The investment outfit and its Brazilian backers will need to do more than just cut costs at the troubled burger chain
When it comes to the pitfalls of operating a fast-food chain, Burger King (BKC) has experienced them all: falling profits and sales, angry franchise owners, mediocre innovation, growing competition, and a razorlike focus on the very customers who have been hardest hit during the recession. So when a little-known investment outfit called 3G Capital said it would buy the Miami-based chain for about $4 billion on Sept. 2, an obvious question was: why?
Burger King may be the world's No. 2 hamburger chain, but it's a distant runner-up, with 12,174 restaurants worldwide vs. 32,466 for McDonald's (MCD). McDonald's averages about twice the sales volume per U.S. outlet, and its stock has far outperformed that of its rival on the strength of new products such as coffee drinks and smoothies. Burger King, in contrast, has seemed fixated on hawking a $1 double cheeseburger—now $1.29 following a bitter lawsuit with franchisees who claim it's a money loser. The chain has also narrowed its target audience, chasing young men with cheeky ads, while McDonald's has gone for broad family appeal.
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1 comment:
Maybe they should stop microwaving every single product they serve.
Flame broiling the hamburger is great. But then let it sit around and microwave it (with mayonnaise and tomatoes on it) and it is worthless.
I just don't like my mayo and tomatoes to be served at 140 farenheit. They are meant to be cold on a hot burger.
Duh! Who would eat at Burger King?
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