Burger King Continues Going Strong As It Enters The Sub-Continent

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Nov 09, 2014

Even as the fast-food chains around the world continue suffering, Burger King (BKW) seems to be turning out a complete winner. In the quarter concluded recently, the company posted its biggest quarter sales average in two years. On one hand, Burger Kings’ sales in North America were boosted by 3.6%, McDonald’s took a nosedive by 3.3%. It is thus clear that McDonald’s is fast losing out to Burger Kings in the race to establish a superior position in the market.

Analysts have declared that the company shares are over-burdened. The company's stock had risen 60% in the past year. Burger King, has for the past one year done particularly well. The company has been a flyer at the stock market. This consistency can be owed to a number of factors.

The fast-food chain operator has always believed in promotions and offering considerable discounts. Americans have always been unwilling to shell out cash for fast food. Burger King has lured in customers by offering promotions like its 2 for $5 sandwich deal. The brand also started selling 10 chicken nuggets for $1.49. To help offset the discounts; Burger King raised the prices of some items. While McDonald's offered a promotion on free coffee, the higher price of burgers is a turn-off for consumers. Burger King's promotions, like 10 chicken nuggets for $1.49, are helping to drive sales. The company has also decided to focus on lesser and more impactful products. The company will only benefit from this strategy as helps simplify the kitchen operations. This also suggests that the company wouldn’t be shelling cash out uselessly on the products that go to waste.

This strategy benefits Burger King because it simplifies operations in the kitchen, making service faster. It also means that franchisees aren't shelling out for a variety of products that potentially go to waste. McDonald's CEO Don Thompson meanwhile said that his company was working on improving its menu. He commented, "We are streamlining our merchandising menu board and product offerings and in addition to making it easier for customer to order their favorite products, this will reduce complexity in our restaurants which in turn should enhance accuracy and speed of service.”

Burger King is on-track to remodel 40% of its restaurants by the end of 2015, boosting sales by as much as 10%. Burger King Worldwide has also announced that it will open about 12 outlets in India over the next 60-90 days. The chain announced last year a tie-up with the Everstone Group to develop the Burger King brand presence in the country. In India, the hamburger chain has changed its menu to sell mutton, chicken and veggie sandwiches.

"In the long run, India is going to be one of the largest markets globally. Burger King most certainly sees India as one of the biggest opportunities in the future," the company’s India CEO commented. The chain's first store would be opening New Delhi.

Burger King is a late entrant in the country. Rival McDonald's Corp has been around for close to two decades and has already grown its network in tier two and three cities. Thus, with this we can also expect the company to capture the sub-continental market as well.