Burger King identity crisis: who is it now?

When Burger King was established in the early 1950s, it wanted to attract the families of baby boomers
and serve them with affordable and quick broiled burgers. By providing the consumers with the best
quality burgers, it was able to achieve great success in a short time and become the second largest fast
food chain. Although it achieved great success, because of changing social factors Burger King got
caught in an identity crisis. Who is it, what kind of food does it serve, and which market segment is it
targeting? Currently, Daniel Schwartz is Burger Kings 21st CEO since the company was founded in 1953.
Burger King has suffered from "years of neglect and strategic incoherence" (Leonard, 2014). Burger King
needs a strong brand and core values to stand out from all other competition. Fast food sales are declining
as more customers are gravitating towards healthier food options. Schwartz is helping Burger King regain
its former identity. He started his job as CEO discovering what life was like for the kitchen employees
(Leonard, 2014). He has simplified the menu, and also changed the corporate management team so they
could work better together on a new tactical plan.

Company background
Burger King is the second largest food chain in the United States, with over 10,400 restaurants.
Burger King was originally known as Insta-Burger King and founded in Florida in 1953 by Keith
Kramer and Matthew Burns before they had financial difficulties and sold the company to its
Miami-based franchisees, James McLamore and David Edgerton in 1954 (Burger King
Worldwide, Inc., 2014). Burger King was founded with an idea that was not so unique. Around
this time other restaurants, especially drive-ins, were popping up all over the United States. One
that stands out in particular is the current number one fast food chain, McDonald's, which started
its empire with a California drive-in (Burger King Worldwide, Inc., 2014).
Despite all the competition around it Burger King started out very strong and successful. By
1967 the corporation was acquired by The Pillsbury Co. for $18 million, and it already had about
274 restaurants. Its secret to success was giving its restaurant a special edge. In 1957 the
Whopper sandwich - the burger for large appetites - was introduced and from the beginning it
was successful. It was also the first chain to offer its customers a sit-in dining room.
Two years later, the company began to expand through franchising. That is when it started
having inconsistency in product and service from franchise to franchise. This problem was
caused because it used a small field staff for franchise support. Burger King franchisees had
varying approaches to the way they implemented the organizational culture in Burger King
restaurants (Gibbons, 2000).
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Burger King's main competitor McDonald's took a different strategy from the beginning, leasing
stores to franchisees and demanding a high degree of uniformity in return (Gale, 2004).
To fix this problem, Burger King hired a strong executive from McDonald's to restructure the
company's franchise system. He began by introducing a more demanding franchise contract.
This contract stipulated the franchises need to be awarded only to individuals, not partnerships or
companies. Another rule was that they may not own other restaurants and must live within an
hour's drive of their franchise. These were set in place to stop franchisees from getting too big.
Additionally, he also changed the corporate structure of the company, replacing eight of ten
managers with McDonald's people. In order to attack Burger King's inconsistency problem,
Smith assigned a yearly two-day check of each franchise and frequent unscheduled visits. All of
these strategies worked as planned and by 1979 he had brought the company's share of outlet
ownership up from 34 percent to 42 percent (Gale, 2004). Around this time Burger King also
started to market its products to kids, making its commercials similar to McDonald's. Using
similar tactics to McDonald's, Smith was able to bring up sales for Burger King, but once Smith
left the corporation to join another, Burger King's sales started to decline again.
Burger King's organizational culture is based on being friendly and supporting its people for
high performance, which is accentuated through meritocracy and empowerment. The primary
advantage of Burger King's organizational culture is that people feel comfortable doing what
they know how to do. Another characteristic of Burger King's culture is accountability; this
ensures that with autonomy and flexibility errors and related unnecessary costs are minimized.
However, while Burger King's organizational culture is strongly manifested in its corporate
offices, it has only limited implementation in the restaurants.

The fast-food industry
The fast food industry is a huge industry in the U.S. With low price points and the emphasis on
convenience, fast food restaurants have been a steadily popular option for breakfast, lunch, and
dinner in the U.S. for many decades. Many consider White Castle as the first in the business
although McDonald's might be the most known as they revolutionized the industry with their
effective assembly-line system in the late 1940s. Since then, a huge number of fast food
restaurant chains have entered the market and are now battling for market share.
There are about 200,000 fast food restaurants in the United States and it is estimated that 50
million Americans eat at one every day (Franchise Help, 2017). In 1970 the fast food industry
generated about $6 billion in revenues. It has been a rapidly growing market with $227.5 billion
in revenues and $11.8 billion in profits in 2016.
One of the reasons why these restaurants are wildly popular is mostly because of the
convenience, speed, and low prices they offer. The fast food chains have also put a bigger
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emphasis on the overall restaurant experience over the past few years. The fast food industry has
become an industry with a wide variety of food options.
Restaurants that sell burgers make up 42 percent of the products sold in the fast food market.
This reflects its biggest player in the market, McDonald's. The menu items are consistent in
almost every restaurant which makes it easier for the consumers to pick favorites.
Competitors

The McDonald's way
McDonald's is the largest fast food operation in the world. The first store opened in 1948 in San
Bernardino, CA with its first franchise agreement in 1954. By the end of 2015 the company had
over 36,000 stores in over 119 countries. By 2018 the company plans to have 90 percent of the
stores operated by franchisees. "This is part of a restructuring plan that will give restaurants more
opportunities to experiment and better integrate themselves within their core markets" (Alvarez,
2016).

McDonald's restaurants have a marketing strategy in place that is very successful. There are
three levels of advertising that McDonald's implements at every location. These are national,
regional, and local advertising strategies. McDonald's requires every franchise to give 4 percent
of their sales to pay for the national and regional advertisements (Gerhardt, Hazen, and Lewis,
2014). Local advertisements are up to the franchisee to decide on and are separate from the
initial 4 percent. According to Business Insider, McDonald's is the most successful food chain in
America, compared to Burger King which is in fourth place.
Yum! Brands
Yum! Brands Inc. is a Kentucky-based fast food conglomerate. PepsiCo was the owner until
1997 when it decided to publicly list the company to improve cash flow. "PepsiCo purchased
Pizza Hut in 1977, Taco Bell in 1978 and KFC in 1986" (Alvarez, 2016).
In 2003 the company launched WingStreet to co-exist with Pizza Hut locations. Yum! Brands,
like many of its competitors, operates under franchises with 80 percent of its stores being
franchised. A multi branding strategy is how Yum! Brands believes it is able to offer something
for everyone; helping break the family barrier when the kids want to eat different things than
their parents. When the company puts two or more of its brands in the same restaurant it is able
to increase sales by 30 percent (Enz, 2005). This strategy is believed to offer a chance to
leverage its existing assets that have lower volumes.

Wendy's
Wendy's Co. is a fast food burger chain based out of Dublin, OH, operating more than 6,500
stores globally with 85 percent of its stores under franchise agreements. Wendy's also owns a
stake of 18.5 percent of Arbys.
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Before 2011 Wendy's digital and social marketing was nonexistent. By building a relationship
with Facebook and working with its global marketing service group Wendy's was finally using
digital and social marketing to reach its target audiences. Wendy's declines to give exact
numbers on its digital marketing expense, however, it did spend $290 million in 2013 on media
expenses (Morrison, 2014).

Changing factors
The health-conscious consumer Changes in culture and the study of the human body and eating habits have led to a change in the American people (Alvarez, 2016). A common denominator for all restaurant markets is the
change in customer eating habits in the United States. Especially in the fast food industry it has
been health concerns from customers that have resulted in decreasing sales. The American
people have become more health conscious and are demanding alternatives to the traditional
greasy food most fast food restaurants serve.

Threat of fast-casual restaurants- As a result of new trends in eating habits, new concepts and hybrids in the restaurant industry have emerged. Fast casual restaurants are one of these new concepts. These restaurants are a
hybrid or a mix of a fast food and casual dining place. Basically, they have all the elements of
convenience that fast food has like speed and price, but with a more inviting atmosphere like one
would find in a sit-down restaurant.

These restaurants focus more on offering healthier, fresher, and higher quality ingredients to
attract customers who are health conscious. Fast casual restaurants give off a better impression
than most fast food restaurants. Consumers feel they eat healthier and also feel better in a more
sophisticated atmosphere (Alvarez, 2016). Fast casual restaurants are stealing market share away
from fast food chains. As a counter, many chains are experimenting with their own fast casual
concept. If the experiments are a success, this might be the direction fast food chains are going.
However, fast food chains are seeking to offer healthier options and will do so in the years to
come. They will also diversify into new areas such as cafes or full-service restaurants but maybe
under different names and at new locations (Alvarez, 2016). Fast food chains and fast casual
chains will both be investing in further renovations and improving service through technology
and the basic aesthetics.

Targeting a market
Since the 1980s, Burger King has been having a difficult time attracting a specific target market.
In contrast, some of its competitors such as McDonald's and Wendy's effectively attracted a
distinctive target market (Mitchman and Mazze, 1998).
As a result of consumers' concerns about eating healthy food, Burger King decided to be the first
fast food chain to include information about calories, fat, salt, and other contents in its menu

 5 items. This action was part of a strategic plan to attract new market segments. Likewise, in
response to consumers' changes in preferences, McDonald's and other fast food chains deleted
sodium from food items, and added healthy options such as salads and baked potatoes (Dugan,
2013).

Daniel Schwartz, current CEO, expressed his concern about the market the company has been
historically trying to target, which is males between the ages of 18 and 35, since this market is
not representative of the overall fast food market. After realizing this fact, Burger King decided
not to target this market's subsets (Kelso, 2012). In order to make a shift in its demographic, Burger King decided to target not just males but also females in its advertisements. Results were satisfactory; after having the soccer star David Beckham in one of Burger King's commercials, surveys showed higher percentage of females
consuming its products.

Baby boomers-This segment of the market, born between 1946 and 1964, is being considered as a powerful
consumer of fast food. These members of the population have new habits, they are exercising,
traveling, volunteering. Due to this active lifestyle, they need quick meals, and some of them
demand healthy meals. Also, grandparents might be involved in their grandchildren's daily lives.
By targeting grandparents, fast food chains also gain their family members.

In 1999, the chain released three different advertisements promoting the Whopper; one of them
was intended only for baby boomers, the other two for blacks and Hispanics (Albert, 2012).
Although it is targeting baby boomers it does not market the brand well to this segment. There
are no advertisements that would help them feel connected to the brand, to keep them as
returning customers.

The population between the ages of 18 and 33 years old are currently the generation that tend to
eat out more often. In, fact 53 percent of millennials eat out once a week, compared with 43
percent for the general population in the U.S. However, millennials when being surveyed are
embarrassed to say they eat fast food (Lutz, 2015).

The majority of this market segment prefers eating at fast casual dining restaurants when eating
out. However, they still consider fast food restaurants as a second option. Recently, the chain
reported a decline in 5 percent in traffic of low-income millennials (Forbes, 2017). This decline
might be a consequence of not promoting the brand among this market segment appropriately,
which is mainly through social media.

 

This generation is the group between baby boomers and millennials, comprising people born
between 1965 and 1980. This population is commonly the busiest with work, family, and paying
bills. The Generation X segment prefers coupons and special discounts when consuming
products. Even though the fast food chain has been doing efforts to broaden its demographic,
there is still much to achieve. The brand is constantly launching products for different segments
of the market, and it is not adjusting its branding accordingly. Whether Burger King should focus
on a specific market segment, or adjust its branding accordingly to each one, is a major concern
that the company should analyze, in order to look at solutions for its identity crisis.

Burger King's strategic positioning When referring to positioning in the fast food industry, McDonald's definitely has the lead. The majority of consumers tend to first think about McDonald's when looking for a fast food option.
Burger King has a positioning statement that distinguishes it from the rest, but it has not been
enough to achieve a better position in the market.

Burger King, for a long period, was relying on the positioning statement "Have it your way," but
recently the senior vice-president of global management decided to sharpen the chain's
positioning by first changing the statement to "Be your way" (Parpis, 2016).

However, changing a positioning statement is not enough to gain competitive advantage in the
market. In fact, many customers were confused as to why Burger King dropped a 40-year-old
slogan, and what it had to do with their food. A food critic summed it up by saying "While the
original phrase reminded customers that customizing their food was always on the table, the new
phrase seems like a cryptic philosophy a mentor would give a young boy from Jersey right
before a karate tournament" (Pham, 2014). Although this critic might have been a little harsh,
Burger King gave up part of who it is by changing its slogan.

The company has also decided to advertise without celebrities, and instead focus on the brand's
core product, the Whopper. It is making efforts to build an ecosystem of agencies that are
constantly aligned. It is also trying to be more unified to achieve brand positioning, by creating
an effective advertising campaign and taking in consideration all relevant aspects of Burger
King's new marketing strategies.

Burger King is also supporting the LGBT community by launching a campaign called "Proud
Whopper." Likewise, the company released a commercial spoken in sign language, and used
American Sign Language (ASL) for all the signs located at a store next to Gallaudet University
for the deaf. These actions are meant to support the chain's new slogan "Be your way." The
company is making efforts to gain a competitive advantage. The significant changes in its
marketing strategy have been showing positive results, reporting 4.6 percent growth globally,
and 5.4 percent growth in the U.S. in the first quarter of 2016, after implementing the changes.

 

The way forward Burger King targets too many market segments, at the same time. However, it does not
communicate the same message to all the segments. To do this it creates more than one
advertisement for the same product. Burger King is also known to copy many of the methods of
its competitors. In 2012, Burger King restructured many of its stores with a $750 million
investment, to create a more open and inviting atmosphere but McDonald's made the exact same
move the year before.

Burger King's menu has also been very inconsistent. A couple of years ago it started offering
healthier products like salads, smoothies, and new chicken menu items. Analysts said this was a
page taken out of the Wendy's playbook. Although this was a move made to target more health
conscious consumers, it hurt Burger King's brand identity. Burger King has also brought in some
new, wild menu items like the french fry burger. While some of these menu items have brought
in more customers to the restaurant, other items have been pulled off the menu before most
people even heard about them.
 

Burger King is having a hard time retaining customers because of its issues with brand identity.
It seems a very confusing brand to the public. When it first started out it was known for its main
product, the Whopper. It offered consumers a great burger at a low price. Burger King needs to
restructure its brand image to represent itself and not every other fast food restaurant.

 

Abratt, R., & Bendixen, M. (2018). Burger King: Identity Crisis Who is it Now. Strategic Marketing: Concepts and
Cases. Taylor & Francis. pp. 21-
 

Case Questions

1. Analyze the fast food (quick service restaurant QSR) industry using the data resources provided and other data available on the Berkeley College library database Statista,
2. Analyze the nature of Burger King's "identity" crisis (such as indeterminate value proposition, messaging of its value proposition, its products, and services, or other operational factors)?  Why is the crisis so urgent?
3. Analyze the customer segments using the data provided and build a customer archetype for one of the target segments. (Apply market research data based on demographics, psychographics, behavior, or other relevant factors to segment the fast-food market.)
4. Develop an effective value proposition map for the target segment in question 4 and contrast this to Burger King's value proposition as demonstrated in its current advertisements and marketing mix (you should watch some of BK's recent ad and promotional campaigns).
5. Based on your analysis of all above of the questions, recommend a competitive positioning strategy or other strategies for Burger King against its rivals for addressing its identity crisis.