Business Overview and Analysis of Burger King

Burger King Corporation is an American company, owner of the global fast food chain called Burger King, which specializes in burgers. The headquarters is located in the unincorporated area of ​​Miami-Dade County, Florida, USA. In 2010, Burger King was the second largest fast food chain after McDonald’s (Restaurant Brands International Inc., 2016). There were more than 15,000 restaurants in 100 countries around the world, working under the franchise of Burger King, and the capital of the company amounted to $ 2.2 billion (Restaurant Brands International Inc., 2016). In 2012, Burger King became public again, and the capitalization of the company amounted to 4.6 billion dollars (Restaurant Brands International Inc., 2016).

Description of the Organization and Its Primary Stakeholders

Burger King Company’s history began in 1953 with a restaurant chain called Insta-Burger King in Jacksonville, Florida (Smith, 2006). Insta-Burger King encountered financial problems in 1954, and two entrepreneurs David Edgerton and James Maklemor acquired the company and renamed it to “Burger King” (Smith, 2006). In the next half of the century, the company changed owners four times. The third owner was a group of TPG Capital, Bain Capital, and Goldman Sachs Capital Partners in 2002, who made the company public (Smith, 2006). In late 2010, a Brazilian company 3G Capital has acquired a controlling stake of Burger King of 3.26 billion US dollars (Smithson, 2015). The new owners immediately began to restructure the company to improve its condition. As a result, 3G, together with its partner company, Berkshire Hathaway, merged Burger King and the Canadian network of eateries Tim Hortons. Capital investment fund 3G, owned by Brazilian businessman Jorge Lehmann and partners, has acquired 100% of Burger King Holdings Inc. Immediately after that, Burger King left the stock exchange, as the new shareholders decided to restructure the company (Smithson, 2015). The network felt to the third place among the fast-food restaurants and was behind Wendy’s and McDonald’s after a year of being under the leadership of 3G Capital. However, But soon it gained promising indicators: the net profit of the company grew by 34% up to $ 118 million (Smithson, 2015).

One of the reasons for success was innovations in the menu. As a part of the new strategy, the network management has decided to abandon high-calorie foods and to attract a wider audience of supporters by introducing a healthy lifestyle. So new things appeared in the menu such as salads, rolls, chicken nuggets, smoothies, and frappe, as well as low-calorie potatoes Satisfries, which allegedly contain 40% less fat and 30% fewer calories than comparable portions of potato in other fast-food establishments (Smithson, 2015).

By the end of fiscal year 2013 Burger King reported that it had 13 thousand restaurants in 79 countries (Smithson, 2015). Among them, 66% of restaurants were in the US, and private traders controlled 99% of them. In 2013, new owners of Burger King Restaurants have turned to a model of complete franchise (Smithson, 2015). In order to expand the scale of activities the company historically uses different versions of the franchise. Methods of franchisees licensing differ depending on the region. At the same time, some local franchisors (referred to as master franchisors) are responsible for the sale of sub-licenses on their own behalf. The company’s relationships with its franchisees are not always harmonious. Sometimes there are numerous problems, and in some cases, the company and its franchisees solve their conflicts in the court.

Analysis of One Challenge Faced by the Leadership of the Organization

Currently Burger King has several problems that the leadership of the organization encounters. They include decrease in popularity, because the company does not propose to the young generation the things it wants (healthy dining options); issues with franchisors; lower quality or service in comparison to the competitors; instability in leadership, constant changes in it; numerous law issues.

However, the main challenge that is detrimental for Burger King is discrepancies in top management, concerning the future strategy of Burger King on the world market. The company does not have a clear vision, and even historically, it has had constant changes. Since 1954, the company was sold to Pillsbury, Grand Met, TPG Capital, Goldman Sachs, so the style of management was constantly changing. The very first vector of development was aimed at competition with MacDonald’s. It prevented Burger King from elaborating its own unique strategy and focusing on it.

Competing with MacDonald’s as Detrimental Priority of Burger King’s Organizational Management

Since 1958, people began to recognize Burger King through advertising on television channels and radio. The first commercial was on air in Miami. Then the company started to establish a series of network extensions, so only by 1967, the company has already had 274 restaurants (Smith, 2006). At the end of the 1960’s franchise restaurant chain Burger King began to decline, as the company provided different levels of service and quality of the products. It was a serious drawback to the entire network, which claimed that in any of the restaurants visitors would get the same level of service. At the same time, many network partners tried to buy the company, but after receiving a series of refusals, they started to buy the franchises.

There was an attempt of total control by Burger King that the company’s leadership started to impose after the main competitor hired a talented manager Donald Smith. It should be noted that in a short time McDonald’s has developed rapidly and quickly reached the top in this market segment. Only when Burger King’s manager allowed a complete freedom of action, the company started to create uniform standards for all its products and services. When Donald Smith moved to Burger King, he immediately faced the problem of land ownership, as at that moment only a third of all stores belonged to the network, therefore, it was impossible to establish control over all the restaurants, which placed the company in a difficult position.

For a success and quality control, Burger King designed supervising regional offices, which observed the work of several restaurants, ensuring that they have the finest performance. When Smith was a CEO, Burger King Chain began to expand and has become a world-wide network of fast food restaurants. During 10 successful years of Smith’s working as a leader, new restaurants have appeared in 30 countries around the world (Sharon, 2010). Since 1974, Burger King’s management system implemented unplanned two-week test operation of each franchise, the system of which has been rewritten from the McDonald’s network. In 1980’s, Burger King was expanding its range of products, so there appeared breakfasts immediately after their introduction into another network. When in 1980, Smith left the Burger King, the company was in a stagnant position, the managerial system was changing and all that had a negative impact on the atmosphere in the Burger King team and the ability to move forward in the fast food market (Sharon, 2010).

Since 1985, the company has been gaining momentum in the structure of healthy and beneficial food, so it opened sat-bars, and an assortment of fresh vegetables appeared in more restaurants. The company under the leadership of Donald Smith transformed the network and became strong enough to introduce uniform high standards for its services and the overall style of the work, but Burger King still could not reach the level of McDonald’s. The problems of the past continue to bother the company today, but not to such an extent.

Subsequent advertising of Burger King Company was not so successful. Moreover, many of the commercials, shown on TV, became failures, even those, in which celebrities participated. Perhaps it was the worst time in the history of the existence of the chain. In 1989, the restaurant chain Burger King was sold to the Grand Met Company, which was a good deal for both sides (Denker, 2013). Of course, Grand Met had practically ruined the condition of the largest fast-food chain, but after a while, it managed to adjust operation of the entire network, which made it possible to open new restaurants in 50 countries, which greatly increased the total income (Denker, 2013).

How It Works

With huge investments in advertising and network management, in 1990s the company succeeded to expand the scope of its influence in the foreign market, and the company’s CEO Barry Gibbons helped in it (Denker, 2013). In addition, a deal with the Disney studio brought a great success to Burger King. However, the agreement with it has existed not so long, only for 4 years, and then Disney began to work with McDonald’s, which largely focused on children, and brought a good extra income and advertisement to the studio (Sharon, 2010).

The company set the goal of high profitability, so the Burger King’s staff number has been reduced, and not very profitable for company restaurants were closed. All this created unnecessary uncertainty about the future, was negatively reflected in all experts’ assessments, and influenced the remaining restaurants. However, nothing fundamental has changed in the advertising strategy over the years, it remains as vague as general objectives of the company, which does not allow it to compete on equal terms with the McDonald’s restaurant chain.

The Consequences of the Lack of a Coherent Strategy

The unnecessary vector of competing with MacDonald’s has set the wrong priorities and provoked the decrease in quality and popularity of Burger King. Additionally, each new owner and new leadership has various approaches to company’s issues. For example, Burger King has certain legal issues. Each owner and new staff responded differently to legal controversies, ranging from being polite to becoming angry. That behavior could not earn the trust of customers and other stakeholders. The inability of managerial staff to deal with such issues as PETA, social justice, health aspects (accusations in promoting obesity), nutritional labeling laws, ethics, and corporate responsibility created negative image of Burger King. The situation with Burger King Restaurants opened on Israeli-occupied territory showed certain lack of responsibility of managers.

Another issue is the absence of a uniform code of service, staff behavior, and food quality in all restaurants of the chain around the world. Now, the entrepreneurs, who bought franchise, can establish own rules in the restaurants, and the quality is not controlled. For example, in 2014, Burger King closed 89 restaurants in Germany. The reason for this decision was a journalistic investigation, which proved that the fast food chain violated all the sanitary norms, when preparing the food. All restaurants were owned by a holding company Yi-Ko, with which Burger King canceled all the contracts and closed about nine dozen restaurants that Yi-Ko owned.

A Strategy for Overcoming the Challenge

The challenge of instability of leadership that leads to the absence of a company’s strategy is quite difficult to overcome. First, Burger King has over 15000 restaurants in many countries. Then, it is the unstable financial situation, which makes the company to look for new investors. Finally, changing the whole strategy of the company may mean rebranding that is quite risky. However, the company should definitely take certain measures in order to maintain and improve its position.

First, the company should have unchangeable CEO’s, leaders and stakeholders. There should be one leader or several leaders with the same vision of the company. Nowadays, Burger King is in a difficult condition that requires constant reorganization, modification, and innovation. These requirements are put forward primarily by factors of the environment such as the stiff competition with other fast food chains, the globalization of business, changes in legislation and legal requirements, changes in technology, and the reduction of products life cycle. Skillful use of new realities and adequate response to the challenge of the environment is favorable for the development, but the same factors can lead to a disaster, when the managers of organizations incorrectly interpret them, so that they do not lead to the formation of rapid responses. In order to survive, Burger King needs to focus on achieving the highest quality, high market mobility, and lower prices. Providing only one or two of these key components does not usually lead to success. In addition, the company must also take into account the changes of values ​​and interests of today’s employees, who demand a greater involvement in the affairs of the organization, greater flexibility, and greater autonomy. The modern leader of the organization should focus on inspiring employees to achieve a common goal. The leader of Burger King needs to master the skill of creating a unified team out of many talented and ambitious individuals, who work in the company.

Additionally, Burger King should create a code of quality and behavior. All staff members should learn it, and there should be a constant supervision of adhering to the rules and regulations written in the code. The customer must be confident that when going to Burger King Restaurant, he or she will receive the best service and food quality, and it will not differ from other Burger King restaurants. Stability in meeting customers’ expectations and high quality is necessary for success. Moreover, code with written regulations may include rules on environment sustainability that would prevent from having legal issues. In general, becoming sustainable is a must for modern organization.

Probably, these innovations may demand painstaking efforts from the company, but it is now in a financial and organizational deadlock. Successful advertising will be required. Burger King should represent an independent and responsible company that not chases other fast food chains, but rather uses competition as the stimulus for growing.

In conclusion, Burger King is one of the most popular fast food chains in the world. Restaurants of the corporation are located in all 50 states in the United States and in 56 countries around the world. Burger King was focusing on searching new markets and competing with other fast food restaurants.

Burger King is a company that has had problems with advertising, service, national rules etc. Additionally, there were many organizational problems due to several reasons. First, it was overly concentrated on competition with MacDonald’s, which prevented the company from elaborating its own strategy. Then, the company had different owners with various managerial styles. Lastly, Burger King’s organizational management lacked vision and future strategy. There are several ways to resolve the situation. They include the formation of a common code of quality norms, regulations, and rules that would help to make all restaurants of the chain uniform, having a strong constant leader and representing the company as being reliable for customers and partners.