Competition drives focus on value menu: BK

by Keith Nunes
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MIAMI – Burger King Worldwide is in the process of responding to its competitors’ focus on their value menu offerings. Company executives said they have seen a slowdown in comparable sales during the first quarter of fiscal 2013 and they are making adjustments.

“Although it is early in 2013, year-to-date comparable sales growth in the United States has been modestly negative, due to tougher prior-year comparisons, worse weather conditions, lower consumer disposable income, and a more challenged competitive environment with the industry focusing more on value,” said Bernardo Hees, chief executive officer.

Steve Wiborg, president of Burger King’s North American business, said one driver is an uptick in value messaging by the company competitors.

“We typically balance our marketing message between higher-ticket premium products to drive check, along with value-focused promotions to drive traffic,” Wiborg said. “In Q1 to date, we did not promote enough value to compete with competition. As we progress through Q1 in 2013, you will see a more balanced approach that is consistent with our barbell menu strategy.”

In response to the competitive pressures, Burger King has added the Whopper Junior to its value menu at a price point of $1.29. Wiborg said the value segment is 30 percent of Burger King’s business in North America.

Earlier in the week Burger King introduced a coffee platform that features regular coffees, iced coffees and blended beverages such as lattes.

“We are very excited about what that brings to our business,” Wiborg said. “We’ve talked about one of the gaps being breakfast, and a very important day part for us. And part of that is to have great coffees and lattes and hot chocolate and beverages. When you look at what we have tested, we spent over a year testing and coming up with the blend that beats our competition. And we are happy about where we are at and very excited about what it is going to do to our breakfast business.”

The first quarter slowdown and new coffee platform were discussed Feb. 15 when Burger King Worldwide announced its fiscal 2012 earnings for the period ended Dec. 31, 2012. Net income for the year rose to $117.7 million, equal to 34 cents per share on the common stock, up from $88.1 million, or 25 cents per share, in fiscal 2011.

Sales for the year declined to $1,996.3 million from $2,335.7 million during fiscal 2011.

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