Burger King builds a worldwide empire

2007-06-26T00:00:00Z Burger King builds a worldwide empireDOREEN HEMLOCK
South Florida Sun-Sentinel
nwitimes.com
June 26, 2007 12:00 am  • 

FORT LAUDERDALE, Fla. -- In Turkey, there's home delivery and in Mexico, valet parking. In China, Whoppers come with spicy "mala" sauce and in South Korea, with sweet and sour "bulgogi" topping.

Burger King is finally getting serious about building a worldwide empire.

After decades of ownership changes and management shake-ups, the Miami-based restaurant chain is stabilizing as a stand-alone company with its stock traded on Wall Street. Now, its executive team feels steady enough to focus on lagging growth overseas, aiming to narrow the gap with McDonald's Corp. and other rivals who boast a huge head start outside the United States.

"If leadership keeps changing, it's hard to take a strategy deep," said James F. Hyatt, chief global operations officer from his Miami office. "It takes this continuity component to go international."

Analysts say Burger King's global expansion makes sense, since the U.S. market is so saturated with fast-food outlets. But they warn the company faces fierce competition abroad and will need to carefully adapt to local markets to prosper. Rivals have stumbled by failing to recognize, for example, that the restaurant is more of a midpriced, family gathering spot -- rather than inexpensive drive-through -- in China and many other developing countries.

"You have to be successful the first time around. If you lose your business, you won't get it back," said Darren Tristano, a restaurant industry analyst at Technomic consultants of Chicago.

Heeding the warnings, Burger King executives say they aim to build slowly overseas, with a focus on regions where they have some presence and success -- especially in Europe and Latin America. They figure it could take a decade or more to reach an even split between U.S. and foreign outlets.

That would still put the chain far behind larger McDonald's, which already has most of its restaurants abroad. Indeed, McDonald's rang up almost as much in Europe last year -- $7.6 billion -- as Burger King did in its core market in the United States, where it has numerous locations in the Calumet Region.

. And McDonald's ad budget globally far outstrips Burger King's, too.

"We don't have this mantra that we need to be bigger than McDonald's. We don't have that chase," Hyatt said. "Right trumps fast. You want the brand that you have to be perceived as excellence."

Burger King's plan is to carefully research each overseas market and customize for it.

In Turkey, for example, almost 20 percent of business is home delivery, requiring a call center. And in Mexico City, where parking spaces are limited, at least one outlet turned to valets to accommodate clients.

Menus also differ widely by nation. Besides distinct sauces on Whoppers, Chinese customers can order bone-in chicken, Koreans shrimp burgers and Australians sandwiches with beet-root, for instance.

"We're the `Have It Your Way' place," Hyatt said. "We're about empowerment."

Executing the plan might have been easier years back, when competition was less intense and America's image abroad less tarnished, analysts say.

But Burger King's former owners, Grand Metropolitan, through the 1990s used Burger King and its U.S. base "as a cash cow," milking it for money instead of reinvesting to go global, said Chris Muller, professor of hospitality management at the University of Central Florida and a former consultant to Burger King on pricing strategy.

That puts the world's No. 2 hamburger chain in tougher position now to project its brand overseas.

"In a time of rampant anti-Americanism, if they plan on growing as an American company, that's very limiting," Muller said. "It will be easier to operate with local faces and local partners."

Burger King restaurants worldwide

Total worldwide: 11,201

United States and Canada: 7,483

Europe, Middle East and Africa: 2,198

Asia-Pacific: 625

Latin America and the Caribbean: 859

(Numbers for both company- and franchise-owned restaurants are valid as of March 31 for worldwide and U.S.-Canada, and as of Dec. 31 for Europe, Asia and Latin regions. Sales are for the trailing 12-month period.)

(EDITORS: STORY CAN END HERE)

Burger King chronology

1954: Started in Miami

1957: Whopper sandwich introduced.

1967: Sold to Pillsbury.

1974: "Have it your way" slogan launched.

1989: Grand Metropolitan buys Pillsbury.

1997: Grand Metropolitan merges with Pillsbury to form Diageo.

2002: Sold to private equity investors.

2006: Goes public on the New York Stock Exchange.

2007: More stock offered on Wall Street.

(EDITORS: STORY CAN END HERE)

Burger King worldwide annual sales

Total worldwide: $12.9 billion

United States and Canada: $8.6 billion

Asia-Pacific, Europe, Middle East and Africa: $3.4 billion

Latin America and the Caribbean: $838 million

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