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Burger King hopes a $1 menu solves its value problem

The company’s value offers have been “choppy,” but executives say its $1 Your Way menu is a key part of the plan to improve the chain’s performance.
Burger King sales
Photograph: Shutterstock

Burger King saw same-store sales growth in the U.S. in January, a strong early-year performance and particularly notable given that the chain ended 2020 well behind its competitors.

But Jose Cil, the CEO of parent company Restaurant Brands International, wasn’t claiming any sort of victory even though such situations tend to lead to bullish comments from executives on their various strategies.

“This is not a victory lap, since some of that performance improvement was bolstered in part by the government stimulus,” Cil said on the company’s fourth-quarter earnings call Thursday.

That said, he did note that the company introduced its $1 Your Way menu, a value offer the company hopes will get the chain’s promotional strategy on a more steady course.

Burger King’s same-store sales declined 2.9% in the U.S. in the last three months of the year, only a modest improvement from the 3.2% decline in the third quarter. It’s also a substantial underperformance against the market’s leader, McDonald’s, where same-store sales rose 5.5% during the same period.

While the company’s drive-thrus have performed well during the pandemic and the chain has seen its delivery sales double—while overall digital sales now represent 8% of revenues—it was weak in the morning and late at night. Morning sales have generally been weak at many concepts, including Burger King sister chain Tim Hortons, but both of its top rivals Wendy’s and McDonald’s saw some success late last year.

On the earnings call, Cil placed much of the blame on the company’s promotions, in terms of both new products and its value.

“Value is an important part of the business,” he said. “And of the QSR segment in particular, in the fast-food hamburger space. We’ve been kind of choppy in terms of how we address value.”

Burger King has been among the most aggressive fast-food chains in the value business, with a succession of offers even as its competitors largely avoided such moves. But Cil said that the offers haven’t quite done the job.

“We’ve been doing a lot of bundling and we’ve been doing promotional activations, including paper coupons and other value approaches, which haven’t been resonating as well,” Cil said. “We haven’t had a value proposition, an everyday value proposition, that’s been credible and reliable and something that our consumers can count on for quite some time.”

Burger King introduced its $1 Your Way menu late in December as “an important step” in its value effort but not the only step. “It’s not the plan,” he said. “It’s a component of a longer-term plan for us to be more focused on the core and have everyday platforms that our consumers here can rely on.”

The “core” is the chain’s core menu items, including the Whopper, which the company has been working to improve recently—it recently removed artificial colors, flavors and preservatives in the iconic sandwich, for instance. The company has also “put a lot of investment behind that” in its communications.

Burger King is aggressively pushing digital efforts and just this week started testing a new loyalty program in several different markets.

Cil also said there are opportunities to “expand” its core offerings with chicken—he confirmed the company’s plans to debut a new chicken sandwich this year, for instance. And Cil added that breakfast is going to be an important element in the future. Breakfast currently averages around 13% or 14% of the chain’s sales—far below McDonald’s 25%-plus breakfast offering. “We think it could be a much bigger part of our business long-term,” he said.

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