Burger King's Menu Overhaul Goes Far Beyond Burgers
Burger King is conducting a major overhaul of its menu in an effort to reverse sliding sales and broaden the brand's appeal.
The Miami-based quick-service chain is testing a variety of new menu offerings, including fruit smoothies — which have been ringing up healthy sales increases in the QSR segment — specialty coffees, low-fat parfaits, oatmeal with dried fruit, and salads.
Observers say Burger King's strategy is an attempt to diversify the chain's longtime core demographic, which for years focused on the 18- to 34-year-old burger-eating male.
"It's overdue," said Dennis Lombardi, executive vice president of foodservice strategies for Columbus, Ohio-based WD Partners. "The strategy of going to the male demographic got a serious dent in it when the economy went south. That group has high unemployment. McDonald's success has been very apparent by broadening its demos."
"I'm glad Burger King is [updating its menu] now, and I wonder why they didn't do it two years ago," Lombardi said. "It's not surprising. The whole industry is watchful of what works for others and then comes out with the parallel models."
Preparing for a late Thursday afternoon conference call, the 12,251-unit burger chain is coming off two struggling quarters as global same-store sales fell 2.8 percent in the first quarter of 2011 and 3.7 percent in the fourth quarter of 2010.
For the most part, not much detail is known about the ongoing menu product testing, according to Tony Versaci, chairman of the burger chain's National Franchisee Association.
"They've been very, very, very secretive," said Versaci, president and chief executive of the 17-unit Burger King franchisee Multi King Corp. of Michigan and Illinois. "They haven't told us anything."
However, by broadening its menu selection, offering non-burger items, and reaching out to women and families, Burger King could tap into a consumer audience that it didn't appeal to past years, said Bonnie Riggs, a restaurant industry analyst with The NPD Group, a Port Washington, N.Y.-based market research company.
"They've always had the 18 to 34 super fans," she said. "But what did they do to attract families with kids? They didn't compete in that area. This new [Burger King] management decided to broaden the demographic profile and it's a good move on their part."
Burger King's move to introduce smoothies taps into the current quick-service trend of specialty beverages and snacks, said Darren Tristano, executive vice president of Technomic Inc.
"Chains are focusing on beverages and snacks like oatmeal," Tristano said. "They're hitting the complimentary food items and hitting the snacks."
Sales for smoothies in the quick-service category increased by double digits during a 12-month period that ended May 31. At the same time, specialty coffees, such as iced coffees and frappes, increased 5 percent for the same period, Riggs said.
Smoothies potentially can be a strong new item for Burger King because they can diversify the chain's demographic by appealing to women, serve as a healthy menu alternative and be consumed as a snack, which is another strong quick-service trend, Riggs said.
The fact that a big burger brand such as McDonald's has introduced and marketed smoothies already makes it easier for Burger King to add that item to its menu, she added.
McDonald's said this week that beverages such as its highly publicized Mango Pineapple Real Fruit Smoothie helped produce its 5.1-percent increase in global same-store sales in July.
"McDonald's led the way in terms of consumers visiting hamburger restaurants and ordering smoothies," Riggs said. "It would be something that Burger King can add to its menu that consumers are already aware of."
Other types of quick-service menu products that have increased in the past year have been breakfast-related and chicken offerings, Riggs said. Specifically, those items include chicken nuggets, breaded chicken, chicken strips; and breakfast wraps, burritos and sandwiches, she said.
Burger King's menu update comes at a time when the brand is struggling to grow its sales following the acquisition by private-equity firm 3G Capital last fall. Besides seeing sweeping changes in its management, Burger King also cut ties with its longtime ad agency, Crispin Porter + Bogusky, hiring McGarryBowen with the goal to move away from the signature King mascot character.
Even with sagging sales, Burger King has an opportunity to turn things around with its new menu items, experts said. With 9 percent of consumers saying they want fresh and lighter fare, quick-service operators such as Burger King have to pay attention to that demographic slice, especially when there are 61 billion annual visits to restaurants in the United States, with nearly one out of four visits to a burger chain restaurant, Riggs said.
— Alan Snel