to boost slumping sales, Burger King Corp. is moving to a new coffee offering as part of its breakfast menu improvement plan and to a value-engineered sandwich option that should appease franchisees.
For its new coffee program, BKC has signed an agreement with Starbucks-owned Seattle's Best Coffee to offer the brew in approximately 7,250 U.S. Burger King restaurants by September 2010. The freshly-brewed premium coffee is made from 100-percent arabica beans and is part of Burger King Corp.'s commitment to enhance the brand's beverage platform and breakfast menu. Burger King's BK Joe coffee program will be phased out as stores replace it with the Seattle's Best Coffee.
The Seattle's Best Blend coffee will be availalbe hot or iced, with optional vanilla or mocha flavor and whipped topping, at a suggested retail price of $1 to $2.79.
"The addition of Seattle's Best Coffee expands on our Have It Your Way brand promise by offering our guests even more beverage options and strengthens our ability to remain competitive in a continuously changing industry," John Schaufelberger, senior vice president, global product marketing and innovation for BKC, said in a news release.
Breakfast strategy
Burger King's move to improve its coffee is a necessary component of strengthening its breakfast menu. Other quick-service chains such as Chick-fil-A, Hardee's and Subway, have switched tobetter coffeesin recent months. Hardee's and Chick-fil-A developed their own premium coffee blends, while Subway, like Burger King, is transitioning to Seattle's Best Coffee in 9,000 of its U.S. stores.
BKC chairman and CEO John Chidsey said at this month's Deutsche Bank Securities Small and Mid Cap Conference in Naples, Fla., that the company is working on daypart expansion, with breakfast presenting the best opportunity for growth. On the food side, Burger King will lauch a McDonald's Egg McMuffin-type sandwich in April. The $1 BK Breakfast Muffin Sandwich will feature sausage, egg and cheese on an English muffin.
Having a premium coffee with iced and flavored options allows its breakfast menu to compete directly with McDonald's, which has done well with its McCafé line of espresso-based specialty beverages since their launch in May 2009.
Value burger compromise
Chidsey also told investors in the company's most recent quarterly earnings call that the company was testing options to wean customers off the $1 double cheeseburger, which has driven traffic but impacted check average and margins. The company is taking a lesson from McDonald's and will add a new double patty burger to its value menu, one with a single slice of cheese, according to The Miami Herald.
McDonald's pulled its double cheeseburger off the Dollar Menu in November 2008 after franchisees complained about the profitability of the former sandwich.
Burger King will raise the price of the double cheeseburger in April, when the six-month $1 promotion ends, according to the story.
Franchisees — which make up about 90 percent of the BKC system — have complained about the $1 double cheeseburger since it was proposed last summer, with a number of them filing suit against the company when it moved forward with the special priced offering.
From The Miami Herald:
The new BK Dollar Double sandwich to be introduced on April 26 is comparable to McDonald's McDouble, a double cheeseburger with one slice of cheese. Burger King franchisees would be required to sell it for no more than $1 and promote it on the value menu.Burger King would also still require franchisees to keep the double cheeseburger on the value menu, but starting on April 20 that price can go up to "no more than $1.19.'' But if McDonald's restaurants in the area are selling the product at higher prices, Burger King franchisees can request an exemption to raise their price to $1.29.
Chidsey said at theDeutsche Bank conference that the $1 double cheeseburger promotion succeeded in making the chain a value-focused chain in consumers' minds. BKC also is testing a number of other value offerings as well as premium menu items as part of its bar-bell menu strategy.
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