Miami – Burger King chief executive Greg Brenneman strongly believes that rising sales will cure all the fast-food chain’s ills.
And for most of Brenneman’s first year at the helm, Burger King has seemed to be in the midst of a rather impressive recovery.
The company has focused its attention on the “Super Fan,” a young male consumer who dines frequently on fast food.
Burger King has reached out to that customer with new menu items such as Tender Crisp chicken sandwiches and unconventional marketing by Miami’s Crispin Porter + Bogusky at the same time it has improved restaurant operations.
The moves have helped Burger King deliver a 6.8 percent jump in same-store sales for the year ending in June – the largest increase the chain has seen in a decade.
But the honeymoon appears to be drawing to a close, and Brenneman’s ability to put Burger King permanently on the high road is about to face its biggest test yet.
Franchisees say same-store sales have declined in June and July, after 15 consecutive months of gains. Is that a momentary blip? Or a sign that Brenneman’s turnaround plan may not be going as smoothly as envisioned?
“This brand doesn’t really need the messiah,” said Alan Vituli, chief executive of Carrols Corp., Burger King’s largest franchisee, with 347 stores. “They are as good a management team as I’ve seen. But it’s going to be a very hard road,” said the 18-year veteran of the chain.
While many franchisees remain encouraged about the direction the company is heading, others say there is discontent brewing. The challenge will be keeping that frustration from boiling over into a feud similar to past showdowns between franchisees and many of Brenneman’s predecessors.
Valerie Daniels-Carter, president of Burger King’s minority franchisee association, is taking a wait-and-see attitude on whether the turnaround and the management team are the real deal.
“I think the jury is still out,” said Daniels-Carter, a franchisee for 22 years with 36 restaurants in Wisconsin and Michigan. “Hopefully this management team will stay in place long enough to make it happen.”
In a company where he is the ninth chief executive in the past 15 years, Brenneman jokes that he is still below the average chief executive’s tenure at Burger King.
“I’ll probably clear the bar with any luck,” said Brenneman, who marked his one-year anniversary on the job in August.
Hints of softening sales or restlessness brewing among franchisees don’t worry Brenneman.
“We’re way ahead of where I thought we would be,” he said. “You’re going to go up and down a little bit as we go through the process.”
Despite this year’s gains, Burger King is still trying to return to the level of sales and market share it enjoyed in the late 1990s.
After hitting 20.4 percent in 1998, Burger King’s market share has been steadily declining, according to figures from Technomic, a Chicago-based industry consulting firm. Last year, Burger King’s market share declined to 14.2 percent and Wendy’s had pulled even with it. In 1998, Wendy’s market share stood at 11.6 percent.
But Burger King’s market share is expected to show improvement this year.
Brenneman’s goal is to increase average unit volume sales to $1.3 million and profits to $250,000. Sales had dipped as low as $970,000, with profits of $70,000, but now sales have climbed back to just under $1.1 million and profits to $100,000.
“We still have a long way to go,” Brenneman said. “We’re crawling our way up there.”
The decision by management to focus its attention on the so-called Super Fan became obvious after looking at the numbers. These young men, between 18 and 34, average about 15 trips a month to a fast-food restaurant. For Burger King, they represent only 18 percent of the chain’s customers but account for 49 percent of all traffic. The hope is that Burger King can start capturing more of their business.
Analysts say it’s a move that makes sense but also comes with inherent problems.
“If you’re not McDonald’s, you’ve got to go after some other part of the market,” said Ron Paul, president of Technomic, the restaurant consulting firm. “I don’t think you can narrow your strategy on one demographic group for that long.”
With that Super Fan consumer in mind, Burger King has rolled out new products including TenderCrisp chicken sandwiches, Angus steak burgers, the Enormous Omelet Sandwich and, most recently, chicken fries. Coming soon: BK Joe premium coffee, including a turbo version with extra caffeine.
As Burger King’s chief concept officer, Denny Post is charged with looking for gaps in the fast-food chain’s menu. She sees opportunities for more premium burgers, unique toppings, snack foods and breakfast products. The Enormous Omelet boosted breakfast sales by 20 percent, despite its 730 calories and 47 fat grams.
One of Brenneman’s priorities is expanding restaurant hours to better compete with Wendy’s and McDonald’s.
“It’s kind of hard to sell anything if you don’t open the doors,” Brenneman said. The chain is also ready to open 300 to 350 new stores internationally during this fiscal year.
