Burger King Stubs its Toe
In its May 25 issue, BusinessWeek reported on Burger King’s recent sales woes. It seems that after multiple years of stellar growth, the company has run into some rough water. While arch-rival McDonald’s saw April sales rise 7%, BK has had a difficult couple of months.
While I respect Burger King’s discipline in focusing on its core customer of young men in recent years, I can’t endorse everything they do. (Their Sponge Bob kids meal promotion was truly a head-scratcher.) Still, I think the company will be OK.
Why? Burger King appears to be stumbling on only one of the four internal dynamics that cause problems when growth stalls. CEO John Chidsey says he remains committed to consistency in continuing to pursue young male customers, he’s showing nerve by increasing the ad budget 25 percent next year, and I don’t see any reason to believe why “tweaking his strategy to draw in more budget-conscious consumers” would cause a loss of focus. For the most part he’s making the right calls.
The only concern I have is the one wrong move Chidsey has made. He ticked off his franchisees by appropriating funds from soft drink makers that normally go to store owners. It’s not like he was doing anything untoward with the money–it was going to support the national advertising fund, which would drive even more business into the stores. But Burger King’s independent-minded franchisees don’t like someone changing the rules, especially if it means money is coming out of their pockets.
This minor rift would be a problem in any company, but with Burger King it’s more of a whopper (sorry, couldn’t resist). The company has had a particularly troubling time with the lack of consensus issue over the years (I know–I used to work for one of its ad agencies). You don’t go through nearly a dozen CEOs and half as many agencies over a twenty-year period unless something is structurally wrong.
Consensus issues aside, if Chidsey and the team at corporate keep their market focus where it should be, sales will start to recover and all will be forgiven (for a time, at least). I remain cautiously optimistic that Burger King can steer its way through these rapids.



My husband and I found the Sponge Bob kids meal TV ad offensive. It didn’t seem appropriate for kids.
Comment by Sue Sullivan — Monday, May 25, 2009 @ 11:00 AM