Burger King showed a healthy profit in its first quarter, but a 3% drop in same-store sales in the U.S. and Canada, which North American President Alex Macedo attributed in part to marketing messages that he called "unbalanced." He said that the chain was able to regroup its marketing late in the quarter, making it possible to strike the right chord in its U.S. marketing with a balance of value promotions and premium products.
Mr. Macedo credited its mix of promoting value products like its $1.29 Whopper Junior and premium limited-time products like the $3.99 turkey burger and the $4.29 Chipotle Whopper as helping the chain stem the sales slide late in the quarter. The company, he said, was also able to bring in a broader audience including women and people over 50.
He said that this year's marketing mix will be much more even, in that it's not dedicating a huge portion of marketing dollars to specific quarter like it did last year for a menu overhaul. He also said that the company plans to roll out more menu innovations this year.
In fact, Burger King warned that April sales will be difficult to match because of the menu. The chain launched and advertised it biggest-ever menu rollout -- introducing McDonald's-esque products like smoothies, frappes and snack wraps -- in April last year with a campaign that included ads featuring Jay Leno, David Beckham and an ill-fated spot with Mary J. Blige.
Overall, the company reported global same-stores sales down down 1.4% in the first quarter versus a 4.6% increase in the first quarter of 2012. The 3% falloff in same-store sales in the U.S. and Canada compares to a 4.2% hike in the first quarter of 2012. Like many fast-food chains, Burger King faced difficult first-quarter comparisons because of last year's unusually mild winter weather, which brought more customers to the stores than is typical for the season.
Despite a slide in sales, Burger King's profits soared, thanks to cost-cutting of restaurant expenses. Net income rose to $35.8 million in the first quarter, up from from $14.3 million last year.
The new menu campaign was created by Mother, which in February became its lead agency. It also recently named Alison Brod PR to handle consumer public relations. The company last summer began sniffing around other agencies, enlisting shops such as Pereira & O'Dell to work on projects. Burger King then in the fall began a somewhat more formal search process to find an agency to help it develop more big-idea work.
Fast -food chains so far this year have been pushing continual value-centric marketing, in part in hopes of mitigating tough comparisons because of last year's weather. McDonald's, by far the biggest fast-food chain, focused heavily on value promotion in the first quarter, particularly its dollar menu, even adjusting its marketing calendar late last year to accommodate the value messaging. Wendy's this year has also been promoting a value message, but has been focusing more on value as "more than a low price," according to a recent ad. Its new Right Price, Right Size menu has been marketing prices that range from 99 cents to $1.99.
Burger King also switched up its management in the quarter, naming Mr. Macedo, a former marketing executive, as president of North America. Bernardo Hees, current chief exec of Burger King, will take on the role of chairman this summer after he moves on to become CEO of H.J. Heinz, once the acquisition of the ketchup company by Berkshire Hathaway and 3G Capital, the Brazilian firm that acquired Burger King in 2010, is complete.