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Responding to its powerful franchisee group, Burger King Corp. is stepping up its emphasis on new-product development while archrival McDonald's Corp. is switching to more regional menu items and promotions.


"We're telling Burger King we can't forever do 99 cent Whoppers and chicken and Big Kings and expect to stay in business," said Mike DeRosa, president of the National Franchisee Association, the national association of BK franchisees.

More than 90% of the chain is operated by franchisees.

The budget for research and development is being doubled, Burger King executives last week told franchisees at the operators' annual meeting.

While Burger King has turned around its flagging business in the last three years via a focus on a limited menu/combination meals and creative from Ammirati Puris Lintas, New York, new products need to be in the pipeline, Mr. DeRosa said.


A new breakfast product is already in the works for the chain, as is the long-awaited launch of its reformulated french fries.

The fries had been code-named Stealth and will be linked to the Hasbro Mr. Potato Head toy character.

"Next year, new product will be really top of mind," Mr. DeRosa said. He added he does not anticipate major shifts in ad strategy or spending.

Burger King spent $362 million on measured media last year compared with McDonald's $600 million as tracked by Competitive Media Reporting.

McDonald's doesn't expect to launch any national products next year and will instead offer regional product and price promotions in tandem with national brand advertising via DDB Needham Worldwide, Chicago, for adults and Leo Burnett USA, Chicago, for children.

No ad spending changes are anticipated, a McDonald's spokes-man said.


"We want to nationally put the focus on our core equity menu -- the Big Mac, Quarter Pounder, Egg McMuffin, etc.," the spokesman said.

One new regional sandwich in development is the MBX, McDonald's Big Extra, with an oval patty larger than a quarter pound, lettuce, tomato, ketchup and mustard. The company is also looking at new breakfast items, including bagels, and possibly snack items.

A meeting with McDonald's operators late last week focused in part on the burger giant's 10-year tie-in with Walt Disney Co. that began last January. Franchisees have griped they haven't been getting enough out of the deal, according to an internal company document.


That may be changing, though. In a promotion starting Dec. 1 that is linked to Disney's movie "Flubber," McDonald's is offering peel-off coupons on french fries worth up to $3 for an adult ticket at a children's price. It starts after "Flubber's" opening weekend.

Also, the day after Thanksgiving, McDonald's launches a Happy Meal promotion linked to the re-release of Disney's "The Little Mermaid." For the first time,

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