Presented BY: Walid ElKateb
Burger king is the second largest fast food hamburger chain in the world with more than 12,174 restaurants across 76 countries 60% of which are located in the US & 90% of its restaurants are franchised. By looking at the industry, we can see that Burger king is operating within the fast food hamburger (FFHR) category of the quick service restaurant in the restaurant industry. Sales for the FFHR has been growing rapidly (with a total of 30% over the last 10 yrs) (inspite the of the economy crisis of 2008) & anticipated to sustain this annual growth of 3% till 2015. Although being in a promising industry, it’s obvious that burger king is facing a problem as we take into consideration that it accounts for ONLY14% of total FFHR in the US. The most important issues facing Burger king are the following: 1. Failure to scan its external environment & subsequently lagging behind competition : Burger king`s 12,174 restaurants doesn`t seem to compare to the 32,466 Mcdonald`s restaurants worldwide both in number & sales volume (Mcd. Sells twice as Burger king in US & is twice as profitable. 2. Decline in value of the company share price by half, in addition to a decrease in net profit (although the total revenue only decreased slightly) 3. Failure to recognize its potential opportunities by targeting a limited segment in the market.: ( young adults who were the most affected by the 2008 economy crisis) while ignoring a broader segment like kids & families. 4.Failure in adopting a successful business strategy leading to poor SOP by eating out its own sales by concentrating too much on value meals ( which only total around 20% of sales ) while ignoring other aspects of its menu (e.g its cash cow the famous WHOPPER ) By reading between the lines we also notice other issues that have affected the company over time. 5. Inconsistent Corportate strategy resulting from the change in executives & management several times. ( this was specifically obvious when Diageo, one of Burger king`s owners neglected the business for a while leading to poor performance.) 6. Failure to implement its own Business strategy which stated: -Growing the brand - Running great restaurants - Investing wisely - Focusing on people
However if we look at the new 20/20 industrial metal, concrete design of its restaurant,introducing new menus (that don`t necessarily follow its customer needs ) or ignoring creating an amicable friendly environment in its restaurants ( like McDonald`s has successfully done) it’s obvious that they`re not following their own strategies. For the new Management to ensure the survival & long term success of Burger king they have to follow a proper strategic management process 1- Undergo an internal & external environment scanning.
The most important tool to use is a proper SWOT analysis of the situation of Burger king STRENGTH:
1. Strong Market position:
As the second largest FFHR in the world.
2. Strong Brand equity:
With its Famous Whopper helped to provide quality in addition as a differentiated product when compared to Macdonald`s in taste, size.. etc And is considered as a true cash cow for the company.
3. Strong Financial performance:
Which although it can be improved yet its still strong enough to attract customers like 3G to buy the company 4. Wide variety of products:
In addition to its whopper burgers, it was the first FFHR to sell fire- grilled ribs , premium steakhouse burger line ,breakfast muffin sandwich..etc
1. 60% of its store in 1 area (USA) :
Although the USA is the biggest market for the...