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May ‗11

Burger King

International Business Project

DG KU ZURAIDAH BT AG. MAJID 11739

FATIN AMIRA HANAFIAH 12334

NOOR ZALIFAH MOHAMED 12468

TAHA NASIR 11744

AMR MAGDELDIN ABDELWAHID 9561



Burger King May ‘11

Universiti Teknologi PETRONAS | International Business Project

TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................... 3

BURGER KING INTERNATIONAL ............................................................................................ 6

BURGER KING IN MALAYSIA .................................................................................................. 8

Malaysia: Attractive Market Trend ............................................................................................. 8

Malaysia: High Encouragement from Government .................................................................. 11

Malaysia: Strong Financial Support ......................................................................................... 11

PRODUCTS AND BUSINESSES OF BK ................................................................................... 13

BURGER KING STRATEGIES .................................................................................................. 18

International Strategies ............................................................................................................. 19

Place ...................................................................................................................................... 19

Product .................................................................................................................................. 21

Malaysian Strategy ................................................................................................................... 23

Place ...................................................................................................................................... 23

Product .................................................................................................................................. 24

Promotion .............................................................................................................................. 28

WORST CHALLENGES/OBSTACLES FACED BY BURGER KING .................................... 32

Of Franchisees and Ownership ................................................................................................. 32

Of Marketing and Advertisement Dilemmas ............................................................................ 33

The Woes of Competition ......................................................................................................... 34

Of the King‘s Reign in Malaysia .............................................................................................. 35

REFERENCES ............................................................................................................................. 36





INTRODUCTION

urger King Corporation (BKC), a global chain of hamburger fast food restaurants

started off in 1953 in the state of Florida in the United States. Before the

enthronement of the King, it was known as Insta-Burger, which was based in

Jacksonville, and due to financial issues faced by the founders, Kramer and Burns, it was sold to

its franchisees in Miami, whom gave the Burger a kingdom and thus Burger King was born. It

has been 56 years since David Edgerton and James McLamore had founded the newly-branded

franchise and today BK has over twelve thousand outlets in 73 countries.

In 1957, the sensational burger that became the major stakeholder in the variety of

burgers was introduced, they named it The Whopper. It became a hit and Burger King became

known especially for its flame-broiled burgers. Apart from the Whopper, BK offers a variety of

other products ranging from chicken sandwiches, salads, desert, beverages, sides, and now even

breakfast items. Nearly all of today‘s stand-alone BK restaurants have drive-through services

apart from the usual dine-in.

1959 brought about an expansion around the States and by 1963 it had its first foreign

restaurant in Puerto Rico. After 245 restaurants, BKC was sold to Pillsbury Company for furtherexpansion. After many years of expansion with Pillsbury Company, BKC came to a problematic

phase where it could not control its European franchisees well. Grand Metropolitan PLC stepped

into the picture and bought over Pillsbury Company and under their hood the European

domination started. They took over another chain of fast-food called Wimpy‘s and converted all

the chains into BKs. 1997 marked a major merger of Grand Metropolitan PLC with Guiness &

Co. forming the grand company, Diageo PLC, whom becomes a world leader in the food and

drink industry. After 15 years of British rule the King returned to the States due to BKC being

sold to 3 major companies; Texas Pacific Group, Bain Capital Partners and Goldman Sachs

Capital Partners.





In 2006 the corporation went public due to the many problems faced by the many owners over

the past years and in 2010, 3G Capital; a Brazilian investment company, bought 90% of the

shares to become the owner of the corporation. Today BK is on the number 2 spot of the fast

food industry well behind McDonald‘s whom still has the most people ‗loving it‘. Figure 1.1shows the various countries that BK operates in today.

1954•James McLamore and David Edgerton establish Burger King Corporation.

1957•The Whopper is launched.

1959•The company begins to expand through franchising.

1967•Burger King is sold to Pillsbury.

1977•Donald Smith is hired to restructure the firm's franchise system.

1982•Burger King claims its grilled burgers are better than competitors McDonald's and Wendy's fried burgers.

1989•Grand Metropolitan plc acquires Pillsbury.

1997

•The firm launches a $70 million french fry advertising campaign; Grand Metropolitan merges with Guinness to form Diageoplc.

2002•A group of investors led by Texas Pacific Group acquire Burger King.

2006•BKC goes public on the NYSE

2010•BKC has new ownership, 3G Capital, a Brazilian investment group who bought 90% of the shares





Figure 1.1: List of Countries of BK Operations

North America

•Canada

•Mexico

•United States of America

Latin America &Caribbean

•Argentina

•Aruba

•Bahamas•Bolivia

•Brazil

•Cayman Islands

•Chile

•Colombia

•Costa Rica

•Curacao

•DominicanRepublic

•El Salvador

•Guatemala•Honduras

•Jamaica

•Nicaragua

•Panama

•Paraguay

•Peru

•Puerto Rico

•St. Lucia

•ST. Marten

•Surineme

•Trinidad•Urugury

•Venezuala

Europe, MiddleEast & Africa

• AAFES Europe

• Andorra

•Austria•Cyprus

•Denmark

•France

•Germany

• Gibraltar

•Hungary

• Iceland

• Israel

• Israel

• Italy

• Malta• Netherlands

• Norway

• Portugal

•Spain

•Sweden

•Switzerland

•Turkey

•United Kingdom

•Bahrain

• Jordan

• Kuwait

• Lebanon

• Qatar

• Saudi Arabia

•UAE

Asia Pacific

•AAFES

• Australia

• China• Guam

• Hong Kong

• Korea

•Malaysia

• New Zealand

• Phillipines

• Singapore

• Taiwan

• Thailand





BURGER KING INTERNATIONAL

On September 2, 2010, Burger King Holding Incorporated (BK) announced that they agreed to

be acquired by 3G Capital ( Burger King Corporation, 2010). 3G Capital bought BK for $4

billion (DREA, 2010).

It is one of the best opportunities to BK particularly when looking on BK‘s financial

condition. Bloomberg reported that BK has been facing a decrease on its sales growth for two

straight years as a result of U.S. economic slump (Stanford & Helm, 2010). Hence, it is believed

that 3G Capital will be able to support BK financially as 3G Capital is a multi-billion dollar,

global investment firm (LinkedIn Corporation).

Besides that, Tom Forte, an analyst from Telsey Advisory Group stated that the price

offered by 3G Capital is a good price wherein none is able to offer a higher price than the one

offered by 3G Capital (Baertlein, 2010). Stifel Nicolaus, a restaurant analyst of Steve West also

stated that BK will not be able to receive such good offer anymore (Baertlein, 2010).

In addition, with this acquisition, BK gained an opportunity to fix its business as BK is

becoming a public company. Analysts said that, going public would release BK from having to

worry about the need to please its shareholders while wanting to make any major changes in its

business - in contrast to how it was previously managed (Baertlein, 2010) (Wikimedia

Foundation Inc., 2011). Subsequently, BK will be able to focus on repairing its fundamental

businesses structures while continue to work on closing its gap with McDonald (Wikimedia

Foundation Inc., 2011). It is because, there is a huge gap between McDonald although BK is

place as second in world‘s hamburger chain after McDonald; McDonald is place as first in

world‘s hamburger chain (Brady, 2010). For instance, BK currently has 12, 174 restaurants

worldwide whereas McDonald has 32, 466 restaurants worldwide (Brady, 2010).

Other than that, BK is able to easily penetrate Brazil‘s market. It is because 3G Capital is

owned by the Brazilians (DREA, 2010). Hence, 3G Capital has experience and connections in

Brazil (Brady, 2010). BK can expand its business into Brazil‘s market while at the same time; it

is a one step to further in closing its gap with McDonald. This is of the reason that, many U.S.





food chains including McDonald has difficulty in expanding their businesses to Brazil as it is

difficult to find qualified franchisees in Brazil (Brady, 2010).

Moreover, not only Brazil, BK is able to expand more of its business internationally. 3G

Capital announced that they are planning to build out BK internationally (DREA, 2010) (Heher

& Fredrix, 2010). 3G Capital is planning to open more franchises in Latin America and invest

more in Asia (DREA, 2010) (Heher & Fredrix, 2010).





BURGER KING IN MALAYSIA

In December 1997, BURGER KING returns to Malaysia with a different management group that

operates under a new franchisee i.e. Cosmo Restaurants Sdn. Bhd. The first restaurant was

located at Overhead Bridge Sg. Buloh. It was officiated by the former Prime Minister i.e. Y.A.B

Tun Dr. Mahathir Mohamad. To date there are 22 restaurants in Malaysia, with more outlets

soon to come in the near future.

There are currently, 3 franchise holders in Malaysia. The largest operating restaurant is

managed by Cosmo Restaurants Sdn. Bhd. While outlets located in KLIA are under the

management of Dewina Hosts Sdn. Bhd, outlets in Sabah are operated by another franchisee,

Living Bread Sdn. Bhd. They have all been approved by the Jabatan Kemajuan Islam Malaysia

(JAKIM).

One of the franchisee of Burger King Restaurants in Malaysia, announced plans in 2009

plans to spend 27 million ringgit to open around 50 outlets throughout Malaysia in the following

five years. As many more fast food chains are opening up, BK is facing much competition and

has not been able to claim any spot in the top 5 list as yet due to its slow expansion in Malaysia.

McDonald‘s still rules the top spot followed closely by KFC.

Malaysia: Attractive Market Trend

The reasons below shows why there is an attractive market trend for franchising in Malaysia:

1. Great potential of growth for franchising industry in Malaysia

According to a report written by Digital Media Network Inc., franchising industry in Malaysia is

still in the early stage in which franchising indus try only contribute to 5% of Malaysia‘s annual

retail sales. The percentage is much lower than U.S. In U.S., franchising industry contribute to





40% of U.S.‘s annual retail sales. The low percentage indicates that there is great potential of

growth for franchising industry in Malaysia.

Since franchising industry in Malaysia is still new and it has a lot of potential to grow,

Burger King can take this opportunity by entering Malaysia‘s franchising industry and gain

advantages by being one of the first-movers among the U.S. franchises that penetrate into

Malaysia‘s franchising market.

One of the advantages that Burger King can obtain by being one of the first movers is

that, it will be difficult for the latecomers to penetrate the market or even to surpass Burger King

because comparing to latecomers, Burger King already has its own loyal customers.

Then, if Burger King manages to conquer or hold the most percentage in franchising industryin Malaysia, Burger King can create a very strong barrier of entry to other foreign franchisees

that want to enter the industry. High barrier of entry will resulted in other foreign franchisees are

less likely to enter the market. Hence, Burger King is able to reduce the amount of its competitor.

2. Attractive profit is expected

There is relatively high purchasing power among Malaysian (Digital Media Network, Inc.).

When there is a high purchasing power among Malaysian, when a business want to sell

its products or services to Malaysian, Malaysian people are more likely to purchase the products

or services offered. Hence, when Burger King want to sell its products to Malaysian, most or all

Malaysian people are likely to buy Burger King‘s products. This indicates that Burger King can

gain profit by doing business in Malaysia.

Besides that, it is anticipated that target segment for U.S. franchises will continue to grow as

there will be a rise on disposable income among Malaysian (Digital Media Network, Inc.). When

there is a rise on income among Malaysian, purchasing power among Malaysian will increase.

This increases the amount of potential profit for any businesses in Malaysia too. Hence, if Burger





King is to operate its business in Malaysia, Burger King will be able to get a hold on the profit

too.

3. Many individuals or local organizations are interested to be the franchisee

Many individuals or organizations in Malaysia are interested on the franchising industry in

Malaysia. Although the non-Bumiputras does not receive much financial support from the

government in regard to venturing into franchising industry, the non-Bumiputras still choose to

enter the franchising industry in Malaysia. It is because of the non-Bumiputras identify

franchising as an effective strategy for regional expansion (Digital Media Network, Inc.). Then,

local manufacturers also enter the industry in order to increase their business‘s profitability by

diversifying their operation (Digital Media Network, Inc.). Hence, although Burger King does

not want to establish its operation locally (in Malaysia), they can select one of the interested

individuals or organizations to be the Master Franchisee and let the Master Franchisee to manage

its business in Malaysia.

4. U.S. franchises has high popularity in Malaysia

According to the report written by Digital Media Network Inc., U.S. franchisees are very popular

in Malaysia in which 70% of the franchises in the franchising industry are U.S. franchises.

Since U.S. franchises are very popular and well-received among Malaysian, hence if

Burger King wants to operate its business in Malaysia, there will not be much problem

particularly on getting customer to like and buy its products. It is anticipated that Burger King

will be widely-received by Malaysian since Burger King is one of U.S. franchises and Malaysian

look highly on U.S. franchises.





Malaysia: High Encouragement from Government

Starting from the year of 1992, Malaysia government began to promote franchising sector in

Malaysia. Then, since longer time duration (minimum is two years) needed in order to create a

successful home-grown franchises, Malaysia‘s government highly encourage U.S. franchises

particularly those with proven business systems and track records to establish their franchises in

Malaysia (Digital Media Network, Inc.).

Burger King is one of the U.S franchises and it has a proven business systems and track

record. Hence, It is anticipated that Burger King will be well-received by Malaysia‘s government

if Burger King decided to operate its business in Malaysia.

Malaysia: Strong Financial Support

Malaysia government offer significant financial and training support to Bumiputera who want to

venture into the sector. For instance, on the 8th Malaysian Plan which covered Malaysia‘s plan

for development from 2001 until 2005, government allocated RM100 million (US$26.3 million)to the Ministry of Entrepreneur Development (Digital Media Network, Inc.). The money

allocated is to be used to promote, market, train and finance the Franchise Development Program

(FDM).

Besides that, there are many financial assistance programs and facilities created under the

Ministry of Entrepreneur Development in order to promote franchising business in Malaysia.

The programs are mostly on providing financial assistance to those who want to start a business

on franchising. Moreover, foreign franchisors can get benefit from the programs too if the localpartner or its franchisee is incorporated in Malaysia (Digital Media Network, Inc.).

Burger King is going to receive the benefits from the program too if its local partner or

franchisee is incorporated in Malaysia. For instance, Burger King is eligible to receive financial

assistance from the selected organizations in Malaysia since its local partner or franchisee is





incorporated in Malaysia. Hence, Burger King can be at ease as they can figure out from where

they can get financial assistance if they get financial problem

Other than that, not only Malaysia‘s government is the one who can provide financial

assistance to Burger King. Currently, Burger King Malaysia is being financially supported by

CIMB, one of the top banks in Malaysia.

Cosmo Restaurants Sdn Bhd (Cosmo) is one of the franchise holders for Burger King in

Malaysia ( Burger King Corporation, 2010). One of the best opportunities received by Cosmo is

by having CIMB Private Equity (CIMBPE) as its main shareholders. CIMBPE is one of the

divisions under CIMB Group whereas CIMB Group is the second largest financial provider in

Malaysia (CIMB Group, 2007). Basically, CIMBPE provides equity capital to companies that

seek for expansion capital, restructuring purposes and funding buyouts (CIMB Group, 2007).

On 2007, CIMBPE announced that they are going to provide more investment to Cosmo

in order to help Cosmo to expand its business in Malaysia, to refurbish the existing restaurants as

well as to optimize its capital structure (CIMB Group, 2007) (Kaur, 2008). On 2008, CIMBPE

already hold a 60% equity stake in Cosmo (Mark, 2008).

Director of CIMBPE, Darawati Hussin stated that CIMBPE decided to be the main

investor for Burger King because CIMB has always been attracted to the growth of fast food

sector in Malaysia (Musa, 2008) (CIMB Group, 2007). Besides that, CIMBPE find Burger King

as attractive and think that Burger King has a strong brand (CIMB Group, 2007). She also added

that they are hoping that the funding will facilitate Burger King to be one of the leading quick

service restaurant chains in Malaysia (CIMB Group, 2007).

As a result from the financial support provided by CIMBPE, Cosmo is able to open more

outlets. On 2008, there are already five round-the-clock Burger King Restaurants in Malaysia

with six are in petrol kiosks (Mark, 2008). Then, to date, Cosmo owned 20 Burger King Outlets

in Malaysia and among the three franchise holders, Cosmo is the largest franchisee ( Burger

King Corporation, 2010) (Kaur, 2008).





PRODUCTS AND BUSINESSES OF BK

In marketing, product and services is defined as the physical/ tangible entity or services that

companies may offer to their customers, divided into three levels – core, actual and augmented

product. As for Burger King, meals served are the actual product. Their services are as the

augmented product and the satisfaction of having the meal is the core product. Since Burger

King has internationalized their business throughout the four region of the world, their products

differ from one country to another. The services might be slightly different from one country to

another as most of the giant fast-food chain did have their own Standard Operating Procedure.

Below are the partial lists of Burger King‘s product, differentiated by four regions.

Country Hamburgers

Unites

States of

America

Triple Whopper

with CheeseBacon Cheddar

Ranch

TENDERCRISP

Steakhouse ST

Burger

Whopper

Australia

Bacon Deluxe Angry Angus Single Aussie Whopper Whopper

United

Kingdom

Steakhouse

AngusChilli Cheese Melt

'n Middle

XL Bacon Double

Cheese BurgerWHOPPER

Table 3.1 BK Hamburgers





Country Drinks

Unites

States of

America

Soft Drinks Shake Milk & Juices Hot & Cold

Coffee

Australia

Soft Drinks Shake Juices Coffee and Tea

United

Kingdom

Soft Drinks BK Shakes Coffee Tea

Table 3.2 BK Drinks

z Snack/Side Dishes

Unites

States of

America

Chini-Minis

French Toast Sticks

with Maple Syrup

Blueberry

Biscuits with

Icing

Cheese Bacon BK

Wrapper

Australia

French Fries Angry Onion M&M Minis

Storm

Flake Storm

United

Kingdom

Chilli Cheese Bites Hash Browns Mint Choc Swirl

6 Mini Pancakes

with Maple Syrup

Table 3.3 BK Side Orders





Product variety

Burgers are among the main line up in westerner‘s daily menu. Unlike Asian, rice is their main

food. Hence, choices of hamburgers in Unites States and United Kingdom are much more varies

than in the Asia Pacific especially in Malaysia, Japan and Korea. While United States, Australia

and United Kingdom outlet offers more than 20 different burgers, Malaysia‘s Burger King offers

are only limited to 13 types of hamburgers. United Kingdom‗s also offers eight of its side dishes

and dessert compare to six offered by Malaysia‘s. Westerners prefer sweeter food as their desserts

hence the various ice cream and sundae offered. Compare to Malaysia, Burger King only offer

four types of its very delicious desserts. Same goes to drinks and desserts. In order to

internationalize business, one of the essential knowledge that Burger King possessed is the market

preferences of the host country Westerners may prefer hamburgers and pancakes as their breakfast

but not in Asia. United States, United Kingdom and Australia outlet did offer menus for breakfast

but not in Malaysia and Japan outlet. In additional, fast food chain is originated from the United

States of America – a western country thus increasing the competition of fast food restaurant in

the regions, resulting very competitive moves from other fast food franchisers by offering wide

range food and beverages.

Product Promotion

Burger King around the world has their own way in

promoting their product. . Burger King began airing its

first television commercial in 1958 and their first product

promotion, 'The Bigger the Burger, the Better the Burger,'

debuted in 1968. In 1974 the memorable 'HAVE IT YOUR

WAY' campaign was created. For decades Burger King

had used the ‗Have it Your Way‘ slogan. The slogan was to

convince customers that they can have their burgers as they

wish. In fact in United States outlet, they even allowFigure 3.1 BK Promotion Ad





customers to choose how many pickles, onion or even the patties stack that they wish to eat.

However, nowadays not every outlet is implementing this marketing strategy such as in Malaysia,

Australia and United Kingdom. In additional, not every Burger King Outlet is using the slogan

today. In conclusion, Burger King‘s burger are not really can be easily customized. Customers c anhave their way only in the United States branches.

Burger King also claim their burger as a healthier burger as their patties were grilled

instead of fried. Based on their previous experience and today‘s healthier food demand, Burger

King‘s products wer e aimed to serve the demand. Like most of the restaurant industry, Burger

King is addressing health issues — accommodating the low-carb diets and offering more salads.

Besides the healthier food, they also provide nutritious facts for customers so that customers can

chose which burgers satisfy them the best. They call this as ‗honesty is the best policy‘ since they

will not hide the amount of calories contained in a single meal. The nutritious sheet was embedded

in their website and also Attached is the nutritious fact sheet from few Bu rger King‘s around the

world. Burger King also positively participate in the Kids Live Well initiatives by the United

States Non-Government Association (NGO) hence adding few more menu made uniquely for the

kids into its product line. For example, they have included the Fresh Apple Fries (not fried) to be

dipped with the caramel sauce. Burger King has recently reformulated their children's meals

chicken nuggets by including less sodium inside the food.

Figure 3.2 BK Flame-Grilled

Burger

Figure 3.3 BK Fresh Apple Fries





Country Salads

Unites

States of

America

Tendercrisp Garden Salad Tendergrill Garden Salad Garden Salad

Australia Garden Salad Chicken Salad Veggie Patty Garden Salad

United

Kingdom

Garden Salad Flame-Grilled Chicken

Salad

Table 3.4 BK Salads





BURGER KING STRATEGIES

Since Burger King is a restaurant which originated from Miami, Florida, we would look into

both the international strategy as well as its strategy to operate in Malaysia.

A better way to look into the many strategies that Burger King is adopting is to look into

the four elements of marketing, 4Ps – product, place, price as well as promotion.

Element Description

Product Physical product or service offered to the

customer. In the case of physical product, it

also refers to any services or conveniences

that are part of the offering.

Place Placement decisions associated with channel

of distribution that serves as the means for

getting the product to the target customers.

Promotion Related to communicating and selling to

potential consumers. Since these costs can belarge in proportion to the product price.

Table 4.1 Marketing Mix of BK





International Strategies

Place

Franchisee

Just like any fast food restaurants, Burger King is also expanding its market through franchising.

It is even advertising its franchising interest on its official website, www.bk.com. Burger King is

considered to be an interesting business to venture in. Burger King backs every franchisee with

more than 56 years of innovation and achievements and a proven business model. They are the

right brand with the right formula for success and are performing at the top of its industry.

Burger King have more than 12, 200 restaurants in all 50 states and in 76 countries and

U.S territories worldwide. They support every franchisee by offering world class support

services, including training, operations and marketing. In 2008, Fortune Magazine ranked Burger

King Corp, among America‘s 1,000 largest corporations; Ad Week names it one of the three

industry-changing advertisers within the last three decades, and it was recently recognized by

Interbrand on its top 100 ―Best Global Brands‖ list.

More Burger King Branches in U.S. as well as all around the world would mean that

more people would be able to buy a Burger King product. Thus increasing the market for Burger

King Products.

To increase the number of Burger King Outlets, Burger King Corporation is currently

recruiting multi-unit franchisees. They are looking for candidates who can acquire multiple

restaurants and subsequently grow their business by developing new restaurants (Burger King,

2011).

Look of outlets

The Miami Herald reports that same-store sales in North America declined 6% in the first

quarter, and 3.6% worldwide (The Malaysian Insider, 2011). Thus the chain plans to upgrade the

http://www.bk.com/

http://www.bk.com/





look of its restaurants with a sleek new aesthetic, anchored by a black tower that will give

locations more street-front visibility and more varied sitting options.

Figure 4.1 BK Outlet which stands out

Other Service

Besides that, certain international Burger King outlets provide other services to attract customers

to its outlet. An example is an outlet in Philippines which provides a place for its customers tocharge their mobile phones (Brian). At an era where mobile phone is one of those things people

don‘t leave home without, this is definitely a good idea to attract customers to Burger King.

Besides the good food, customers no longer need to fret when their mobile phones run out of

juice.

TowerBK‘s famous

crown





Figure 4.2 Charging booth - Burger King Philippines

Product

Updates Menu

Besides making Burger King available to more people through franchising, Burger King also has

plans to launch a menu makeover. According to a report from the Miami Herald, the second

largest fast food hamburger chain in the world is testing out more than a dozen new products

across the US. They include items like mango and mixed-berry smoothies; low-fat vanilla parfait

with granola, raspberries, blueberries and blackberries; and oatmeal with dried fruit and maple

sugar.

The story revealed that Burger King will also be making a foray into healthy fast-food

options with a new chicken and apple salad with blue cheese and an Asian chicken salad with

baby edamame, red cabbage and sesame lime vinaigrette. The chain is also experimenting with

gourmet-styled sandwiches with a home-style burger on a brioche bun with thick-cut bacon,

romaine lettuce, and spicy new pepper sauce.





Teaming up with Starbucks

Great news for Burger King as well as Starbucks lovers when Burger King announced that

Burger King Holdings Inc will sell Starbucks Corp‘s Seattle‘s Best Coffee at its U.S. restaurants

(Baertlein, Burger King to sell Starbucks' Seattle's Best Brew, 2010). This initiative will start in

autumn as Burger King revamps its morning menu as a respond to the successful launch of

McCafe coffee by McDonald‘s Corp.

The new coffee drinks come with optional flavourings and whipped topping will see for

$1 to $2.79. Seattle‘s Best will replace Burger King‘s BK Joe Brew which was introduced back

in 2005. When this joint venture was announced, Burger King‘s shares rose 0.7 percent, while

Starbucks gained 1 percent in the afternoon trading (Baertlein, Burger King to sell Starbucks'

Seattle's Best Brew, 2010).

Figure 2.3 The different Seattle's Best coffee at Burger King

Besides in the U.S., the serving of Seattle‘s Best at Burger King has extended to Burger King

Outlets in Singapore (Kpat, 2011).





Figure 4.4 Breakfast meal at Burger King Singapore

Malaysian Strategy

Place

Franchisee

There are currently three Burger King franchise holders in Malaysia. The largest operating

restaurant is managed by Cosmo Restaurants Sdn. Bhd. and outlets in KLIA are under the

management of Dewina Hosts Sdn. Bhd. Meanwhile outlets in Sabah are operated by Living

Bread Sdn. Bhd. Thus, Burger King in Malaysia is generally handled by these three franchisees.

With this in mind, take note that not all strategies are being implemented by all outlets due to its

different owners. Thus, individuals trying to open a Burger King outlet in Malaysia may not have

an option to do so, unless one has the capabilities to operate multi-units at one go.





Product

New Products

To ensure that Burger King in Malaysia can keep up with competitions from other fast food

outlets such as McDonalds and A&W, it also tries to

update its offering by creating new menus. New

available products at Burger King would ensure that

regular customers will not be bored of the items, and it

may also attract new customers to the outlet.

The latest addition for the Burger King in

Malaysia is the Spicy Tender Crisp Chicken Burger.

Succulent chicken fillet, tangy mayonnaise, fresh lettuce

and tomato slices sandwiched in between a corn dusted

bun. This particular item was made available starting

22nd July 2011 in outlets located in Peninsular Malaysia

excluding KLIA outlets.

Besides that, Burger King fans can no enjoy Burger King meals at more affordable prices

with the introduction of its new Burger King A4dables meals. These meals consists of the Spicy

Chick N‘ Crisp as well as the chick -a-licious Spicy Chick N‘ Crisp with Smoked Chicken Roll.

Prices for both items are ranged below RM10, which is considered cheap. And unlike rival fast

food outlets, these meals are available throughout the day, seven days a week.

Figure 4.5 Spicy Tender Crisp

Chicken Burger from Burger King





Figure 4.6 Burger King's A4dables meals

Delivery Service

Burger King has also joined the hype by introducing its own delivery service. Initial stages

started earlier this year; covering areas around outlets in Masjid Jamek, IOI Mall and Klang

Bukit Tinggi. Now after a few months, Burger King has expanded its delivery service to six

different states and two federal territories (Burger King, 2011).





Figure 4.7 Burger King Delivery service

Burger King‘s delivery service is available within the vicinity of those outlets stated in

Figure 3 from 11am to 11pm daily. With the exception of Majid Jamek, Alamanda, SunwayPyramid and Aeon Jusco Bandaraya Melaka which ends its delivery service at 10pm. The service

includes a variety of choice, namely Burger King‘s Value Meals which comprises of 16 different

burgers to choose from. If one is not up for a heavy meal, customers also have the the choice to

order snack sized meals as well other side dishes. They also provide meals that can cater for a

family or a group of friends to enjoy called the Buddy Meal 1 and Buddy Meal 2. Some of the

menus available can be found in Figure 6 below.

Negri Sembilan

• 9 Avenue,Nilai

Melaka

• Aeon JuscoBandaraya

Melaka

Penang

• Promenade28

Perak

• Jalan Gopeng

• Jalan Sultan

Azlan Shah

Kuala Lumpur

• Masjid Jamek

• KL Sentral

• Desa SriHartamas

Selangor

•IOI Mall

•MutiaraDamansara

•Shah Alam,Seksyen 13

•Bandar Bukit

Tinggi•Sunway Pyramid

•Setia Alam

Johor

• Jln Tun AbdulRazak

• UTM Skudai,Pontian

Putrajaya

• Alamanda





Figure 4.8 Parts of Burger King's delivery menu





Promotion

Over the past few months, we see competition between fast-food restaurants in Malaysia to gain

more sales in their particular outlet. Burger King is also adopting similar strategies.

Introduction of New Product

As can be seen in Figure 6, the

promotion includes two pieces of

Spicy Chicken Drummet for only

RM1.99 with any Value Meals

purchase of the newly introduced

Spicy Tender Crisp Chicken Burger.

RM1 Whopper

One of the most talked about promotions that was

conducted by Burger King was the one day offer to sell a

whopper for only RM1. The promotion was only made

available on the 6th October 2010. It was promoted in

major newspapers around Malaysia and news about the

promotion was circulated through blogs as well. It got so

much response from Burger King fans that they

experience an insufficient stock of RM1 Whoppers on 6 th

October 2011 (Rizal & Paiz, 2010).

Figure 4.9 Burger King promotion to introduce Spicy

Tender Crisp Chicken Burger

Figure 4.10 RM1 Whopper





Beefy Monday

Mondays at Burger King are dedicated to Beef. Its BBQ

Beefacon Cheese Single is priced at only RM3.99 with every

medium carbonated drink purchased. This enables customers

who are a fan of this burger and those who aims to have stay

within budget while still enjoying a hearty meal to purchase

it. This also will increase its sales of this particular burger on

Mondays. It would also create a sense of awareness regarding

this particular burger in Burger King.

Whopping Tuesday

While Mondays are for beef lovers, Tuesday is dedicated to

Whopper lovers all over Malaysia. Customers are able to enjoy

double the taste of a whopper on Tuesdays when buying two

medium carbonated drinks and 1 whopper. Besides that, customers

can also save more than RM10 when purchasing the meal on

Tuesdays.

Chick Wednesdays

Wednesdays are also enjoyable at Burger King,

especially for those who love chicken. Two pieces of

Grilled Chicken are priced at RM9.99 with every

purchase of two medium carbonated drinks. Thus ensure

that customers would still have a chance of enjoying a

discounted meal on Wednesdays at their favourite Burger

King Outlets.





Whopper Mania

Besides having daily offers like the one stated above,

Burger King also offers limited time offers like the one

stated in Figure 8. With every purchase of Whopper

Large Value Meal, one can get one Whopper Jr. for

free. The offer was introduced in February 2011 and

according to the caption stated below the poster which

was uploaded unto the Burger King‘s Malaysia‘s page;

it was available until the end of February.

This strategy will enable customers to always be alert

with any new Burger King offers to ensure that they do

not miss out on any interesting promotions.

Valentine’s Day

Burger King also joins in celebrations

such as Valentine‘s Day. The

promotion done was in line with the

celebration by providing free cheese

with every burger value meal purchase.

It was made available only on the day

before Valentine‘s as well as that day

itself. This would not only spread the

message of love, but also satisfy craves

of cheese lovers by offering either

American Cheese of Swiss Cheese.

Figure 4.11 Whopper Mania!

Figure 4.12 Happy Cheesy Valentine's





Ramadan 2011

This Ramadhan, Burger King

also has promotions for

breaking of fast. As can be seen,

the promotion is targeted at

groups wanting to enjoy the

break of fast together. It can be

either the family or just a group

of friends. To ensure customers

at Burger King has a healthy

break of fast, the meal includes

burgers as the main course, fries

and onion rings as side dishes

and drinks. The meal is then

completed with Burger King‘s famous Hershey‘s Pie. The promotion enables customers to enjoy

Burger King during the break of fast at a cheaper price.

Figure 4.13 Ramadhan 2011 offer





WORST CHALLENGES/OBSTACLES FACED BY BURGER KING

Since 1921, the dawn of fast food restaurants has been overwhelming and the change from

contemporary dining to fast food has been an adventure for many and as all new things will have

problems one time or another, Burger King (BK) has had its share of obstacles that it has faced

since its beginnings.

Addressing the most critical challenges, BK, putting in a nutshell, has had the most

feared problem that any company could face; administrative issues. Since BK first opened in

1953, it has had 4 owners due to the incompetence of the prior owners; finally in 2002 it went

public. Change of ownership many a time at this level is considered to be very unreliable and

unstable in the corporate world. The reason of change being mismanagement, inappropriate

marketing resulting in failure of sending out the actual message and finally disturbed franchisee

relations. Apart from internal issues, the most major external challenge it faced was poised by

fast growing competition from McDonalds. This was in the global marketplace, in Malaysia

itself BK started out in 1997 and since then expansion has been slow as compared to other fast

food chains, that itself is a major setback of BK.

Of Franchisees and Ownership

During the 1954-67 eras BK found itself on a rapid growth scale and by the time the company

was sold to Pillsbury in 1967, BK had become the third largest fast food chain in the USA. That

is when its problems first started out with its franchisees. Though the overall system of

franchising was a success no doubt, BK had failed to maintain its image consistently throughout

its franchising scheme, the main problems being the inconsistency in both food and service from

franchise to franchise. This was a major error in its scheme and thus resulting in customer

attrition. Franchisees had their own methods of conducting day-to-day operations and strategies

which basically overrides the parent company‘s operations. One franchisee had in fact reached to

such a level that they could go against the parent company and they did; in 1969 one franchisee





in Louisiana had over a dozen BK in their control and went public under the name of Self

Service Restaurant Inc. within a year they were also in control of the Chicago market before the

parent company could even get their hands on it. They didn‘t stop there the franchisees went on

to control 351 stores by 1971 and were ready to fully takeover from Pillsbury, they made an offerwhich was turned away and in retaliation they went on to capture more BK stores and put them

under the name of Chart House. In the end Pillsbury sued the franchisees for a motive on

contractual right of first refusal to any sale. This suit was indication that a new management style

was necessary, one with more control over franchisees.

It was reported in the Wall Street Journal in 2004 that over the past 15 years, BK has had

9 CEOs and that 3 of its largest franchisees had filed for bankruptcy. With all the franchising and

multiple managements and styles, BK slowly lost its vigor and by 2002 it was merely known as a

company, it became just an idea existing in the corporate world disguising itself as a major

player in the fast food industry. It had become several stand alone units working on the sinews of

franchisees and surviving with their larders.

Of Marketing and Advertisement Dilemmas

Burger King signed on with Crispin Porter & Bogusky (CP&B), an advertising agency, and

started to see its sales increase with new marketing

strategies. That was but a mere day dream for BK as in

2009 sales dropped anchor in the middle of the ocean.

Till the 3rd quarter of 2010 sales were in negative

numbers falling 2.5% to $8.7 billion. Many have put

these as adverse effects of bad advertising and over-the-

top marketing campaigns. For example one of their ads

showed a Hindu goddess ―perched on a ham sandwich‖,

very well for cultural respect, ghastly it is to find out

their little understanding and appreciation for other

religions. Another ad they made which was noted to be

Figure 5.1





disturbing to many people was aimed to appeal young men during the recession period as they

claimed that cheap is ‗chic‘ for those suffering f rom recession, thus referring to the particular

demographic group (Figure 5.1).

One TV commercial, though this time targeted for kids to buy kids meals, featured a

Nickelodeon cartoon character SpongeBob SquarePants, dancing with the King (BK mascot) to a

1990s hit ―Baby Got Back‖ surrounded by scantily dressed women whom danced shaking their

behinds, the song itself mentioning that the ―King likes square behinds‖. Parents were furious

over the indecent commercial and thus BK was under pressure, ironically BK and Viacom

(parent company of Nickelodeon) made claims that the commercial was for ‗adult‘ audiences.

Many proclaimed that BK had lost its aim on delivering the message in a cohesive manner and

rather did not deliver the message at all.

The Woes of Competition

While BK was suffering with internal issues of management and franchisees McDonalds on the

other hand was running the marathons till the end producing a winning sheet. In the US,

McDonalds has claimed the number 1 spot in the fast food industry with its sales and profits

increasing year by year. Thus it is BK‘s main rival and the funny thing is BK is number 2 in US

but is nowhere near the likes of McDonalds‘ success. Currently McDonald has over thirty-six

thousand outlets over the globe whereas BK has only around twelve thousand. In 2010

McDonalds‘ revenue was a staggering US$ 24 billion and BK‘s was only a mere US$2.5 billion,

a mountain of difference. The key factor behind McDonalds‘ success was its consistency in

managing the company and also its image. Its strategy on franchising was absolutely fabulous

and it enabled McDonalds to have a hand in operations of the franchisee, thus wherever one goesthe same service will be shown at any McDonalds‘ outlet. The marketing strategy or McDonalds

focused on ―Family Relations‖ and that was a hit which even played through recession as

compared to the young men target group of BK.





Close behind BK is the upcoming fast food chain, Wendy‘s. With its increasing

popularity and cohesive marketing and advertising, Wendy‘s has a more stable and cohesive

approach as compared to BK. Though at number 3 spot, Wendy‘s is a major threat to BK in the

US and as experts say, BK might soon just lose its number 2 spot to Wendy‘s. Just these 2companies in comparison to BK has led us to observe that BK has tough competition some

which it cannot tackle in any way possible.

Of the King’s Reign in Malaysia

Burger King in Malaysia as mentioned earlier started out in 1997 and operates under a franchisee

known as Cosmo Restaurants Sdn. Bhd. and today it has around 20 restaurants all over Malaysia.

Burger King has faced problems in Malaysia too; firstly in 1999 there was a major boycott of BK

by Malaysians due to BK building a restaurant in Israeli occupied Palestinian territory. This

boycott itself ruined an image yet to build. BK has not caught the Malaysian audience as others

like KFC and McDonalds has. The competition is now too strong to overcome, thus BK chose a

more simple method by keeping the restaurants exclusive to certain areas. This though has

worked well; success rate is not based on exclusiveness but profits. In 2008 BK announced itwould open 50 additional restaurants within 5 years, it is now 2011, 3 years have passed and yet

we barely see 20 new restaurants let alone reach 50. This slow growth indicates BK‘s lack of

sales and perhaps even strategy.

Overall it is noticed that BK has major issues to deal with and as some have dubbed it a

‗problematic company‘. Since BK went public it has found new freedom to venture a round the

globe, yet BK is still lost in its own conscience. Sales and profits are on a verge of major decline

since 2009 and even in 2011 shows no sign of it rising up. Perhaps BK should revisit itsfoundations and find the root of the problems so that they may be addressed in order to achieve

more success in the future. As for BK in Malaysia, the only way would be to tackle KFC and

McDonalds and that can only be done by using the Malaysian mentality to its advantage and

create an aligned marketing strategy. It needs to increase in the number of outlets to increase in

sales and BK should start mixing new ingredients to suit the tastes of the Malaysian nation.





REFERENCES

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