The birth of the “King”
Burger King’s story began when Keith J. Kramer and his wife’s uncle Matthew Burns were inspired by the success of the McDonald’s franchises over in California. They opened their first store in Jacksonville, Florida, in 1953. They built a stove called the “Insta-Broiler” where their burgers were cooked. Their stores were named “Insta-Burger King.”
Ownership by Pillsbury; Burger King’s very bold (and controversial) marketing campaign
When the company grew, James McLamore and David Edgerton bought the Insta-Burger King franchise in 1954. During their tenure, Burger King’s signature dish, the Whopper, was unveiled in 1957. When Kramer and Burns’ original Insta-Burger King business began to decline, McLamore and Edgerton bought the company out in 1959. They renamed it Burger King, which opened its doors to franchising in that same year. After running Burger King successfully for eight years, in 1967 McLamore and Edgerton sold the company to Pillsbury for $18 million.
Now under Pillsbury’s helm, Burger King rose to become the #2 largest burger chain in America by the late 1970s. Burger King’s most marked change involved “pirating” Donald N. Smith, McDonald’s former executive, in 1978. Under Smith’s direction, Burger King underwent a change on its menu (including the introduction of chicken and fish sandwiches), franchising agreements and corporate branding.
When Smith left the company, Burger King saw a decline in its sales. Norman E. Brinker was appointed as Smith’s successor. Under Brinker’s leadership, Burger King made one of its boldest moves to market its products. One of them was to proclaim that their flame-broiled burgers were better and bigger than McDonald’s. This marketing campaign was controversial as it was the first straight “attack” ad by a fast food competitor, and not run by insinuations like in the old days of advertising. Despite lawsuits by McDonald’s against Burger King and its advertising agency, sales of Burger King took off.
Ownership by Grand Met and then by TPG Capital
When Brinker left the company, Burger King’s sales, once again, took a downward slide that led to the British company Grand Metropolitan’s acquiring it from Pillsbury in the 1980s. Grand Met went to alter Burger King’s distribution system and because of this, it laid off many employees as part of the company’s restructuring. An additional part of Grand Met’s plan to expand Burger King globally was their partial acquisition of United Biscuits’ restaurant arm, including their burger chain Wimpy. By then many Wimpy restaurants were converted to Burger King’s. In another ambitious move, Grand Met switched Burger King’s soft drink supplier from Pepsi to Coca-Cola. It also partnered with the Walt Disney Co. in an attempt to push Burger King to its younger customers, with a considerable success.
In 1992, Hurricane Andrew destroyed Burger King’s Miami headquarters. But aggressive and intense restructuring efforts by Grand Met eventually put Burger King on the map once again. In 1997, Grand Met merged with brewing behemoth Guinness to form Diageo PLC, which ultimately proved to be detrimental to Burger King. Diageo’s focus and favor towards its alcohol and liquors businesses hurt Burger King. In particular Burger King’s franchises in particular were hurt with many of them going out of business.
Burger King soon found itself in familiar territory once again with plummeting sales. TPG Capital sought to salvage Burger King from Diageo for $1.5 billion. With the initial public offering (IPO) in 2006, the burger chain’s stock sales generated profits of $425 million. TPG Capital also introduced the “BK Whopper Bar” concept which allows customers in some BK branches to see the burgers being prepared.
Recent ownership by 3G Capital
Burger King was eventually purchased by 3G Capital from TPG in 2010 for $3.26 billion; the company was made private in 2010. 3G Capital aimed to restructure their business by changing its ad agency, remodeling its existing stores, and revamping some of its menus. Burger King plans to build 2,500 new franchise outlets around the globe. In 2012 Burger King also announced plans to go public again after 3G Capital partnered with Justice Holdings LTD., a UK-based venture capital firm.
Burger King has had major changes throughout its history when compared to other burger fast food chains. With its shares of ups and downs, now only time will tell if Burger King’s recent ownership by 3G Capital and corporate developments will finally help it achieve its goals in the future. In 2014 there was a merger with the Canadian based firm Tim Hortons (of Tim Horton’s Cafe and Bake Shop) which causes some controversy. By being owned by a Canadian company it would reduce the taxes paid to the United States government (called Tax Inversions).
Burger King is one of the most popular fast food chains in the world. It is the 16 most popular brand all over the world having a variety of delicious fast food in its menu. But do you guys know the history behind Burger King? How it got started and how it became so popular all over the world in such a competitive fast food market? If not, then this blog is for you.