Economy, Rivals No Match for BK's Marketing
Emily Bryson York
Advertising Age
May 5, 2008
CHICAGO (AdAge.com)
-- Burger King is giving rivals a solid thrashing -- and
marketing is getting the credit.
While other fast feeders fault the recession and housing
crisis for tepid sales, Burger King posted a healthy
same-store-sales gain of 5.4% in its fiscal third
quarter, well ahead of even McDonald's, which reported a
comparatively anemic 2.9%.
'Freakout': BK says prank drove sales.
No. 3 burger chain Wendy's, now in the throes of an
ownership change, saw same-store sales fall 1.6% at
company-run stores in the same period.
Analysts are crediting Burger King's marketing with some
of the gains.
"They're doing a super job on the advertising front,"
said UBS analyst David Palmer. "They're clearly
connecting with the super fan that is the young, hungry
male."
Burger King CEO John Chidsey said, "The current
macroeconomic environment did not impact our top-line
performance as consumers continued to seek our quality,
convenience and affordability."
'Barbell menu strategy'
He credited the wildly popular "Whopper Freakout"
campaign from Crispin Porter & Bogusky with driving
sales through January and kid-friendly promotions
involving SpongeBob SquarePants and Snoopy, from
Campbell Mithun, with bringing families into the
restaurants during the quarter. He added that the
chain's "barbell menu strategy," with value-menu
offerings such as the Whopper Jr. and the crispy-chicken
sandwich at one end and premium fare such as the new BBQ
Bacon Tendercrisp on the other, is also faring well.
It hasn't been an overnight turnaround for the King;
this is its fourth consecutive year of positive
same-store-sales growth. But until recently, it was
McDonald's that was the industry's biggest engine of
growth. The chain began a storied turnaround in 2003,
and while its same-store sales are still on the upswing,
the trajectory is slowing. McDonald's recently put the
blame on the economy.
But even as gas prices climb and the economy gets more
wobbly, UBS's Mr. Palmer expects Burger King to grow
even stronger through the summer. It's got more new
products in the pipeline, some blockbuster summer movie
promotions lined up and is just starting a "reimaging
campaign" to update the look and feel of its stores,
some of which are 30 years old.
Mr. Palmer said the chain is benefiting from tactics
that have boosted McDonald's bottom line in recent
years, including longer hours and a wider breakfast
value menu. Burger King has average sales of $1.5
million per store, compared with $2.2 million at
McDonald's, so he said there's room for even more growth
in the future. With lower sales at similarly sized
stores, Mr. Palmer said, it's easier for Burger King to
boost same-store sales by an extra $100,000 per store.
McDonald's, on the other hand, may have to wait until
its beverage initiative has launched nationwide to see
sales bumps of a similar magnitude.
Movie tie-ins
Also on Burger King's side are alliances with some of
the more hotly anticipated summer films: "Iron Man,"
"Incredible Hulk" and "Indiana Jones and the Kingdom of
the Crystal Skull." For the last, Burger King is
planning an Indiana Jones-themed sandwich: an Indy
Double Whopper (two patties, pepper jack, bacon and
Cajun mayo).
Upcoming are new-product plans aimed at kids. Burger
King signed on to the Better Business Bureau's
Children's Food and Beverage Advertising Initiative late
last year and will roll out "apple fries" in its
locations nationwide this summer. The fresh-fruit
offering is simply apples cut to look like fries,
employing a proprietary technology that prevents them
from turning brown. Burger King will also be adding a
child-pleasing Kraft Macaroni & Cheese dish to the menu.
"Actually the majority of [the apple fries side] is
going out à la carte and being consumed by adults as
well," Burger King Chief Marketing Officer Russ Klein
said on a conference call.