8 Things We Learned About Burger King’s New Leadership

We tend to focus more on the wacky food items and creepy mascots coming out of Burger King, but we learned this week that there are interesting things going on behind the scenes. Burger King is changing the way that it does business in a way that will either fail catastrophically or set an example for the rest of the fast-food industry.

Bloomberg Businessweek explained the company’s changes to its business model and the relatively young CEO in this week’s cover story.

  1. Burger King’s new chief executive officer, Daniel Schwartz, is only 33 years old. The only CEO in the Fortune 1000 who is younger is Mark Zuckerberg of Facebook. Many of the company’s top officers are pretty young, too: their chief financial officer and head of investor relations are both under 30.
  2. Burger King now owns only 52 of its restaurants, having sold more than 1,200 corporate-owned locations since new ownership took over in 2010. They use the 52 remaining corporate-owned restaurants for testing and training. Some experts think that’s a bad idea: by owning so few restaurants, the corporate overlords will know less about what’s going on in restaurants on the ground.
  3. In the last year, Burger King has opened new restaurants, especially abroad, increasing their total count by 1,493. New franchisees have put up the money for that expansion, so most of Burger King’s income is now royalty fees.
  4. Schwartz comes from Wall Street, not the fast-food biz. He started as an analyst after graduating from Cornell, and was the driving force behind his employer, 3G Capital, acquiring Burger King.
  5. 3G took over during the Double Cheeseburger Revolt, when franchisees actually sued the company because they couldn’t make money selling double cheeseburgers for $1.
  6. The company engaged in some very millennial-generation cost-cutting after 3G took over, with employees told to scan and e-mail documents instead of using FedEx, and to make long-distance calls with Skype.
  7. Schwartz worked on the ground in a restaurant for his first few months as CEO. Sure, it was a publicity move reminiscent of “Undercover Boss,” but he also learned a lot. For example: he had trouble keeping up with complicated orders, concluding that the menu was too complicated and needed simplifying.
  8. Burger King now employs coaches to help franchisees boost their income. The in-house consultants may have helped the company’s same-store sales rise by 2%.

Burger King Is Run by Children [Bloomberg Businessweek]

Read Comments1

Edit Your Comment

  1. Mokona512 says:

    Burger king has gone down hill significantly over the past few years. I have completely stopped going. The reason being that the locations are just too inconsistent. some will have no value menu, and others will have an overpriced value menu (no way am I spending $1.99 for a whopper jr ) (this was at a time when some burger kings were still selling the whopper jr for $1)

    Overall, the execs do not know how to run a business. The actual store locations are burger king in name only, but other than that, there is no price consistency, some locations will not accept coupons, 90% of them will not participate in and of the advertised promotions, most will charge varying degrees price inflation over the expected retail price.

    What is the point of having a franchise business if the only thing the various locations have in common is that they sell food?

    With pretty much everything being a “Price and participation may vary” label, you end up with a franchise system where it is extremely rare for any of the business locations to be honoring a TV promotion, coupon, value menu items/ prices, and pretty much pricing for everything else. In the same town you can go to one burger king and find 1 item for $1, and then have the other one less than a mile away charging $1.69 for the same value menu item (and the ones near some schools and colleges, charging $2+ for what should be a value menu item.

    PS for the whole double cheese burger thing, the profit margins were lower, but they did make money. the businesses that complained, did not account for fixed costs being limited. For the double cheese burger to become profitable, the stores had to sell many of them (which was not hard), What the managers and owners of those locations really didn’t like was that the double cheese burgers for $1 , did not carry the 600% profit margin of the whopper.