Review of the Burger King Fast Food Chain franchise opportunity
Although Burger King has never reached the global dominance and almost universal brand recognition of its main rival McDonalds, the fast food chain is still a staple in many of the towns, cities and service stations across the country. In fact, the UK alone is home to around 500 Burger King locations, compared to around 800 for KFC and an impressive 1,200 for McDonalds. Known for the Whopper Sandwich, the Quarter Pound King and the Double Whopper as well as excellent fries and a choice of sides, the burger restaurant serves thousands of customers every day.
To see how the brand developed, and to find out how it has tried to keep pace with its mammoth competition, we’re taking an in-depth look at the history of Burger King and how its developed, evolved and succeeded over the years.
How did Burger King franchise start?
In 1950s America, families were getting busier, the number of cars on the road was increasing and more and more people had a little extra money to play with. As a result, fast food outlets became incredibly popular and many of today’s best-known brands are able to trace their history back to this vibrant decade.
Like McDonalds, KFC, Pizza Hut and many other well-known franchises, Burger King was founded in the 1950s. Starting life as Insta-Burger King, it was the brainchild of entrepreneurs Keith J. Kramer and Matthew Burns who opened the first restaurant in Jacksonville, Florida in 1953. The restaurant used ‘insta-machines’ to help get their food out quickly and soon achieved a good reputation in the Jacksonville area.
The model was successful and soon Insta-Burger King began to franchise. Two of the earliest investors were James McLamore and David Edgerton who bought themselves a franchise in Miami, Florida in 1954. McLamore had previously visited the McDonald brothers’ original burger stand in San Bernardino, California and had spotted the huge potential of fast food outlets in post-war America.
Burger King is born
Although Insta-Burger King was moderately successful, in 1959 the Kramer-Burns operation faltered. Conversely, James McLamore and David Edgerton had enjoyed considerable success and had even innovated on the tried and tested cooking methods prescribed by the franchise, introducing the ‘flame-broiler’ after just a few years.
When Kramer and Burns ran into financial difficulty at the end of the 1950s, McLamore and Edgerton swooped in and bought the founders out of the business. By 1961, the eatery had been renamed Burger King and its signature burger, The Whopper, was beginning to make waves across the US. In 1963, the franchise opened its first international restaurant in Puerto Rico. In 1967, the Burger King Corporation was bought by the Pillsbury Company for $18 million. At this point the brand was the third largest fast food chain in the US and, with its 274 locations, was well on its way to becoming the second biggest fast food brand.
Burger King and franchising
Like many of the other successful fast food chains of the day, Burger King used franchising to expand its operations. Allowing for maximum growth with minimal investment, the business model was a popular choice for entrepreneurs who wanted to corner the market fast. Unlike McDonalds, which used single-store franchising, Burger King opted to give franchisees large geographic territories. Within these territories franchisees were able to do largely as they pleased, opening as many restaurants as they wanted and even selling sections of their territory on to other franchisees.
Although this approach allowed the brand to grow incredibly quickly, it also meant that McLamore and Edgerton struggled to maintain consistency across all their franchised stores. This was a major problem for new owners Pillsbury, who soon attempted to tighten up operations and implement higher standards across all franchises.
One of the biggest challenges for the new owners came in 1970, when Billy and Jimmy Trotter, franchisees from Louisiana, bought up the lucrative Chicago territory before Pillsbury had had time to make an offer of their own. The Trotters continued to cause problems for the brand, and by 1971 they owned a whopping 351 stores worth a combined total of $32 million. In 1972, they attempted to purchase Burger King from Pillsbury for $100 million. When this was turned down they continued to acquire restaurants, snapping up nine new locations in Boston and 13 in Houston.
New Burger King franchisor
In 1978, Burger King poached McDonalds executive Donald N. Smith from their rivals. He quickly began resetting the balance between franchisor and franchisee, bringing in a number of new rules to prevent franchisees from becoming too powerful.
For a start, franchisees were no longer able to own restaurants that were more than an hour’s drive from their homes. It was hoped this would help with absentee ownership and prevent any one franchisee from gaining too many locations. Franchisees were also no longer allowed to own franchises in other chains, a move that was designed to increase loyalty among the Burger King team.
These measures, combined with a new advertising campaigned aimed at children and range of new menu items, helped Burger King to turn its fortunes around. By 1980, sales were up 15% and the chain was once more making gains across the US.
Rivalry with McDonalds
Throughout its long history, Burger King has continually been compared to fast food giant McDonalds. In the 1980s, the brand decided to take advantage of this rivalry and produced an advertising campaign that specifically said Burger King burgers were better than McDonalds burgers. This sparked the famous ‘burger wars’ and helped to boost Burger King’s profile in the process.
However, once the architect of the burger wars, Norman E. Brinker, departed the company, Burger King’s fortunes began to decline once again. In 1989, the brand was acquired by British entertainment conglomerate Grand Metropolitan. Grand Metropolitan dramatically increased Burger King’s UK presence by buying up British burger chain Wimpy, which at the time had 381 outlets in the UK and a further 148 worldwide. By the summer of 1990, around 200 Wimpy restaurants had been converted into Burger Kings.
The troubled 1990s
The brand then began to focus on growing its international operations, opening restaurants in Hungary, Mexico, Poland, Saudi Arabia, Israel, Oman, the Dominican Republic, El Salvador, Peru and New Zealand in the first half of the 1990s. The brand then launched a sustained campaign to improve its image around the world. During this period, it increased the size of its burgers, launched a successful kids club and introduced a value menu for budget-conscious dinners.
In 1997, Grand Metropolitan merged with Guinness to form Diageo plc. Diageo continued to push the brand to rival McDonalds, introducing a Big King Burger to rival the Big Mac and running a multi-million-dollar ad campaign promoting the company’s French fries. However, the brand continued to experience problems with its image and with consistency across all franchises and many franchisees complained that Diageo was neglecting Burger King.
In the early 2000s, Burger King was sold once more, this time to TPG Capital for $1.5 billion. TPG Capital introduced a number of innovations to Burger King including the Whopper Bar and the ‘Whopperista’. With consistent investment the brand once more began to pick up and in 2010 was sold to 3G Capital for $3.2 billion. Today, there are around 15,667 Burger King restaurants around the world, the vast majority of which are owned and run by franchisees.
To find out how you can invest in a franchise of your own, or to learn more about the franchise model, explore our site today.
Source: Franchise UK