There have been changes in the eating habits of people over the years. As people started going out to work for longer hours, their food practices changed. The workers had a stipulated lunch hour and they were expected to work hard for the day. Having to work after lunch again meant that they were not supposed to have heavy lunch else they will feel sleepy but they needed good food to stay energetic throughout the day. Here the need for optimum food arisen. Also, they had limited time to take food so they could not afford to wait till dinner when the food preparation gets completed. So, they started looking for options on the street, and that is how fast food became such a hit.
Need for Fast Food
The work hours and schedules led to two options, of having limited food and in quick time to continue the work after the food hours. Hence their need was understood and the first fast-food shop for fish and chips started in Britain in the 1860s. The food was quick-prepared and there were take away food centres.
The food was usually pre-prepared and frozen and while serving it was re-cooked in a few minutes and served to the customers. This solved both the problem of food quantity and time. By the 1950s Drive-through restaurants serving fast food became quite popular in the United States. In 1951, the word ‘fast food’ was made official by inclusion in the dictionary. (Merriam-Webster)
Origin of the Fast Food
- In different countries, the origin of fast food is found to be different. In Roman cities, people used to live in ‘insulae’, a kind of multi-storeyed blocks and were dependent on the food vendor for their meal. Hence they found out quick food like bread soaked in wine, and cooked vegetables and stews.
- Chinese ate fried dough, soups, and stuffed buns.
- Baghdadis depend on processed legumes and starches.
- During the middle ages, in London and Paris people moved to pies, pasties, wafers, and pancakes, etc.
- The main purpose was common to be able to get food prepared quickly and can be carried on to work to keep them energetic throughout the day.
- In the 1950s the United Kingdom and the United States were the leading countries as far as drive-through restaurants were concerned.
- The fast-food chain consists of various types of food like chips, fried potatoes, burgers, and sandwiches, etc. Hamburgers were made famous by some of the food chains like McDonald’s and Burger King. Both the companies have their stories of fame.
Burger King Story
Burger King is a restaurant company famous for its specialty in fast-food broiled hamburgers. Burger King’s story is very interesting because of its consistent position in the fast-food industry.
- Burger King was started by James W. McLamore and David Edgerton in 1954 in Florida, Miami. However, Keith Kramer and Matthew Burns are said to be the actual Burger King founders, in 1953.
- The first franchisee of Burger King was sold in 1959 and shortly it became a well-known national chain.
- In 1963, Puerto Rico became the first to have Burger King Franchisee outside the United States.
- Since the start Burger King always tried to impose a lot of changes in their approach and their management in quest to become number one in the US. Their governance saw many changing hands ownership and control.
- The history of Burger King has seen many corporate changes till the time. In 1967 it was sold to Pillsbury Company, which appointed McDonald’s former executive Donald Smith in the 1970s. Smith introduced many items in the menu and also started to gain good control over franchisees.
- Later, the British company Grand Metropolitan (Grand Met) PLC acquired Pillsbury in 1989. After its merge with Irish brewer Guinness PLC Grand Met itself became Diageo PLC in 1997.
- In 2002, Diageo sold Burger King to a consortium of private equity financers, Bain Capital, Texas Pacific Group, and Goldman Sachs Capital Partners.
- In 2010, a Brazilian billionaire Jorge Paulo Lemann, an investor group 3G Capital, took over the company in leveraged payout.
- Worldwide, Burger King merged with Canadian Doughnut and fast-food chain Tim Hortons in 2014, and a new parent company Restaurant Brands International was formed.
- The company has seen so many establishments and now have the headquarters at Oakville, Ontario, Canada.
The Logo Story
- The history of the Burger King Logo is also interesting. Right from the year of introduction in 1953, the ‘whooper’, a big size hamburger was getting increasingly famous. The logo of a king sitting on a hamburger with soda in his hand was designed. Red, yellow, blue, and brown colors were used in this logo and the phrase ‘Home of the Whooper’ was placed at the bottom of the logo.
- When Burger King started offering its franchisees in 1963 and started to become an international brand the logo was redesigned in 1969.
- The new logo simply featured the name Burger King inside two buns.
- In 1999, the logo was redesigned again. This time they included a blue circle around the similar old logo by changing the angle and color of the fonts a bit.
- The competition between Burger King and McDonald’s was so intense that McDonald’s had sued Burger King over their advertisement which claimed their burger is better than McDonald’s.
- This war had already started way back in 1954 when Burger King became famous instantly.
- Burger King tried everything they can, to be the leader in fast-food chains in the United States. They were the first to offer customers dining rooms, albeit uncomfortable ones.
- In 1957, they introduced the ‘whooper’, a hamburger with sauce, cheese, lettuce, pickles, and tomatoes.
- In 1958, the first commercial of Burger King appeared on television, which was the newest medium for advertising.
Idea of Franchise
- Burger King was able to expand outside Florida and also US because of the fast growing culture of franchising. This was much easier and was involved very low cost.
- The company was not needed to establish a new location by searching for spaces. They started owing franchisees and it helped them to grow quite fast.
- McLamore and Edgerton attracted big investors, some with already set business, and allowed them to take their decisions on how to run the store in their territory. They gave the territorial rights in exchange for the lump-sum payment.
- This idea worked well for them and the growth of Burger King was rapid.
- By 1967, when they decided to sell the company, they had 274 stores of their chain. The franchise owners too grew very rapidly to the extent of competition with their parent company.
- Some large investors took full advantage of the freedom of operation and built a good store.
Difficulties of Franchisees with Pillsbury
- However, the freedom given to the franchise owners was not worth maintaining the company image. Because they had the right to decide, it was obvious that the food and service differ from store to store. This situation is never a good one for the brand image of the company. Consistency is the vital characteristic in the chain system and that was lacking. The customer expects the same food quality and service in all the stores under one brand, wherever it may be.
- The new owner Pillsbury was left to do the damage control then. Some of the franchisee owners thought they can run the outlet better than a packaged-goods company. One of the wealthy franchisee owners Trotters, within 4 years already had 24 Burger King Restaurants and went into the public under the name of Self Service Restaurants Inc.
- In 1970, when the Chicago franchisee decided to sell out, this owner went overnight and bought the Chicago franchisee giving no chance to Pillsbury to own the franchise.
- By 1971, Trotters owned 351 stores worth $32 million in sales. At one point in time Trotters were prepared to take over the Burger King’s operation altogether. They made an offer of $100 million for Burger King to Pillsbury. When it failed they bought 9 stores in Boston and 13 in Houston under their Chart House. However, when Pillsbury sued the Chart House deal, they compromised on Boston and kept the properties in Houston.
Impact of Donald Smith
- Donald Smith, a former executive at McDonald’s took the charge in 1977. A powerful administrator from McDonald’s, Smith was given complete control of the operations.
- It was then the franchisees were brought back under the control of Burger King. He adopted the method which McDonald had already implemented on its stores in the chain, a high degree of uniformity in food and service for a good return for the franchisees. When he came to power, Burger King owned only 34% of the land and buildings in which its products were sold.
- Sighting this, Smith started a more demanding franchise contract and giving it to single owners and not partners or companies. He insisted the franchisee not run any other restaurant and lives within one hour from the site of the store. This way was effective to stop the franchisee from getting too big.
- Another action taken by him was to create ten regional offices to manage and control franchises. To successfully manage operations and consistency of franchises, Smith introduced a two-day audit once a year and frequent unscheduled visits to the franchises by the company officials. This resulted in franchises being well-organized in line with the company requirement. He also insisted that the company should own the store wherever possible. All these efforts made the company outlet ownership from 34 to 42%.
- Smith also introduced new menus in the Burger King outlets like French Fries, sandwiches-fish, chicken, ham, and cheesesteak to increase the Burger King trade.
Troubles in the 1980s
- With Donald Smith leaving Burger King to join Pizza Hut in 1980, Burger King initially sailed smooth and within two years reached number 2 in the fast-food chain.
- However, due to frequent changes in the top position of company management led to inconsistency in the policies and implementation.
- Till 1987, Burger King saw 4 top changes in the management. However, the company as a whole was still expanding within and outside the country as well. They had ups and downs in their strategies as they kept on introducing some new menus based on the needs of the people.
- In some menus like Chicken Tenders, they even faced loss because they were not able to supply what the demand was. Eventually, they also had to pull out an introductory ad campaign of $30 million.
- In 1982, Burger King made ads directly attacking its competitors McDonald’s and Wendy’s by claiming their grilled burgers are better than McDonald’s and Wendy’s. Both the companies sued Burger King and a lawsuit was filed.
- Wendy’s even challenged Burger King for a ‘taste test’. Burger King finally settled the issue by phasing out ads gradually but eventually came out as winners.
- The average sales volume of $750,000 went up to $840,000 in their 3500 stores with sales up by 19% and pre-tax profits to 9%.
Turn around under Grand Met
- Barry Gibbons, a successful manager in pubs and restaurants in the United Kingdom, was posted as CEO of Burger King by Grand Met after they take over Burger King in 1989.
- The Grand Met acquired a lot of units of United Biscuits and by the summer of 1990, around 200 units were converted to Burger King strengthening the company’s overseas operations.
- Grand Met decided to attack the weaker area of Burger King and correct it that was international expansion.
- Burger King started their first operation in the countries that they have not reached. Hungary, Mexico, Poland, Saudi Arabia, Israel, Oman, Peru, New Zealand, and many other countries.
- However product-wise there was a mixture of success and failure which was understandable. The only area not in control was the advertising. This was in disarray till Adamson took the charge of the company. He tried to understand how was Burger King founded, did a bit of homework, took the advice of co-founder McLamore. Improved the quality of food and service. He addressed the most important key areas of quality, value, and image.
- By the 1995, with his strong agenda, he led Burger King to a very good position which also boosted the morale of the franchisee owners.
The Bottom Line
Like any other company, Burger King has seen a lot of ups and downs in its journey. However, the clarity in the vision to be successful was carried out by each successor and it paid them good dividends. It is very important to carry on with the same agenda while the baton is handed over. The company operations are very complex and it needs the support of every person associated with the company for the company to be a success story.
We can see the efforts taken by each person contributed in making company big and generating more revenue. The success story of Burger King is good inspirational steak for new entrepreneurs.