Those of us old folks who’ve watched Burger King and its playbook over the past couple of decades may be a bit taken aback by this new-age version of the fast-food chain.
Consider: When McDonald’s this year broadcast lower prices on combo meals, after convincing franchisees to increase the discount given when items are bundled, Old Burger King would have pushed something more aggressive—typically by getting its discount in the stores earlier.
New Age Burger King did … nothing.
Doing nothing apparently worked. The Miami-based chain’s same-store sales rose 3.2%, despite a market that has been rather unfriendly to the quick-service industry. The company has consistently outperformed its fast-food rivals on the key metric for the past few quarters.
“We’re going to stick to the same things that we talked about at the beginning of the year,” CEO Josh Kobza told analysts. “We said that we wanted to focus on the Whopper in flame grilling. We wanted to bring families back in the restaurants, and we wanted to have consistency in our value offerings through the year and through all the macro ups and downs of various quarters.
“We stuck with that plan, and I think that really has paid off.”
This is a key lesson, not just for Burger King but for the industry at large. It’s not always vital to match competitors’ moves with something similar. It’s better to lead than to follow. And straight discounts simply don’t work these days, not in the face of so many value offers. Also, profitability matters.
Old Burger King struggled to learn that lesson, even in the face of franchisee disputes, lawsuits, closed restaurants, mass bankruptcies and constant underperformance. This is the chain that once shoved a money-losing, $1 Double Cheeseburger down franchisees’ throats just because McDonald’s had a $1 Double Cheeseburger.
It’s also the same chain that started discounting in 2021, when discounts were not driving traffic, after its operationally complex entry into the chicken sandwich wars failed.
It’s no secret that mass bankruptcies and store closures followed both instances. There were years between both situations, along with new owners and new management. And yet Burger King operated in much the same way, which is why the company not only fell badly behind market leader McDonald’s but also closer rival Wendy’s.
New Age Burger King’s formula these days is to avoid the trappings of a discount war while focusing on the fundamentals, which can make its existing prices look better. The company has a steady value offer, $5 Duos and $7 Trios, offering two or three sandwiches for a set price.
The company looked at its prices after McDonald’s Extra Value Meals announcement, saw that it already provided substantial discounts on its combo meals, and left it alone. Burger King is instead banking on operations improvements that will make its offerings look like a better value.
“It’s only value if you’re offering good value on what people want to eat, that gives them a good choice on what they’re going to order,” Restaurant Brands International (RBI) Executive Chairman Patrick Doyle said in an interview with Restaurant Business. “What’s been driving growth is the other part of the equation. We’re executing better. We’re remodeling restaurants so more of our restaurants look better. And we’ve moved from being bad at service to being good at service.”
Burger King is also avoiding the Race for More Chicken currently engulfing much of the restaurant industry, opting to continue its emphasis on the Whopper—despite record high beef prices.
“We’re a burger chain,” Doyle said. “There’s a lot of focus even by people outside the chicken category on chicken. But at the end of the day we are always going to be known for our flame-grilled burgers, and we’re going to continue to lean into that.”
To be sure, RBI did understand that it needed to do something different. While most of the company’s sales and profits come from Tim Hortons and its thriving international business, investors pay close attention to Burger King U.S. It needed to fix that brand’s domestic performance.
And so, in 2022 the company put forth the initial Reclaim the Flame program under former CEO Jose Cil, who had previously shifted Burger King’s focus to operations in naming Tom Curtis the brand president. And then RBI brought in Doyle, whose focus has notably been about improving operator profitability as a way to boost long-term health.
Doyle himself says that the model for Burger King’s comeback was also in place at Tim Hortons. “The inspiration is right here in Toronto with Tims,” Doyle said, noting that the chain has now had 18 straight quarters of positive same-store sales. “Tims has done just about everything right.”
Burger King has a way to go before it is truly fixed. Its unit volumes remain well behind its primary competitors, for one. Beef costs won’t help that precious franchisee profitability. But the company should keep improving so long as its focus remains where it belongs, even if we’re not accustomed to seeing it.