Investment plan

A big investment plan is coming for Burger King

Restaurant Brands International CEO José Cil knows what Burger King is capable of. He also acknowledges that in recent years the fast-food giant has failed to live up to those expectations.

Burger King is the seventh-largest quick-service brand by sales in the United States, according to the QSR 50down from fifth in 2019. The chain was skipped by Wendy’s, which caused a stir with its new breakfast menu at the start of the pandemic, and Dunkin’, a business now run by Inspire Brands.

Change is coming, Cil has been pointing it out for over a year now. In August 2021, Burger King announced the promotion of former COO Tom Curtis to President of the United States and Canada, and a month ago named Thibault Roux Chief Digital Officer. Operationally, the company has spent the past few months simplifying the menu and processes, focusing on core offerings, strengthening its value platform, removing the Whopper from discounts, realigning messaging from brand and increase digital sales.

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The turnaround strategy will reach a crucial point in September when US operators gather for their national franchise convention. Here, Cil and RBI executives will unveil plans and investments that will “launch compelling long-term growth.”

“We believe that the underlying performance of the business, even in difficult circumstances, is the barometer of why we believe over the long term in the ability to drive this BK business from a sales and growth perspective. profitability,” Cil said on RBI’s second quarter earnings call. “More to come on that. Excited about the progress we’ve made, but there’s a lot more to come with the BK business and excited about the team we’re building and the progress we’re making with franchisees.

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Burger King’s U.S. same-store sales rose 0.4% in the second quarter, or 13.4% year-over-year. Both are sequential improvements from the first quarter, which saw comps fall 0.5% year-over-year and rise 6.1% on a two-year stack. Positive sales in the second quarter were driven by a net benefit from core offerings, value-based $5 Meal Your Way, and contribution from digital and delivery channels. This was offset by the overlap of stimulus measures in April and May. The concept once again closed the comparable sales gap between itself and its quick-service competitors. In addition, the reduction in products has improved the customer experience without a short-term negative impact on sales.

Cil said Burger King’s digital advancements are “growing steadily” as it continues to leverage native delivery and its fledgling loyalty program, Royal Perks. In the second quarter, the best example was the brand’s Frequent Fry’ers campaign in which loyal customers were offered free fries every week for the rest of the year. Promotion was gradual. With marketing, the channel focuses its media on fewer well-tested, high-quality, high-impact messages. In a similar vein, Burger King is working with its new creative agency, O’Keefe Reinhard & Paul, to further engage consumers.

To help franchisees navigate ongoing macroeconomic pressures, Burger King has rolled out an employee value proposition, enhanced its feedback framework with a new online Franchisee Success System dashboard, and expanded field teams. . Cil believes operators’ use of the Value Proposition Guide, which includes best practices for hiring and retention, fueled a quarter-over-quarter increase in average hours of operation. The online dashboard allows franchisees to compare key restaurant-level metrics to the system average, as well as the top 10% of operators. Cil explained that once an opportunity has been identified (speed of service, accuracy of orders, etc.), larger field teams develop an action plan to help operators.

“Collectively, these initiatives are driving customer satisfaction, which has improved sequentially over the past four quarters,” Cil said. “As a reminder, we have a significant growth opportunity by improving this particular metric, as we have seen a clear positive correlation between customer satisfaction and higher comparable sales.”