Burger King Beefs up Global Operations

INTRODUCTION

Founded in 1954 by James McLamore and David Egerton, Burger King Corporation has grown to become the world's largest flame-broiled fast-food restaurant chain and the world's second largest hamburger chain trailing only McDonald's. Despite its success, Burger King Corporation has undergone several acquisitions and leadership changes in 56 years with its most recent occurring in the fall of 2010.

After first being sold to Pillsbury in 1967, franchising increased considerably. However, Pillsbury sold Burger King to British company, Grand Metropolitan. Fortunately, under their ownership, the United Kingdom was introduced to Burger King through the conversion of its Wimpy restaurants to Burger King restaurants. After Grand Metropolitan merged with Guinness in 1997, it formed Diageo approximately five years later. Diego was accused of neglecting Burger King in favor of its premium liquor business and during 2002 Burger King was sold again to a group of investors led by Texas Pacific Group. Four years later, in 2006, Burger King became a publicly traded company. Most recently, in fall 2010, Burger King was purchased by 3G Capital, an investment firm. It's most recent buyer, 3G Capital, has acquired Burger King and its challenges.

In addition to withstanding the structural and leadership changes that occurred under new owners, Burger King has been challenged with falling profits and sales, angry franchise owners, mediocre innovation, growing competition, and narrowly focused on the very customers who have been hardest hit during the recession (Brady, 2010). Despite its challenges and its long history, Burger King has consistently focused on expanding globally. This paper seeks to analyze how Burger King can capitalize on its opportunity to expand globally in an effort to remain a competitive threat in the fast food industry and possibly overtaking it's main rival McDonald's.

BURGER KING STRENGTHS

Burger King has more than 12,000 restaurants within the U.S. and internationally and is located in 74 countries. In addition, to having comparable products to its competitors there are two elements that differentiate Burger King from its competitors. First, Burger King has a flavor advantage as it utilizes a flame broiling method with creates a distinct and unique taste to its food. Second, Burger King offers customized orders more effectively than competitors. Specifically, Burger King prides itself on allowing customers to choice how they would like their burgers.

MAJOR CHALLENGES OF BURGER KING

In spite of Burger King's resiliency since its inception and its strengths, the company faces major challenges that affect its overall stability and global expansion efforts.

* Ownership and Leadership Changes: Burger King has encountered decades of ownership and management changes. James F. Hyatt, chief global operations officer was once quoted stating, "if leadership keeps changing, it's hard to take a strategy deep...it takes this continuity component to go international" (Hemlock, 2007).

* Clinging to Old Strategy: The target audience for the company has been its primary focus, young men 18-34 years old, who are considered to be the largest consumers of fast food. Burger King focused its promotions, advertising, pricing and even menu towards this demographic. However this demographic has been impacted the most by the recession (Hudson, 2010).

* Competition: The U.S. market is saturated with fast-food restaurants which makes it difficult to grow more nationally however there is also strong competition globally and thus requires the company to carefully adapt to global markets (Hemlock, 2007).

* McDonald's: Burger King has struggled to keep up with its rival during the economy's roller coaster of the past two years (Heher &Fredrix, 2010). Moreover, McDonald's has most of its restaurants abroad and its ad budget globally surpasses Burger King's.

GLOBAL CHALLENGES OF BURGER KING

Although Burger King is represented in 74 countries there have been times when the company has had to close its doors internationally. This was due to franchises not always perform adequately through insufficient investing or failing to make royalty payments. In some instances, the international markets have turned out to be too small to support the infrastructure. Moreover, host countries, especially Israel's, style of hamburgers was far more popular