What's eating Burger King

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Burger King's biggest problem is not advertising, but what lies beyond the bun.

In recent years the chain has seemed unable to settle on a strategy or an executive lineup-current CEO Brad Blum is No. 19 in its 50-year history. Advertising has often been the scapegoat for sliding sales, with four shops getting axed in the last four years. But insiders say the fault for Burger King's 22% decline in customer traffic over the past six years lies with inconsistent quality, poor customer experience and lack of focus.

The burger giant's decision this week, first reported by AdAge.com, to make nontraditional hotshop Crispin Porter & Bogusky its lead marketing agency shows some recognition of the real nature of its problems. While Crispin Porter is nominally an ad shop, its campaigns typically go beyond traditional media to address ways in which a company interacts with its customers.

brand problem

"This is a brand problem, not an advertising problem, and that's what they've got to get resolved," said Kevin Keller, professor of marketing at the Amos Tuck School of Business at Dartmouth College.

"It's a continual issue with [the company] that it's always the agency's fault and 99% of the time it's the fault of the brand's leadership," said one longtime franchisee close to the situation. "We've been trying to have this CEO explain the strategy for this brand and it's about as clear as mud to us."

What weighed most heavily on Burger King has been the restaurant experience. With every management change has come new menus, new equipment and new costs for operators as customer satisfaction wanes.

"What I want is something that will turn our sales around, if it's marketing, if it's advertising, new products or operations," said another franchisee. "All of those things have to click for things to happen."

Among the top four burger chains, Burger King has declined to its lowest rating in overall quality perceptions over the past year, while the other three have improved customer satisfaction scores, according to data from Sandelman & Associates. Compared to the fourth quarter of 2002, Burger King's overall quality rating fell four percentage points, according to QuickTrack data that asks consumers who have visited the chain within three months to rate their experience based on food, service, atmosphere and price. By contrast, McDonald's gained two points, Hardee's gained four points and Wendy's improved by nine points.

In replacing WPP Group's Y&R Advertising after nine months, Burger King put much of the blame on its advertising. "The creative team at Young & Rubicam failed to produce ads that would turn around decreasing sales during the agency's nine-month run with Burger King," said Mr. Blum in a conference call Jan. 22. But it's also acknowledging that it needs to reinvent marketing and its image from the ground up.

rededication

"There has been a-I wouldn't say a shift in strategy-but a rededication to the core consumer," said Mr. Blum. To accomplish that, "We think our best chances to be set up for success are with Crispin Porter & Bogusky," said Russ Klein, Burger King's chief marketing officer.

Mr. Blum cited Crispin Porter's success on traditional and nontraditional campaigns for BMW's Mini, Molson beer and Ikea as examples of the agency's ability to build brands. He said President-CEO Jeff Hicks will lead the account while Alex Bogusky, executive creative director, will handle creative development. "Anybody who's watched the pop-culture connection they've made on behalf of their current clients ... would certainly be impressed on how they've been able to do great ground-up brand building," Mr. Blum said.

Indeed, Crispin Porter indicated a full-scale makeover is in the works for Burger King. "Advertising in the traditional form is less and less effective," said Mr. Bogusky. He acknowledged that while Burger King knows that, it does not yet "have our processes and systems for making sure that of the dozens and dozens of consumer touch points, we either are in there doing something really charming or we're getting out of the way."

Time is running out for Mr. Blum, now in his 13th month as CEO and rapidly approaching an 18-month deadline to achieve a turnaround. Linda Fox, president of the Burger King's mid-America franchisee association, representing 450 restaurants, urged for patience with this regime, despite its flagging sales. "I think these guys have done a remarkable job of filling the pipeline with new products, focusing on operations and training and getting things right. You do not change the restaurant or perceptions of the guest in 12 months."

contributing: claire atkinson, hillary chura and lisa sanders

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