Simple innovation winning at Burger King

by Monica Watrous
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MIAMI — Customers won’t soon see wacky new ingredients debuting at Burger King. The fast-food chain’s strategy of operational simplicity and fewer, bigger launches continues to improve traffic trends for the brand, even during a harsh winter in US markets.

“We introduced four new menu items during the quarter, all of which were designed to provide our guests with fresh new tastes without adding operational complexity to our kitchen,” said Daniel Schwartz, CEO of Burger King Worldwide, Inc., during an April 25 earnings call with analysts.

Two of the items, the Rodeo Chicken Sandwich and the Rodeo Burger, debuted as part of Burger King’s King Deals value menu, which launched during the quarter and includes a range of products starting at $1.

“These products are great examples of how we can deliver compelling value without sacrificing operational efficiency,” Schwartz said. “Neither of them required new SKUs to be rolled out to our restaurants, leading to less waste, less incremental training and higher franchisee profitability.”

During the first quarter, global comparable sales increased 2 percent during the quarter, and system sales grew 6.9 percent, reflecting growth across the company’s four regions. In the United States and Canada, comparable sales climbed 0.1 percent.

“We’ve had this strategy in place for almost one year now, and we believe consistency in menu and promotional activity is helping drive our improved performance,” said Alex Macedo, president of the North America region. “We believe that this type of product innovation is beneficial for our guests and our franchisees. Our guests can continue to expect exciting and bold additions to our menu while our franchisees can continue to operate their restaurants without complex new procedures.”

The two Rodeo sandwiches, for example, include barbecue sauce and onion rings, ingredients already found in Burger King’s kitchens.

Building on momentum from the new value offerings, Burger King expanded the King Deals menu in March to include breakfast items.

“This allowed us to drive traffic during the morning day part, which we view as a major opportunity to increase restaurant sales and ultimately improve restaurant profitability,” Macedo said. “We continue to believe that a balanced marketing approach with refreshed value options in all layers of the menu is an effective strategy that will continue to help us improve upon and deliver positive comparable sales growth in the US and Canada.”

Net income for the first quarter ended March 31 was $60.4 million, equal to 17 cents per share, up 69 percent from $35.8 million, or 10c per share, in the prior-year period.

Revenues totaled $240.9 million, down 26 percent from $327.7 million in the first quarter of the year before.
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