Imitation is the sincerest form of flattery, and it turns out it can be a shot in the arm for business, too. After losing its crown as the number-two burger chain in the country to Wendy’s, Burger King fought back and dumped $750 million into a massive makeover. Its efforts seem to be paying off. The company announced this week that its quarterly net income shot up by a super-sized 60%.
But while nobody’s going to mistake BK’s former plastic-masked King mascot (which it abandoned last year in favor of celebrity endorsers) for McDonald's Ronald or Wendy’s eponymous spokes-redhead, there’s something striking about the changes Burger King made to get customers back in the door and at the drive-through window: They look a lot like the tactics both McDonald’s and Wendy’s have been using for some time now.
When its primary market was young men, Burger King didn’t have to worry as much about atmosphere. But to court a bigger — and freer-spending — customer base, the company had to overhaul its restaurants, right down to workers’ uniforms (now a trendier gray) and the containers for its signature Whoppers (cardboard, not paper). Locations were overhauled with more modern, upscale elements like leather armchairs and warm lighting. The new look also borrows from the fast casual chains that have been eating fast food‘s lunch, incorporating privacy partitions and moveable chairs and tables.
It’s a good idea; so good, in fact, that McDonald’s had it last year and began a four-year, $1 billion overhaul of its restaurants in the United States. The changes McD’s are making are similar; it’s going for a more upscale, less industrial look. Warmer lighting and sectioned-off seating areas are also on the remodeling roster.
Bigger, Less Burger-Centric Menu
Burger King executives told investors that new beverages like blended coffee drinks and smoothies are a big hit with customers, along with new chicken menu items, salads and wraps. It’s a page taken from the playbook of BK rival Wendy’s, which clawed its way past Burger King into the number-two spot among hamburger giants, an achievement analysts said was largely due to introducing higher-quality, pricier items like specialty salads and chicken club sandwiches.
Wendy’s itself was copying a McDonald’s tactic; the Golden Arches began rolling out higher-priced beverages like smoothies and coffee drinks at the tail end of the recession to snare customers downgrading from brands like Starbucks. It also took its menu from simple to something-for-everybody, specialty salads, snack wraps and an Angus beef burgers over the last decade.
Push Into International Markets
McDonald’s has a huge international presence, and BK is making a serious play for customers outside the U.S. Four in five of Burger King’s new restaurants in the past year have opened in Europe, the Middle East or Africa, and it’s continuing to pursue overseas growth on a grand scale. In the most recent quarter, it hammered out plans to bring several hundred restaurants to Russia and more than 1,000 to China over the next several years.
Burger King’s existing overseas efforts appear to be paying off; sales at restaurants in Latin America and the Caribbean rose 10.5%, compared to 4.4% in the U.S. and Canada. But this strategy isn’t without risk. McDonald’s earnings missed analysts’ expectation because it suffered a drop in sales at foreign outlets because of a slumping economy, worry about the financial crisis in Europe and the strong American dollar.