CHICAGO (AdAge.com) -- Burger King Corp. let franchisees have it their way -- as long as they were willing to vote for corporate's way.
After losing a vote over whether to introduce a dollar double cheeseburger for four months, the corporate office, in essence, told its franchisees this: If you voted "yes" the first time, you're done. If you voted "no," you need to try again, and if you don't vote again, it'll essentially count as a yes.
But the company threw its operators one very juicy bone: a promise for less offensive advertising in the future.
Battling a sales slide
Burger King is battling a sales slide that franchisees say started at the end of March and continued through June. Corporate's suggestion to offer a double cheeseburger for $1 -- an item that didn't make it through testing in 2007 because it wasn't profitable -- is a Hail Mary pass that would seem to confirm those reports. After all, even McDonald's (known to have more streamlined operations) pulled its double cheeseburger from the dollar menu last fall because franchisees found it wasn't making a buck. Burger King's version of the sandwich is more costly by all accounts, because the chain uses thicker patties.
Regarding the dollar-burger vote, Burger King spokeswoman Lauren Kuzniar said that "many product and menu options are always in development and under consideration." She added that the chain will let media and consumers know "when any final menu or value decisions are made." At press time, the outcome of the vote was unclear.
Franchisees have additionally expressed concern over existing consumers trading down and devaluing the brand. "We have the Cadillac burger," one franchisee said. "Why should we give it away? It tastes better and we need to take advantage of that."
Burger King won't report the current quarter's results until Aug. 20. But UBS analyst David Palmer issued a note this week pertaining to the vote, and projected that Burger King's North American same-store sales would be down between 2% and 3%. Four franchisees polled over the last month all reported greater sales declines, some in double digits for May and June. By comparison, McDonald's is expected to post 3% to 4% same-store sales gains over the same period.
Concern over advertising
Burger King called for a vote on a four-month promotion of a double cheeseburger for a dollar last Friday, and called for all franchisees to vote by Wednesday. Operators generally have at least 10 business days to consider such proposals. Then, responding to blowback over the weekend, Burger King announced Monday that it would tone down the sexual content of its advertising. Franchisees have repeatedly expressed concern over sexually suggestive advertising and other generally offensive efforts such as the "Texican Whopper," which have a potential to scare off customers. But Burger King's internal message may have gotten lost, as the chain generated intense controversy the same day over in-store advertising in Spain that depicted Hindu goddess Lakshmi atop a ham sandwich.
The four-month proposal was struck down on Wednesday. Franchisees say that the corporation immediately demanded a re-vote, shortening the promotional window to six weeks, and putting forth an oddly cobbled set of rules: only "no" votes could vote again. Anyone who had voted "yes" would be counted as in favor. And the window to re-vote was condensed to about 36 hours. Anyone failing to vote would diminish the overall voting pool, likely giving those "yes" votes more weight. The deadline for voting was 3 p.m. Eastern time today.
'Unintended public narrative'
Shortly following the re-vote mandate, Burger King disseminated a meandering memo, attributed to Chief Marketing Officer Russ Klein, reiterating the promise for less offensive ads, among other things. Mr. Klein acknowledged that some ads had caused offense and have been damaging to the brand. "Burger King Corporation acknowledges the regrettable but unintended public narrative, reflecting perceptions of some amount of our patrons, are the gratuitous or offensive use of sexual innuendo in a series of various advertisements even some outside the U.S., that have inadvertently reflected negatively on the brand -- and that the advertising will be managed more conservatively with a keen sensitivity accordingly," Mr. Klein wrote.
He continued that "Alex Bogusky and I have a clear and mutual understanding of the need for the brand to tone down creative execution in this regard. ... While what is a decidedly more edgy/breakthrough approach to our brand advertising will remain."
Franchisees interviewed for this story admitted that the meandering memo was received with skepticism and confusion. "What does that mean?" another franchisee said. "You tell me."
Ms. Kuzniar said that Burger King doesn't comment on internal memos as a company policy. A call to Crispin, Porter & Bogusky, Burger King's agency, was not immediately returned.