Burger King Corporation

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Harvard Business School 9-681-045
Rev. February 27, 1998

Burger King Corporation
The first Burger King restaurant in Miami in the mid-1950s featured a walk-up window, a limited menu (burgers and shakes for 19¢, sodas and fries for 10¢), and "your food ready by the time you'd paid for it." As one early manager recalled, "Our windows faced front so we could see customers driving in. With the limited menu, we pretty much knew what they'd order and we'd have it ready." In the 1960s and 1970s, Burger King developed an assembly-line production process that delivered a fresh, hot, high-quality sandwich, yet that had the flexibility to customize that sandwich. One executive explained, "Market research showed us that our ability to give the customer what he wanted clearly differentiated us from McDonald's, so we capitalized on it." The following jingle was used by Burger King in the 1970s: Hold the pickles, hold the lettuce Special orders don't upset us All we ask is that you let us serve it your way. Later, however, Fortune noted: Hold the jingle. The Burger King hamburger chain has abandoned that bouncy promise to build its sandwiches to suit the customer. Tailoring Whopper Sandwiches was manageable when relatively few fast-food fanciers were coming through the doors. But now so many are lining up, at least at peak hours, that special orders are, well, upsetting. Burger King will still make it your way, if you insist, but isn't going to invite you to and rather hopes you won't. 1

The Burger King Corporation
Founded in 1954 by Jim McLamore and David Edgerton, Burger King Corporation had grown from one store in 1954 to 2,766 units, including 136 outside the United States, in 1980. Milestones in the company's development included the invention by Edgerton of the continuous chain broiler, and creation by McLamore of the Whopper sandwich, both in 1956; franchising agreements in 1959; the sale of Burger King Corporation to the Pillsbury Company in 1967; and the

1Fortune, June 16, 1980, p. 90.

Research Associate David C. Rikert prepared this case under the supervision of Professor W. Earl Sasser, Jr., as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The cooperation of Burger King Corporation and the Hillybourne restaurant manager and personnel is gratefully acknowledged. Burger King and Whopper are registered trademarks of Burger King Corporation. The operational aspects of the Hillybourne restaurant are presented for case study purposes only and do not necessarily reflect operating procedures of the Burger King restaurant system. Copyright © 1980 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permi ssion of Harvard Business School.

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681-045 Burger King Corporation

hiring of Donald Smith, then 36 and third-ranking executive at McDonald's, as chief executive in 1977. Systemwide sales grew 26% to $1.84 billion, an 11% market share in the hamburger fast-food industry (led by McDonald's with a 35% share) for the fiscal year ending May 31, 1980. Average annual sales for the 412 company-operated domestic units rose 13% to $747,000. Advertising and promotion expenses grew 35% to $88 million. At year-end, the corporation had a real estate interest in 804 of the 2,218 domestic franchised units. Average investment per store was estimated by industry experts...
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