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Burger King Essay

4416 words - 18 pages

CASE STUDIES

Burger King case study
Targeting the Superfan as a means of retaining growth in the fast food market
Reference Code: CSCM0246 Publication Date: April 2009

DATAMONITOR VIEW CATALYST
After years of poor sales, Burger King has turned its business around and now enjoys healthy business growth. This case study looks at how the company did this by refocusing its marketing towards the Superfan, namely young adult males who have a penchant for fast food.

SUMMARY
• Diageo was accused of neglecting Burger King under its ownership, letting the brand fall off the radar at a time when fast food in general was reporting favorable growth. The fast food chain's fortunes began to ...view middle of the document...

Burger King case study
© Datamonitor. This brief is a licensed product and is not to be photocopied

CSCM0246 / Published 04/2009 Page 1

Burger King case study

ANALYSIS Burger King suffered years of decline but achieved a turnaround after a marketing overhaul

McDonald's dominated the fast food sector for many years
For years, McDonald's was by far the leading fast food company, dominating the sector in terms of sales, perceived quality and consumer preference. However, in recent years Burger King (BK) has begun to fight back, reporting impressive sales growth due to a change in the way it markets the business; instead of trying to appeal to the everyday consumer, which it found to be an impossible task, the company has focused on the Superfan, defined as an 18–35 year old male with a love of fast food. BK still cannot hope to beat McDonald's in terms of sales at present, with the latter recording revenues of over $5.6 billion for the fourth quarter of 2008 compared to BK's $634 million for the same period. Its restaurant outlets are also dwarfed by McDonald's, which has 30,000 global outlets compared to BK's 11,600. However, where it is attempting to gain appeal is as a 'cooler' venue where consumers, particularly the Superfan, want to be seen. This case study looks at how it is achieving this through innovative marketing campaigns.

Burger King's sale to a triumvirate of private equity firms in 2003 was the impetus for change
BK was founded as a single restaurant in Miami in 1954 and steadily built up its fast food empire to become one of the leading fast food companies in the world with over 11,600 global restaurants. However, the chain's popularity began to wane under the ownership of Diageo, which bought BK in 1989 when Diageo was known as Grand Metropolitan. Diageo was criticized for neglecting the brand in favor of focusing its resources on its beverage arm. Diageo sold the fast food brand to a consortium of private equity companies in 2003 for $1.5 billion. The consortium was led by TPG Capital, L.P., with associates Bain Capital and Goldman Sachs Capital Partners. At the time, BK had recorded seven straight years of sales decline and footfall had dropped by 22%. This was during a period when the fast food industry as a whole was enjoying healthy growth. The new owners sought to rejuvenate the brand and re-establish it as a fast food venue of choice for a key group of fast food customers; young males which it terms the Superfan. This strategy has been a success for BK. The company posted record worldwide revenues of $2.46 billion in 2008, a rise of 10% from the previous year and its 18 consecutive quarter of positive sales growth.
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Although not immune to the downturn the company continues to grow, with plans for Brazil and China expansion
The company's latest results are not as positive, with revenue for the quarter ending December 2008 rising 3% to $634 million, missing Wall Street's expectations by $0.04 per...

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