Burger King
Burger King Corporation is an American fast food chain of hamburger fast food restaurants, headquartered in Miami-Dade County, Florida. The company was founded on July 23, 1953, as Insta-Burger King, a Jacksonville, Florida–based restaurant chain. After Insta-Burger King ran into financial difficulties, its two Miami-based franchisees David Edgerton and James McLamore purchased the company in 1959. Over the next half-century, the company changed hands four times and its third set of owners, a partnership between TPG Capital, Bain Capital, and Goldman Sachs Capital Partners, took it public in 2002. In late 2010, 3G Capital of Brazil acquired a majority stake in the company in a deal valued at US$3.26 billion. The new owners promptly initiated a restructuring of the company to reverse its fortunes. 3G, along with its partner Berkshire Hathaway, eventually merged the company with the Canadian-based coffeehouse chain Tim Hortons under the auspices of a new Canadian-based parent company named Restaurant Brands International.
Burger King's menu has expanded from a basic offering of burgers, french fries, sodas, and milkshakes to a larger and more diverse set of products. In 1957, the "Whopper" became the first major addition to the menu, and it has since become Burger King's signature product. Conversely, Burger King has introduced many products that have failed to catch hold in the market. Some of these failures in the United States have seen success in foreign markets, where Burger King has also tailored its menu for regional tastes. From 2002 to 2010, Burger King targeted the 18–34 male demographic with larger products that often carried correspondingly large amounts of unhealthy fats and trans-fats. This tactic would eventually damage the company's financial underpinnings and cast a negative pall on its earnings. Beginning in 2011, the company began to move away from its previous male-oriented menu and introduce new menu items, product reformulations, and packaging, as part of its current owner 3G Capital's restructuring plans of the company.
As of December 31, 2018, Burger King reported having 17,796 outlets in 100 countries. Of these, nearly half are located in the United States, and 99.7% are privately owned and operated, with its new owners moving to an almost entirely franchised model in 2013. Burger King has historically used several variations of franchising to expand its operations. The manner in which the company licenses its franchisees varies depending on the region, with some regional franchises, known as master franchises, responsible for selling franchise sub-licenses on the company's behalf. Burger King's relationship with its franchises has not always been harmonious. Occasional spats between the two have caused numerous issues, and in several instances, the relations between the company and its licensees have degenerated into precedent-setting court cases. Burger King's Australian franchise Hungry Jack's is the only franchise to operate under a different name due to a trademark dispute with a similarly named restaurant in Adelaide, South Australia, and a series of legal cases between the two.
History
The predecessor to Burger King was founded in 1953 in Jacksonville, Florida, as Insta-Burger King. After visiting the McDonald brothers' original store location in San Bernardino, California, the founders and owners, who had purchased the rights to two pieces of equipment called "Insta-machines", opened their first restaurants. Their production model was based on one of the machines they had acquired, an oven called the "Insta-Broiler". This strategy proved so successful that they later required all their franchises to use the device. After the company faltered in 1959, it was purchased by its Miami, Florida, franchisees, James McLamore and David R. Edgerton. They initiated a corporate restructuring of the chain, first renaming the company Burger King. They ran the company as an independent entity for eight years, before selling it to the Pillsbury Company in 1967.Pillsbury's management tried several times to restructure Burger King during the late 1970s and the early 1980s. The most prominent change came in 1978 when Burger King hired McDonald's executive Donald N. Smith to help revamp the company. In a plan called "Operation Phoenix", Smith restructured corporate business practices at all levels of the company. Changes included updated franchise agreements, a broader menu and new standardized restaurant designs. Smith left Burger King for PepsiCo in 1980 shortly before a system-wide decline in sales.
Pillsbury's Executive Vice President of Restaurant Operations Norman E. Brinker was tasked with turning the brand around, and strengthening its position against its main rival, McDonald's. One of his initiatives was a new advertising campaign featuring a series of attack ads against its major competitors. This campaign started a competitive period between Burger King, McDonald's, and top burger chains known as the Burger wars. Brinker left Burger King in 1984, to take over Dallas-based gourmet burger chain Chili's.
Smith and Brinker's efforts were initially effective, but after their respective departures, Pillsbury relaxed or discarded many of their changes and scaled back on construction of new locations. These actions stalled corporate growth and sales declined again, eventually resulting in a damaging fiscal slump for Burger King and Pillsbury. Poor operation and ineffectual leadership continued to bog down the company for many years.
Pillsbury was eventually acquired by the British entertainment conglomerate Grand Metropolitan in 1989. Initially, Grand Met attempted to bring the chain to profitability under newly minted CEO Barry Gibbons; the changes he initiated during his two-year tenure had mixed results, as successful new product introductions and tie-ins with The Walt Disney Company were offset by continuing image problems and ineffectual advertising programs. Additionally, Gibbons sold off several of the company's assets in an attempt to profit from their sale and laid off many of its staff members.
Burger King's headquarters experienced major damage in 1992 from Hurricane Andrew.
After Gibbons's departure, a series of CEOs each tried to repair the company's brand by changing the menu, bringing in new ad agencies and many other changes. The parental disregard of the Burger King brand continued with Grand Metropolitan's merger with Guinness in 1997 when the two organizations formed the holding company Diageo. Eventually, the ongoing systematic institutional neglect of the brand through a string of owners damaged the company to the point where major franchises were driven out of business, and its total value was significantly decreased. Diageo eventually decided to divest itself of the money-losing chain and put the company up for sale in 2000.
The 21st century saw the company return to independence when it was purchased from Diageo by a group of investment firms led by TPG Capital for US$1.5 billion in 2002. The new owners rapidly moved to revitalize and reorganize the company, culminating with the company being taken public in 2006 with a highly successful initial public offering. The firms' strategy for turning the chain around included a new advertising agency and new ad campaigns, a revamped menu strategy, a series of programs designed to revamp individual stores, a new restaurant concept called the BK Whopper Bar, and a new design format called 20/20. These changes successfully re-energized the company, leading to a score of profitable quarters. Yet, despite the successes of the new owners, the effects of the Great Recession weakened the company's financial outlooks while those of its immediate competitor, McDonald's, grew. The falling value of Burger King eventually led to TPG and its partners divesting their interest in the chain in a US$3.26 billion sale to 3G Capital of Brazil. Analysts from financial firms UBS and Stifel Nicolaus agreed that 3G would have to invest heavily in the company to help reverse its fortunes. After the deal was completed, the company's stock was removed from the New York Stock Exchange, ending four years as a public company. The delisting of its stock was designed to help the company repair its fundamental business structures and continue working to close the gap with McDonald's without having to worry about pleasing shareholders. In the United States domestic market, the chain fell to third place in terms of same-store sales behind Ohio-based Wendy's. The decline was the result of 11 consecutive quarters of same store sales decline.
In August 2014, 3G announced that it planned to acquire the Canadian restaurant and coffee shop chain Tim Hortons and merge it with Burger King with backing from Warren Buffett's Berkshire Hathaway. The two chains retained separate operations post-merger, with Burger King remaining in its Miami headquarters. A Tim Hortons representative stated that the proposed merger would allow Tim Hortons to leverage Burger King's resources for international growth. The combined company became the third-largest international chain of fast food restaurants. The deal led to a controversy over the practice of tax inversions, in which a company decreases the amount of taxes it pays by moving its headquarters to a tax haven, a country with lower rates, but maintains the majority of their operations in their previous location. As a high-profile instance of tax inversion, news of the merger was criticized by U.S. politicians, who felt that the move would result in a loss of tax revenue to foreign interests, and could result in further government pressure against inversions.
In 2019, Burger King reported that it planned to close up to 250 low-volume locations per year, with closures coming into effect in 2020.
In February 2021, Burger King began testing a customer loyalty rewards program called "Royal Perks" in Los Angeles, Miami, New York City, New Jersey, and Long Island, New York.
Following the 2022 Russian invasion of Ukraine, many companies, including Burger King, faced growing pressure to halt operations in Russia. In March 2022, Burger King claimed to have suspended all its corporate support, including operations, marketing, supply chain, investments and expansion in Russia in response to the invasion of Ukraine, including support to the more than 800 fully franchised restaurant chains in Russia managed by a local master franchisee. However, the International Consortium of Investigative Journalism revealed that Burger King retained its stake in the Russian franchises through an offshore joint venture with the Russian state-owned VTB Bank and a Ukrainian investment firm linked to corrupt deals with Ukraine's former pro-Russian leader.
In October 2023, Tom Curtis, president of Burger King U.S. & Canada, announced a new store design at its annual franchisee convention in Canada, branded "The Sizzle". The company planned to remodel existing Burger King locations with a new look inside and outside, to tackle slowing business after the 2020 coronavirus pandemic. The overhaul plan included more kiosks, dedicated pickup areas for mobile app orders, food-ordering platforms like Doordash, Uber Eats, and Grubhub, and an improved drive-thru service. In 2023, Burger King remodeled several locations in the United States with the "Sizzle" concept. While the remodel plan was an overhaul to the entire restaurant, Burger King was also investing in a "Refresh" initiative in order to replace equipment and upgrade technologies. By the end of 2023, Burger King completed 264 remodels and exited the year with 46% of its restaurants with a modern image.