Burger King

"BK" redirects here. For other uses, see BK (disambiguation).
This article is about the restaurant chain. For other uses, see Burger King (disambiguation).

Burger King
Subsidiary
Industry Restaurants
Genre Fast food restaurant
Predecessor Insta-Burger King
Founded

Insta-Burger King:

1953 (1953)

Jacksonville, Florida

Burger King:

1954 (1954)
Miami, Florida

Founder

Insta-Burger King:

Keith J. Kramer and Matthew Burns

Burger King:

David Edgerton and James McLamore

Headquarters 5505 Blue Lagoon Drive, Miami-Dade County, Florida, United States
Number of locations
 15,243[1] (September 30, 2016)
Area served
 Global
Key people
  • Alexandre Behring (Chairman RBI)[2]:123
  • Daniel S. Schwartz (CEO)[2]:123
  • José E. Cil (President)[2]:123
  • Joshua Kobza (CFO)[2]:123
Products
Revenue Increase US$4.05 billion (FY 2015)[2]:30
Decrease US$363.0 million (FY 2015 RBI)[2]:30
Decrease US$1.912 billion (FY 2015 RBI)[2]:30
Total assets Decrease US$18.41 billion (FY 2015 RBI)[2]:31
Total equity Decrease US$2.912 billion (FY 2015 RBI)[2]:31
Number of employees
 34,248 (FY 2015 RBI)
Parent Restaurant Brands International
Website

www.bk.com

Burger King (often abbreviated as BK) is an American global chain of hamburger fast food restaurants, headquartered in the unincorporated area of Miami-Dade County, Florida. The company was founded in 1953 as Insta-Burger King, a Jacksonville, Florida-based restaurant chain. After Insta-Burger King ran into financial difficulties in 1954, its two Miami-based franchisees David Edgerton and James McLamore purchased the company and renamed it as Burger King. Over the next half century, the company would change hands four times, with its third set of owners, a partnership of TPG Capital, Bain Capital, and Goldman Sachs Capital Partners, taking it public in 2002. In late 2010, 3G Capital of Brazil acquired a majority stake in the company, in a deal valued at US$3.26 billion. The new owners promptly initiated a restructuring of the company to reverse its fortunes. 3G, along with partner Berkshire Hathaway, eventually merged the company with the Canadian-based doughnut chain Tim Hortons, under the auspices of a new Canadian-based parent company named Restaurant Brands International.

The 1970s were the "Golden Age" of Burger King advertising, but beginning in the early 1980s, the company's advertising began to lose focus. A series of less successful advertising campaigns created by a procession of advertising agencies continued for the next two decades. In 2003, Burger King hired the Miami-based advertising agency Crispin Porter + Bogusky (CP+B), who completely reorganized Burger King's advertising with a series of new campaigns centered on a redesigned Burger King character nicknamed "The King", accompanied by a new online presence. While highly successful, some of CP+B's commercials were derided for perceived sexism or cultural insensitivity. Burger King's new owner 3G Capital later terminated the relationship with CP+B in 2011 and moved its advertising to McGarryBowen, to begin a new product-oriented campaign with expanded demographic targeting.

The Burger King menu has expanded from a basic offering of burgers, French fries, sodas and milkshakes to a larger and more diverse set of products. In 1957, the Whopper was the first major addition to the menu; it has since become Burger King's signature product. Conversely, BK has introduced many products which failed to catch hold in the marketplace. Some of these failures in the United States have seen success in foreign markets, where BK has also tailored its menu for regional tastes. From 2002 to 2010, Burger King aggressively targeted the 18–34 male demographic with larger products that often carried correspondingly large amounts of unhealthy fats and trans-fats. This tactic would eventually damage the company's financial underpinnings, and cast a negative pall on its earnings. Beginning in 2011, the company began to move away from its previous male-oriented menu and introduce new menu items, product reformulations and packaging, as part of its current owner 3G Capital's restructuring plans of the company.

As of September 30, 2016, Burger King reported it had 15,243 outlets in 100 countries.[3] Of these, 47.5% are in the United States and 99.5% are privately owned and operated, with its new owners moving to an almost entirely franchised model in 2013. BK has historically used several variations of franchising to expand its operations. The manner in which the company licenses its franchisees varies depending on the region, with some regional franchises, known as master franchises, responsible for selling franchise sub-licenses on the company's behalf. Burger King's relationship with its franchises has not always been harmonious. Occasional spats between the two have caused numerous issues, and in several instances the company's and its licensees' relations have degenerated into precedent-setting court cases. Burger King's Australian franchise Hungry Jack's is the only franchise to operate under a different name, due to a trademark dispute and a series of legal cases between the two.

History

1955–1968 Burger King logo

The predecessor to Burger King was founded in 1953 in Jacksonville, Florida, as Insta-Burger King. After visiting the McDonald brothers' original store location in San Bernardino, California, the founders and owners (Keith J. Kramer and his wife's uncle Matthew Burns), who had purchased the rights to two pieces of equipment called "Insta-machines", opened their first restaurants. Their production model was based on one of the machines they had acquired, an oven called the "Insta-Broiler". This strategy proved to be so successful that they later required all of their franchises to use the device.[4][5] After the company faltered in 1959, it was purchased by its Miami, Florida, franchisees, James McLamore and David R. Edgerton. They initiated a corporate restructuring of the chain, first renaming the company Burger King. They ran the company as an independent entity for eight years (eventually expanding to over 250 locations in the United States), before selling it to the Pillsbury Company in 1967.[4]:28

Pillsbury's management tried several times to restructure Burger King during the late 1970s and the early 1980s. The most prominent change came in 1978, when Burger King hired McDonald's executive Donald N. Smith to help revamp the company. In a plan called "Operation Phoenix",[5]:118 Smith restructured corporate business practices at all levels of the company. Changes included updated franchise agreements,[6] a broader menu[5]:119[6]:66 and new standardized restaurant designs. Smith left Burger King for PepsiCo in 1980[7] shortly before a system-wide decline in sales.

Pillsbury's Executive Vice President of Restaurant Operations Norman E. Brinker was tasked with turning the brand around, and strengthening its position against its main rival McDonald's. One of his initiatives was a new advertising campaign featuring a series of attack ads against its major competitors. This campaign started a competitive period between Burger King, McDonald's and top burger chains known as the Burger wars.[8] Brinker left Burger King in 1984, to take over Dallas-based gourmet burger chain Chili's.[9]

Smith and Brinker's efforts were initially effective,[10] but after their respective departures, Pillsbury relaxed or discarded many of their changes, and scaled back on construction of new locations. These actions stalled corporate growth and sales declined again, eventually resulting in a damaging fiscal slump for Burger King and Pillsbury.[11][12] Poor operation and ineffectual leadership continued to bog down the company for many years.[12][13]

Pillsbury was eventually acquired by the British entertainment conglomerate Grand Metropolitan in 1989.[14][15] Initially, Grand Met attempted to bring the chain top profitability under newly minted CEO Barry Gibbons; the changes he initiated during his two-year tenure were hit or miss. Successful new product introductions and tie-ins with The Walt Disney Company were offset by continuing image problems and ineffectual advertising programs.[16] Additionally, Gibbons sold off several of the company's assets in attempt to profit from their sale, and laid off many of its staff members.[17][18][19]

After Gibbon's departure, a series of CEOs each tried to repair the company's brand by changing the menu, bringing in new ad agencies and many other changes.[20][21][22] The parental disregard of the Burger King brand continued with Grand Metropolitan's merger with Guinness in 1997, when the two organizations formed the holding company Diageo.[23] Eventually, the ongoing systematic institutional neglect of the brand through a string of owners damaged the company to the point where major franchises were driven out of business, and its total value was significantly decreased.[24] Diageo eventually decided to divest itself of the money-losing chain, and put the company up for sale in 2000.[25][26]

An example of the 20/20 concept interior at a Burger King in Cork, Ireland

The twenty-first century saw the company return to independence when it was purchased from Diageo by a group of investment firms led by TPG Capital for US$1.5 billion in 2002.[16][27] The new owners rapidly moved to revitalize and reorganize the company, culminating with the company being taken public in 2006 with a highly successful initial public offering.[28][29] The firms' strategy for turning the chain around included a new advertising agency and new ad campaigns,[30][31][32] a revamped menu strategy,[33] a series of programs designed to revamp individual stores,[34] a new restaurant concept called the BK Whopper Bar,[35] and a new design format called 20/20.[35] These changes successfully re-energized the company, leading to a score of profitable quarters.[36] Yet, despite the successes of the new owners, the effects of the financial crisis of 2007–2010 weakened the company's financial outlooks while those of its immediate competitor McDonald's grew.[36][37] The falling value of Burger King eventually led to TPG and its partners divesting their interest in the chain in a US$3.26 billion sale to 3G Capital of Brazil.[38][39] Analysts from financial firms UBS and Stifel Nicolaus agreed that 3G would have to invest heavily in the company to help reverse its fortunes.[39][40] After the deal was completed, the company's stock was removed from the New York Stock Exchange, ending a four-year period as a public company.[41][42] The delisting of its stock was designed to help the company repair its fundamental business structures and continue working to close the gap with McDonald's without having to worry about pleasing shareholders.[40] In the United States domestic market, the chain has fallen to third place in terms of same store sales behind Ohio-based Wendy's. The decline is the result of 11 consecutive quarters of same store sales decline.[43]

In August 2014, 3G announced that it planned to acquire the Canadian restaurant and coffee shop chain Tim Hortons and merge it with Burger King with backing from Warren Buffett's Berkshire Hathaway. The two chains will retain separate operations post-merger, with Burger King remaining in its Miami headquarters.[44] A Tim Hortons representative stated that the proposed merger would allow Tim Hortons to leverage Burger King's resources for international growth. The combined company will be the third-largest international chain of fast food restaurants.[45][46] The deal lead to a controversy over the practice of tax inversions, in which a company decreases the amount of taxes it pays by moving its headquarters to a tax haven, a country with lower rates but maintains the majority of their operations in their previous location. As a high-profile instance of tax inversion, news of the merger was criticized by U.S. politicians, who felt that the move would result in a loss of tax revenue to foreign interests, and could result in further government pressure against inversions.[46][47][48][49]

Structure and operations

Burger King's corporate headquarters
Company headquarters in unincorporated Miami-Dade County, Florida

Burger King Holdings is the parent company of Burger King, also known as Burger King Corporation and abbreviated BKC, and is a Delaware corporation formed on 23 July 2002.[2]: A subsidiary, it derives its income from several sources, including property rental and sales through company owned restaurants;[2]: however a substantial portion of its revenue is dependent on franchise fees.[2]: During the transitional period after the acquisition of the company by 3G Capital, Burger King's board of directors was co-chaired by John W. Chidsey, formerly CEO and chairman of the company, and Alex Behring, managing partner of 3G Capital.[50] By April 2011 the new ownership completed the restructuring of Burger King's corporate management and Chidsey tendered his resignation, leaving Behring as CEO and chair.[51]

The company operates approximately 40 subsidiaries globally that oversee franchise operations, acquisitions and financial obligations such as pensions.[2]:Exhibit 21.1 One example of a subsidiary is Burger King Brands, Inc. which is responsible for the management of Burger King's intellectual properties. A wholly owned subsidiary established in 1990,[52] Burger King Brands owns and manages all trademarks, copyrights and domain names used by the restaurants in the United States and Canada. It also responsible for providing marketing and related services to the parent company.[53]

The majority of Burger King restaurants, approximately 90%, are privately held franchises.[54] In North America Burger King Corporation is responsible for licensing operators and administering of stores. Internationally the company often pairs with other parties to operate locations or it will outright sell the operational and administrative rights to a franchisee which is given the designation of master franchise for the territory. The master franchise will then be expected to sub-license new stores, provide training support and ensure operational standards are maintained. In exchange for the oversight responsibilities, the master franchise will receive administrative and advertising support from Burger King Corporation to ensure a common marketing scheme.[55][56] The 3G Capital ownership group announced in April 2011 that it would begin divesting itself of many corporate owned locations with the intent to increase the number of privately held restaurants to 95%.[54]

As the franchisor for the brand, Burger King Holdings has several obligations and responsibilities; the company designs and deploys corporate training systems while overseeing brand standards such as building design and appearance.[34][57][58] The company also develops new products and deploys them after presenting them to its franchises for approval per a 2010 agreement between itself and the franchise ownership groups.[54] Burger King has limited approval over franchise operations such as minimum hours of operation and promotional pricing.[59][60] Additionally Burger King designates approved vendors and distributors while ensuring safety standards at the productions facilities of its vendors.[2]:

Burger King is headquartered in a nine-story office tower by the Miami International Airport in unincorporated Miami-Dade County, Florida.[61] Elaine Walker of the Miami Herald stated that the headquarters has a "Burger King" sign that drivers on State Road 836 "can't miss." In addition, the chain planned to build a neon sign on the roof to advertise the brand to passengers landing at the airport. On Monday 8 July 2002, 130 employees began working at the Burger King headquarters with the remainder moving in phases in August 2002. Prior to the moving to its current headquarters in 2002, Burger King had considered moving away from the Miami area; Miami-Dade County politicians and leaders lobbied against this, and Burger King stayed.[62] In August 2014 the future of the company's Miami headquarters was again in doubt as reports surfaced Burger King was in talks with Tim Hortons about buying the Canadian restaurant chain, with a view to relocating its headquarters to Canada where the corporate tax rate is lower.[63]

The company's previous headquarters were in a southern Dade County campus described by Walker as "sprawling" and "virtually hidden away."[62] The former headquarters were located on Old Cutler Blvd in the Cutler census-designated place.[64][65] The former Burger King headquarters as of 2007 houses rental offices for several companies.[66]

Franchises

A Burger King in London, England
Burger King restaurant in Leicester Square, London, United Kingdom

When Burger King Corporation began franchising in 1959, it used a regional model where franchisees purchased the right to open stores within a geographic region.[5]:117[6]:64 These franchise agreements granted BKC very little oversight control of its franchisees and resulted in issues of product quality control, store image and design, and operational procedures.[5]:118[6]:64

During the 1970s, structural deficiencies in Burger King's franchise system became increasingly problematic for Pillsbury. A major example was the relationship between Burger King and Louisiana-based franchisee Chart House,[6]:64 Burger King's largest franchisee group at the time with over 350 locations in the United States. The company's owners, William and James Trotter, made several moves to take over or acquire Burger King during the 1970s, all of which were spurned by Pillsbury.[16] After the failed attempts to acquire the company, the relationship between Chart House and Burger King soured and eventually devolved into a lawsuit.[16] Chart House eventually spun off its Burger King operations in the early 1980s into a holding company called DiversiFoods, which in turn was acquired by Pillsbury in 1984 and absorbed into Burger King's operations.[67][68]

As part of the franchising reorganization segment of Operation Phoenix, Donald N. Smith initiated a restructuring of future franchising agreements in 1978. Under this new franchise agreement, new owners were disallowed from living more than one hour from their restaurants – restricting them to smaller individuals or ownership groups and preventing large, multi-state corporations from owning franchises. Franchisee were also now prohibited from operating other chains, preventing them from diverting funds away from their Burger King holdings. This new policy effectively limited the size of franchisees and prevented larger franchises from challenging Burger King Corporation as Chart House had.[6]:64 Smith also sought to have BKC be the primary owner of new locations and rent or lease the restaurants to its franchises. This policy would allow the company to take over the operations of failing stores or evict those owners who would not conform to the company guidelines and policies.[16] By 1988, parent company Pillsbury had relaxed many of Smith's changes, scaled back on the construction of new locations which resulted in stalled growth of the brand.[11] Neglect of Burger King by new owner Grand Met and its successor Diageo,[24] further hurt the standing of the brand, causing significant financial damage to BK franchises and straining relations between the parties.[69]

A Burger King in Oaxaca, Mexico
A Burger King franchise adapted to operate in the historic district of Oaxaca, Mexico

By 2001 and after nearly 18 years of stagnant growth, the state of its franchises was beginning to affect the value of the company. One of the franchises most heavily affected by the lack of growth was the nearly 400-store AmeriKing. By 2001, the franchise owner, which until this point had been struggling under a nearly US$300 million debt load and been shedding stores across the US, was forced to enter Chapter 11 bankruptcy.[70] The failure of AmeriKing deeply affected the value of Burger King, and put negotiations between Diaego and the TPC Capital-led group on hold. The developments eventually forced Diaego to lower the total selling price of the chain by almost $750 million.[69] After the sale, newly appointed CEO Bradley (Brad) Blum initiated a program to help roughly 20 percent of its franchises, including its four largest, who were in financial distress, bankruptcy or had ceased operations altogether.[71] Partnering with California-based Trinity Capital, LLC, the company established the Franchisee Financial Restructuring Initiative, a program to address the financial issues facing BK's financially distressed franchisees. The initiative was designed to assist franchisees in restructuring their businesses to meet financial obligations, focus on restaurant operational excellence, reinvest in their operations, and return to profitability.[72]

Individual franchisees took advantage of the AmeriKing failure; one of BK's regional owners, Miami-based Al Cabrera, purchased 130 stores located primarily in the Chicago and the upper mid-west region, from the failed company for a price of $16 million, approximately 88 percent of their original value. The new company, which started out as Core Value Partners and eventually became Heartland Foods, also purchased 120 additional stores from distressed owners and revamped them. The resulting purchases made Cabrera the largest minority franchisee of Burger King, and Heartland one of the company's top franchises.[73] By 2006, the company was valued at over $150 million, and was sold to New York–based GSO Capital Partners.[74] Other purchasers included a three way group of NFL athletes Kevin Faulk, Marcus Allen and Michael Strahan who collectively purchased 17 stores in the cities of Norfolk and Richmond, Virginia;[75] and Cincinnati-based franchisee Dave Devoy, who purchased 32 AmeriKing stores. After investing in new decor, equipment and staff retraining, many of the formerly failing stores have shown growth approaching 20 percent.[24]

As part of 3G's restructuring plan, the company decided to divest itself of its corporate owned locations by re-franchising them to private owners and become a 100% franchised operation by the end of 2013. The project, which began in April 2012, saw the company divest corporate owned locations in Florida, Canada, Spain, Germany and other regions.[76][77][78] The move gave the company a Q3, 2013 profit of US$68.2 million over the same quarter, 2012 of US$6.6 million.[76]

At the end of its 2013 fiscal year, Burger King is the second largest chain of hamburger fast food restaurants in terms of global locations,[2]:123 behind industry bellwether McDonald's (32,400 locations); it is the fourth largest fast food restaurant chain overall after Yum! Brands (parent of KFC, Taco Bell and Pizza Hut totaling 37,000 locations),[79] McDonald's,[80] and Subway (32,000 locations).[81]

International operations

A Burger King restaurant in Mexico City
Burger King located in Chalco, Mexico City

While BK began its foray into locations outside of the continental United States in 1963 with a store in San Juan, Puerto Rico,[82] it did not have an international presence until several years later. Shortly after the acquisition of the chain by Pillsbury, it opened its first Canadian restaurant in Windsor, Ontario in 1969.[6]:66[83] Other international locations followed soon after: Oceania in 1971 and Europe in 1975 with a restaurant in Madrid, Spain.[84][85] Beginning in 1982, BK and its franchisees began operating stores in several East Asian countries, including Japan, Taiwan, Singapore and South Korea.[16] Due to high competition, all of the Japanese locations were closed in 2001; however, BK reentered the Japanese market in June 2007.[86] BK's Central and South American operations began in Mexico in the late 1970s, and by the early 1980s in Caracas, Venezuela, Santiago, Chile and Buenos Aires, Argentina.[16] While Burger King lags behind McDonald's in international locations by over 12,000 stores, as of 2008 it had managed to become the largest chain in several countries including Mexico and Spain.[87] The company divides its international operations into three segments; The Middle East, Europe and Africa division (EMEA), Asia-Pacific (APAC) and Latin America and the Caribbean (LAC).[2]:5 In each of these regions, Burger King has established several subsidiaries to develop strategic partnerships and alliances to expand into new territories. In its EMEA group, Burger King's Switzerland-based subsidiary Burger King Europe GmbH is responsible for the licensing and development of BK franchises in those regions.[2]:5, Exhibit 21:1[88] In APAC region, the Singapore-based BK AsiaPac, Pte. Ltd. business unit handles franchising for East Asia, the Asian subcontinent and all Oceanic territories.[2]:6, Exhibit 21:1[55][89] The LAC region includes Mexico, Central and South America and the Caribbean Islands and has no centralized operations group.[2]:6, Exhibit 21:1

Australia is the only country in which Burger King does not operate under its own name.[2]:6 When the company set about establishing operations down under in 1971, it found that its business name was already trademarked by a takeaway food shop in Adelaide.[90] As a result, Burger King provided the Australian franchisee, Jack Cowin, with a list of possible alternative names derived from pre-existing trademarks already registered by Burger King and its then corporate parent Pillsbury, that could be used to name the Australian restaurants. Cowin selected the "Hungry Jack" brand name, one of Pillsbury's US pancake mixture products, and slightly changed the name to a possessive form by adding an apostrophe "s" forming the new name Hungry Jack's.[84][91] After the expiration of the trademark in the late 1990s, Burger King unsuccessfully tried to introduce the brand to the continent. After losing a lawsuit filed against it by Hungry Jack's ownership, the company ceded the territory to its franchisee.[84] Hungry Jack's is now the only Burger King brand in Australia; Cowin's company Hungry Jack's PTY is the master franchise and thus is now responsible for oversight of the operations that country with Burger King only providing administrative and advertising support to ensure a common marketing scheme for the company and its products.[56]

A Burger King in Beijing, China
Burger King in Beijing International Airport, Beijing, China

Over a 10-year period starting in 2008, Burger King predicted 80 percent of its market share would be driven by foreign expansion, particularly in the Asia-Pacific and Indian subcontinent regional markets.[92] While the TPG-led group continued BK's international expansion by announcing plans to open new franchise locations in Eastern Europe, Africa and the Middle East, and Brazil, the company plan is focusing on the three largest markets – India, China and Japan.[93][94][95][96] The company plans to add over 250 stores in these Asian territories, as well as other places such as Macau, by the end of 2012.[97] Its expansion into the Indian market has the company at a competitive disadvantage with other fast food restaurants such as KFC because of the aversion of the country's large Hindu majority to beef. BK hopes to use their non-beef products, such as their TenderCrisp and TenderGrill chicken sandwiches, as well as other products like mutton sandwiches and veggie sandwiches, to help them overcome this hurdle to expand in that country.[92][98] 3G has reported that it will continue with the plans to grow globally, even ramping up the planned expansion to help increase their return on investment.[15]:1 It is expected that 3G Brazilian-based management connections in the region may help Burger King expand in Brazil and Latin America, where it has been having problems finding acceptable franchisees.[15]:2[99]

The Hoot's family Burger King in Mattoon, Illinois, unrelated to Burger King Corporation
The Burger King restaurant in Mattoon, Illinois, originally owned by the Hoot's family. This location was one subject of major litigation by Burger King

Burger King has been involved in several legal disputes and cases, as both plaintiff and defendant, in the years since its founding in 1954. Disputes involving these many legal topics have affected almost every aspect of the company's operations. Depending on the ownership and executive staff at the time of these incidents, the company's responses to these challenges have ranged from a conciliatory dialog with its critics and litigants, to a more aggressive opposition with questionable tactics and negative consequences.[100][101][102][103] The company's response to these various issues has drawn praise[104][105] as well as accusations of political appeasement from different parties over the years.[106]

A trademark dispute involving the owners of the identically named Burger King in Mattoon, Illinois, led to a federal lawsuit. The case's outcome helped define the scope of the Lanham act and trademark law in the United States.[107] An existing trademark held by a shop of the same name in South Australia forced the company to change its name in Australia,[108] while another state trademark in Texas forced the company to abandon its signature product, the Whopper, in several counties around San Antonio.[109] Legal decisions from other suits have set contractual law precedents in regards to long-arm statutes, the limitations of franchise agreements, and ethical business practices.[110][111] Many of these decisions have helped define general business dealings that continue to shape the entire marketplace.[112][113][114]

Controversies and disputes have arisen with groups such as People for the Ethical Treatment of Animals (PETA), governmental and social agencies, and unions and trade groups over various topics. These situations have touched on legal and moral concepts such as animal rights, corporate responsibility,[115] ethics,[116] and social justice.[116] While the majority of the disputes did not result in lawsuits, in many of the cases the situations raised legal questions, dealt with legal compliance, or resulted in legal remedies such as changes in contractual procedure or binding agreements between parties. The resolutions to these legal matters have often altered the way the company interacts and negotiates contracts with its suppliers and franchisees, or how it does business with the public.[104][105][117][118]

Further controversies have occurred during the company's expansion in the Middle East. The opening of a Burger King location in Ma'aleh Adumim, an Israeli settlement in the Israeli-occupied Palestinian territories, led to a breach of contract dispute between Burger King and its Israeli franchise due to the hotly contested international dispute over the legality of Israeli settlements in the Palestinian territories in accordance to international law. The controversy eventually erupted into a geopolitical dispute involving Muslim and Jewish groups on multiple continents over the application of, and adherence to, international law.[119][120][121] The case eventually elicited reactions from the members of the 22-nation Arab League. The Islamic countries within the League made a joint threat to the company of legal sanctions including the revocation of Burger King's business licenses within the member states' territories.[120][121][122]

A related issue involving members of the Islamic faith over the interpretation of the Muslim version of canon law, Shariah, regarding the promotional artwork on a dessert package in the United Kingdom raised issues of cultural sensitivity,[123] and, with the former example, posed a larger question about the lengths that companies must go to ensure the smooth operation of their businesses in the communities they serve.[124]

Charitable contributions and services

Burger King has two of its own in-house national charitable organizations and programs. One is the Have It Your Way Foundation, a US-based non-profit (501(c)(3)) corporation with multiple focuses on hunger alleviation, disease prevention and community education through scholarship programs at colleges in the US. The other charitable organization is the McLamore Foundation, also a non-profit, 501(c)(3) corporation that provides scholarships to students in the US and its territories.[125][126]

In various regions across the United States, Burger King and its franchises have aligned themselves with several charitable organizations that support research and treatment of juvenile cancer. Each year, these coalitions hold a fund raising drive called "A Chance for Kids", in which Burger King restaurants sell lottery-style scratch cards for $1. Each card produces a winning prize that is usually a food or beverage product, but includes (rarer) items such as shopping sprees or trips. In the Northeast, BK has affiliated itself with the Major League Baseball team the Boston Red Sox and its charitable foundation, the Jimmy Fund. The group runs the contest in Boston. In the New York City area, it operates the contest in association with the Burger King Children's Charities of Metro New York and the New York Yankees. Funds raised in these areas go to support the Dana-Farber Cancer Institute, located in Boston.[127][128] In Nebraska, the company is affiliated with the Liz's Legacy Cancer Fund "BK Beat Cancer for Kids" program at the UNMC Eppley Cancer Center at the University of Nebraska Medical Center in Omaha.[129] In the Pittsburgh region, it funded the establishment of the Burger King Cancer Caring Center, a support organization for the families and friends of cancer patients.[130]

Products

A Whopper sandwich
The Whopper sandwich, Burger King's signature product.

When the predecessor of Burger King first opened in Jacksonville in 1953, its menu consisted predominantly of basic hamburgers, French fries, soft drinks, milkshakes and desserts. After being acquired by its Miami, Florida, franchisees and renamed to its current moniker in 1954, BK began expanding the breadth of its menu by adding the Whopper sandwich in 1957. This quarter-pound (4 oz (110 g)) hamburger was created by Burger King's new owners James McLamore and David Edgerton as a way to differentiate BK from other burger outlets at the time.[131] Since its inception, the Whopper has become synonymous with Burger King, and has become the focus of much of its advertising.[132] The company even named its new kiosk-style restaurants Whopper Bars.[133]

The menu component of Donald Smith's Operation Phoenix was initiated in 1978 and led to the addition of the Burger King Specialty Sandwich line in 1979. The new product line significantly expanded the breadth of the BK menu with many non-hamburger sandwiches, including new chicken and fish offerings. The new Specialty Sandwich line was one of the first attempts to target a specific demographic, in this case adults 18–34, members of which would be willing to spend more on a higher quality product.[5]:119 One of Smith's other significant contributions to the menu was the addition of a breakfast product line, which until this time was not a market Burger King had entered.[16] Besides the addition of the Croissan'Wich in 1983, the breakfast menu remained almost identical to the McDonald's offerings until a menu revamp in 1985.[16] This expansion introduced BK's "Am Express" product line, which added new products such as French toast sticks and mini-muffins.[134]

As the company expanded both inside and outside the US, it introduced localized versions of its products that conform to regional tastes and cultural or religious beliefs. International variations add ingredients such as teriyaki or beetroot and fried egg to the Whopper;[135] beer in Germany, Italy and Spain; and halal or kosher products in the Middle East and Israel.[136][137][138] To generate additional sales, BK will occasionally introduce limited time offers (LTOs) that are versions of its core products, or new products intended for either long or short term sales. Items such as the Texas Double Whopper and various sandwiches made with mushrooms and Swiss cheese have been rotated in and out of its menu for several years,[139][140] while products such as its 1993 Meatloaf Specialty Sandwich offering and accompanying limited table service, along with special dinner platters, failed to generate interest and were discontinued.[141][142]

A Burger King value meal
A meal including small French fries, a Whopper Jr., a drink and packets of Heinz ketchup.

In order to appeal to as many demographic groups as possible and better compete with its competitor Wendy's, Burger King added a multi-tiered value menu in 1993 with items priced at 99¢, US$1.99 and $2.99.[16] The additions, part of then CEO James Adamson's back to basics program also called Operation Phoenix, were an attempt to add not only a value menu, but also a line of value meals.[143] The tiered menu was replaced with a more standard value menu in 1998, while the value meals were separated into their own menu segment.[144] This value menu featured seven products: Whopper Jr., five-piece Chicken Tenders, a bacon cheeseburger, medium-sized French fries, medium soft drink, medium onion rings, and small shake. In 2002 and 2006, BK revamped its value menu, adding and removing several different products such as chili and its Rodeo Cheeseburger.[145] Many of these items have since been discontinued, modified or relegated to a regional menu option.[146] To better appeal to a more adult palate and demographic, BK introduced several new products to its menu in 2003, including several new or revamped chicken products, a new salad line and its BK Joe brand of coffee. Some of the new products, including its Enormous Omelet Sandwich line and the BK Stacker line, brought negative attention due to the large portion size, and amounts of unhealthy fats and trans-fats.[147][148][149] Many of these products featured higher quality ingredients like whole chicken breast, Angus beef, and natural cheeses such as cheddar and pepper jack.[150][151] Again, not all these products, such as the BK Baguette line, have met corporate sales expectations.[30]

With the purchase of the company in 2010, 3G began a program to restructure its menu designed to move away from the male-oriented menu that had dominated under the previous ownership. The first major item to be introduced was a reformulation of its BK Chicken Tenders product in March 2011.[152] Over the next few months, approximately 20 new products were researched and developed while others were reformulated, including its Chef's Choice Burger.[153] Eventually pruned down to 10 items, Burger King began deploying the items in the United States throughout 2011–2012 with the official roll out beginning April 2012. The changes included new ice cream products, smoothies, frappés and chicken strips. The Whopper was the most prominently reformulated product in this round of introductions with a new type of cheese and packaging.[43]

Equipment

An Burger King kitchen
Food being prepared in a Burger King kitchen in Italy

Like its menu, the equipment the company cooks its hamburgers with has also evolved as the company expanded. The burgers have always been broiled mechanically; the original unit, called an Insta-Broiler, was one of two pieces of equipment the founders of Insta-Burger King purchased before opening their new restaurant.[4]:27[131] The Insta-Broiler worked by cooking 12 burger patties in a wire basket, allowing the patties to be cooked from both sides simultaneously.[4]:27 When McLamore and Edgerton took over the company, besides dropping the "Insta-" prefix, they switched to an improved unit, which they called a "Flame Broiler". Designed by the two and featuring stationary burners that cooked the meat on a moving chain, the unit broke down less often, while maintaining a similar cooking rate.[131] The company would stay with that format for the next 40 years until Burger King began developing a variable speed broiler that could handle multiple items with different cooking rates and times.[154][155][156] These new units began testing in 1999 and eventually evolved into the two models the company deployed system-wide in 2008–2009. Accompanying these new broilers was new food-holding equipment, accompanied with a computer-based product monitoring system for its cooked products.[157] The monitoring system allows for more concise tracking of product quality, while giving the company and its franchisees a method to streamline costs by more precisely projecting sales and product usage.[158]

Advertising

A Burger King crown on Nick Van Eede
The Burger King "crown", worn by Nick Van Eede

Since its foundation in 1954, Burger King has employed varied advertising programs, both successful and unsuccessful. During the 1970s, output included its Hold the pickles, hold the lettuce... jingle, the inspiration for its current mascot the Burger King, and several well known and parodied slogans such as "Have it your way" and "It takes two hands to handle a Whopper".[159][160][161] Burger King introduced the first attack ad in the fast food industry with a pre-teen Sarah Michelle Gellar in 1981. The television spot, which claimed BK burgers were larger and better tasting than competitor McDonald's,[6]:66 so enraged executives at McDonald's parent company that they sued all parties involved.[162] Starting in the early 1980s and running through approximately 2001, BK engaged a series of ad agencies that produced many unsuccessful slogans and programs, including its biggest advertising flop "Where's Herb?".[163][164]

Burger King was a pioneer in the advertising practice known as the "product tie-in", with a successful partnership with George Lucas' Lucasfilm, Ltd., to promote the 1977 film Star Wars in which BK sold a set of glasses featuring the main characters from the movie.[165][166] This promotion was one of the first in the fast food industry and set the pattern that continues to the present. BK's early success in the field was overshadowed by a 1982 deal between McDonald's and the Walt Disney Company to promote Disney's animated films beginning in the mid-1980s and running through the early 1990s. In 1994, Disney switched from McDonald's to Burger King, signing a 10-movie promotional contract which would include such top 10 films as Aladdin (1992), Beauty and the Beast (1991), The Lion King (1994), and Toy Story (1995).[16] A partnership in association with the Pokémon franchise at the height of its popularity in 1999 was tremendously successful for the company, with many locations rapidly selling out of the toys and the replacements.[167]

Shortly after the acquisition of Burger King by TPG Capital, L.P. in 2002, its new CEO Brad Blum set about turning around the fortunes of the company by initiating an overhaul of its flailing advertising programs. One of the first moves by the company was to reinstate its famous "Have it your way" slogan as the corporate motto. BK handed the effort off to its new advertising agency, Miami-based Crispin Porter + Bogusky (abbreviated as CP+B). CP+B was known for having a hip, subversive tack when creating campaigns for its clients, exactly what BK was looking for.[30][31] One of CP+B strategies was to revive the Burger King character used during BK's 1970s/1980s Burger King Kingdom children's advertising campaign as a caricatured variation, now simply called "the King".[168][169] The farcical nature of "the Burger King" centered advertisements inspired an internet meme where the King is edited into unusual situations that are either comical or menacing, many times followed with the phrase "Where is your God now?"

Additionally, CP+B created a series of new characters like the Subservient Chicken and the faux nu metal band Coq Roq, featured in a series of viral web-based advertisements on sites such as MySpace and various BK corporate pages, to complement various television and print promotional campaigns.[170][171][172] One of the more successful promotions that CP+B devised was the creation of a series of three advergames for the Xbox 360.[173][174] Created by UK based Blitz Games and featuring company celebrity spokesman Brooke Burke, the games sold more than 3.2 million copies, placing them as one of the top selling games along with another Xbox 360 hit, Gears of War.[174][175] These ad campaigns, coupled with other new promotions and a series of new product introductions, drew positive and negative attention to BK, and helped TPG and its partners realize about US$367 million in dividends.[176][177]

With the late-2000s recession hitting the 18–35 demographic targeted by the CP+B created ads particularly hard, the company saw its market share decline and the company move into the red. After the completion of the sale of the company in late 2010, the new ownership group terminated Burger King's seven-year relationship with CP+B and hired rival firm McGarryBowen to create a new campaign with an expanded market reach.[178] As part of the new campaign, McGarryBowen terminated the use of The Burger King in the company's advertising program in favor of a new program that focused on the food and ingredients in its new advertising campaigns.[179]

See also

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