Burger King sees whopping growth

It's a hectic time in the world of burger retail. With the eternal dominance of category monster McDonald's and an increasingly fragmented QSR market threatening the share of all the established brands, you have to keep busy to keep pace. There's...

It’s a hectic time in the world of burger retail. With the eternal dominance of category monster McDonald’s and an increasingly fragmented QSR market threatening the share of all the established brands, you have to keep busy to keep pace. There’s barely time to grab a burger and fries.

Certainly Patrick Gibbons has been quick off the mark to expand Burger King Canada’s presence since becoming chief marketing officer earlier this year. Gibbons has already signed a partnership deal with Zellers that allows consumers to redeem Club Z points for Burger King gift certificates. He also just opened the first-ever Burger King in a Famous Players multiplex theatre in Calgary, launched a new veggie burger nationwide and oversaw the creative for a new round of spots promoting the chain’s flagship product, the Whopper.

The former Blockbuster senior director of marketing and merchandising also took the lead on the chain’s massive ‘Win a Windstar’ promotion that has the distinction among roll-up-the-rim programs to offer a prize with every purchase.

It tuckers you out just reading about it, doesn’t it?

Prizes in the Windstar promotion range from a cup of coffee to Sony Playstation 2 consoles to one of five 2001 Ford Windstar Sports Vans. The promotion is supported by POP material plus TV and radio creative developed by Toronto-based Ammirati Puris.

The fact is, Burger King, with 343 restaurants nationwide, has been in perpetual motion since 1996 when George Michel took over the reigns of the operation with the aim of upping Burger King’s profile in the Canadian market. In the last year alone, the chain signed a five-year deal with Maple Leaf Sports and Entertainment, putting franchises into Toronto’s Air Canada Centre and the Burger King brand behind the Toronto Maple Leafs and Raptors. The chain also launched its first-ever domestically produced national TV spots last summer with a critically acclaimed campaign that skewered McDonald’s for its different-promotion-every-day approach to its value meal deals.

So, just what has the chain gained from all this activity?

Well, five years ago, Burger King was perpetually anchored beneath its burger competitors in the QSR sector in terms of market share – last among McDonald’s, A&W, Harvey’s and Wendy’s. Today it stands second among its peers with an 11 share in the burger category, tied with Wendy’s, behind only the perennial heavyweight champion of the burger world McDonald’s.

As you can see, things have been moving at the speed of fries at the lunch-hour rush. Still, Gibbons and Michel did manage to take time out from a hectic schedule to sit down with Strategy and talk about the burger biz, how the QSR market is changing and where Burger King is going.

Has the company shifted its targeting with the Windstar promo? Are you moving away from kids to parents?

Patrick Gibbons: We have an interest in all of those segments. Usually the most effective way to attract the younger age group is with a proper license. We’ve done that very successfully in the past and I’m sure that there will be a number of very strong licenses in the future that our company will be able to leverage. This particular promotion was geared specifically for the family and hence the tie-in with PlayStations and the Windstar and food.

It seems that it would be a very costly promotion with every cup a winner. Redemption must really add up.

PG: It’s a matter of balance. We promote on a regular basis some type of call-to-action. It’s either a food discount or an added value or it’s a promotion like this. Rather than discounting a product, we’ve elected this to be our promotion. It doesn’t become a huge added expense. It just adds a level of excitement.

The spots for the Windstar promotion are the second round of domestically produced TV commercials for Burger King. What led to these spots being created here?

George Michel: Our business strategy is to be the number two player – to increase our penetration in the Canadian marketplace. In order to get increases in sales on a comparable basis, we need to be investing in effective advertising and promotions at the same time. They come hand in hand.

Why did you choose to focus on the Whopper in Burger King’s up-coming advertising campaign?

GM: Although the Burger King brand in Canada is highly recognized, the Whopper as a product and as a brand has not been as developed in Canada as it is already in the US. If anything, in the US the Whopper is seen as bigger than even Burger King as far as the brand. That’s not the case in Canada. We’ve got to establish the Whopper as a brand in Canada.

How has the landscape changed in the QSR sector?

GM: The QSR business has been changed by the expansion of Tim Horton’s. Tim Hortons switched from being a coffee and donut place to being a QSR with a full menu. Today they are as aggressively after the burger business as the sandwich business, the snacking business and the coffee business. So Tim Horton’s has taken market share from all of us.

To what do you attribute Burger King improving its position in Canada?

GM: It’s been about opening new restaurants. For a number of years, we were stagnant in Canada. From the mid-’80s to almost the mid-’90s, there was no growth for Burger King here…. If anything, in the mid-’80s we were closing some restaurants and restructuring our portfolio. Since 1996 we’ve grown by almost 45% in Canada as far as just restaurant growth.

Are there things that your franchisees would like to see in terms of the direction of marketing efforts?

GM: Unlike a lot of other chains, we are the largest single franchisee because we own and operate 133 restaurants out of the 343. We have a big stake in the results that come out of the restaurants…. [Because] we operate more than one-third of the restaurants ourselves, when we make decisions, we all have the same needs and the same objectives.

A lot of sectors are re-evaluating licensing. If a movie flops, it is less likely to drive traffic to your franchises. How do you evaluate the risk?

GM: Kids are coming to Burger King regardless of whether a movie is out or not. A tie-in to a movie gives you a unique toy for a period of time. If the movie doesn’t do well, they’re still getting a toy. However, when the movie does well…kids come because they want to get that specific toy. That is where you get incremental sales. But the base business is covered regardless of what kind of toy you’ve got there.

What was the hottest tie-in for Burger King in recent memory?

PG: Pokemon. It just raised the bar beyond anything.

GM: We hit that at the right time. It happened in November 1999 just before Christmas and at that time Pokemon was at its highest craze. I have a nine-year-old who was seven at that time and that’s all he talked about with his friends and with me. We had people lining up waiting for delivery trucks to come into Burger King with the toys.

Patrick, coming from the video retail industry, what lessons do you bring to Burger King?

PG: I’ve always been in the retail business, for 22-odd years. I started in drugstore retail, Boots Drugstores…I’ve been accustomed to large industries, fast-paced businesses. I bring experience in how to drive traffic. I bring experience in how to measure effectiveness of promotions. In other industries I’ve been in, promotions have always been a big component of the business and it’s always been critically important to understand how one goes into a promotion. How do you measure when it works, when it doesn’t? What is the learning that goes along with that so you can continually fine-tune and improve your decision-making? I bring that to this team.

This business has been focused in production and quality execution at restaurants and maybe it hasn’t spent as much time as it could on understanding some of the internal customer responses and analytical results of specific initiatives.

Burger King has tremendous attributes that aren’t clearly understood, in my opinion, from outside the business. From my standpoint, it just seemed like a great organization to be part of in its next stage of development and growth.