Burger King is one of the most successful food chains in the world. In its 70 years of existence, Burger King has gone from being a modest burger Outlet to becoming the second-largest fast-food chain in the world, with more than 17000 Outlets all across the world. And even during the pandemic, It has been extremely profitable with a profit of 823 million dollars. But while most of us are familiar with the glorified success of Burger King, very few of us know that In 2009, the brand image of Burger King was in deep deep trouble. While on one side, McDonald’s was expanding rapidly capturing every inch of the market. On the other side, Burger King was.
In a mess. They had changed 13 CEOs In just three decades. The stores were shutting down rapidly. The shares had dropped by 18%and profit had fallen by 10% to just 44 million dollars. But something magical happened in 2010 when an investment firm called 3G Capital took over the company and appointed one of the youngest CEOs in fast-food history, who went by the name DanielSchwartz. Back then, Daniel was only 32 years old. And the weirdest thing was that he did not have any experience in the restaurant business. He spent most of the time in core Finance, but as usual, while most of the industry experts undermined his capabilities, This guy did such an incredible job that when the same BurgerKing went public again in 2012.
In just 18 months, the stock price shot up by 100%. The question is, how did such a young man with no experience in the restaurant business achieve something so extraordinary? What exactly was his business strategy? And most importantly, as future Business Leaders, what are the lessons that we need to learn from this incredible Businessman? This video is brought to you by Amazon sellers. But more on this at the end of the video. The first thing that Danial did was something that no ordinary CEO would ever do. And that is scrubbing the floors and cleaning the toilets. Yes, You heard that right? When Daniel took over the leadership of the company Since he had no experience in the restaurant business.
He decided to get down to the ground and actually walk with the Burger King employees to try and understand what exactly was the fundamental problem with the operation. And this involved doing everything from making burgers to cleaning the toilets. And in this wonderful process, Daniel learned that there were four fundamental problems with the operation of every Burger King Outlet. Number one, the menu was extremely cluttered with a lot of options that confused the customers. And in spite of having so many options, no signature dish was popular enough to attract loyal customers. Number two, although Burgers as an individual product were a very good value addition to the menu, when the employees were making these burgers, the kitchen got cluttered. As a result, there were a lot of sauces and.
A lot of ingredients. Eventually, this reduced both the efficiency and the accuracy of making burgers. Thirdly, this inefficiency increased the wait times, and it gave the drive-thru customers a terrible experience. Now, this was a very, very big deal, because you see the drive-thru customers contributed to more than 60 percent of the revenue for both McDonald’s and BurgerKing. And from the consumer standpoint, if the order gets delayed by an average of just one minute three terrible things happen. Number one, the customer who’s fifth in line has to wait for5 extra minutes in hunger, which is a terrible time to annoy anyone. Number two, during the peak times, when the cars got lined up at the store.
If another customer wants to eat at the BurgerKing store, He will skip and move on to the next Outlet merely by looking at the long line. Asa result, The number of burgers sold decreased by a large extent at every single Outlet. And last and most importantly, in the race of having a diverse menu, in spite of all the inefficiency, very few products on the menu were high profit margin products. Therefore, when these inefficient practices were repeated for a million orders all across the United States, it cost Burger King millions of dollars in profits. So you know what? Daniel Schwartz took a bold step and decided to eliminate a dozen items from the menu. And he presented only Whopper as the signature dish of Burger King. And since then, starting from the marketing campaigns.
Up to the menu, even the Instagram post, Whopper has always been presented as the signature dish of Burger King. This is the reason why, if I asked you to name two other burgers that Burger King sells other than the Whooper, you will have a hard time remembering them despite making countless visits to the BurgerKing store. Now this seemingly simple move, ladies and gentlemen, brought along an insane amount of benefits for the Burger King brand. Number one, out of the 2.4 billion hamburgers that was sold, 2.1 billion of them that is, more than 87 %of the burgers that were sold at Burger King were just Whoppers. Secondly, because 87% of the orders were of the same Burger, there were very less sauces, very less ingredients..
As a result, There was no confusion inside thestores. This skyrocketed the efficiency and brought down the wait times by a large extent.Apart from that, the supply chain inventory also became extremely lean and extremely efficient.And last and most importantly, the most amazing thing about the Whooper is that, it is a highmargin product. Now, although Burger King doesn’t reveal how much profit itmakes with every Whopper, It is said to be around 50 to 80%. And justlike that, when such a high degree of efficiency and profit margins were repeated for millionsof orders throughout the United States, it started to give out millions of dollars in profits.This is the primary reason why Burger King became an extremely successful brand after 2010.But Daniel Schwartz did not stop.
There. He further went deeper into the causeand found out every little cause of the company was incurring, starting with the office suppliesto the executive travel. That is when he found out, that there were already two years of officesupply, and there were a lot of unnecessary spending that needed to be cut down.So he started cutting down on things as small as pen and paperalso. Apart from that, He made a bold statement and sold thecorporate Jet and ask ed the executives to use Skype call to do the meetings. And even bya modest calculations, they are estimated saving was at least 5321 dollars peronline meating. That’s 3.9 lakhs per meeting. And after this groundwork was done, one final thing needed to be fixed.
And that was the marketing of the Burger Kingbrand. But on the outset, no company, especially after becoming as efficient as Burger Kingwould ever think twice before shooting up their marketing budget, right? After all, marketingis one of the greatest Investments a company can make. But in case ofBurger King, they wanted to achieve externally visibility and at the same time, spent veryless on marketing. Now, this looks impossible, right? Well, guess what? Burger King deployed amarketing strategy that was based on a fundamental attribute of human psychology and that is,conflict breeds attention In simple words, rhe reason why Big Boss is a hit is because conflictbreeds attention. The reason why Ekta Kapoor serials are a hit is because conflict breeds attention. And the reason why news anchors bully.
Their guests during prime time is because conflictbreeds attention. So you know what? Burger King purposefully started trolling and callingout their rival McDonald’s in the social media posts and the Billboards inviting a conflict.And soon enough, McDonald’s started to respond. As a result, The conflict started breeding attention. And not so surprisingly, hundreds of blogs started reporting about the marketing war that was happening between Burger King and McDonald’s. And people like you and me started retweeting their ads. And a large chunk of the customer base even participated in the campaign like the burn the ad campaign and this participation of the customers indicated the extraordinary impact of this marketing campaign. This is how time and again, Burger King gets billions of dollars worth.
Of publicity through organic blogs, International media, and social media Impressions. And the best part is they only have to spend a fraction of their marketing budget to create the conflict. And then, the attention that the conflict breeds eventually leads to the Snowball Effect, creating billions of Impressions on social media, eventually giving Burger King the publicity that it never paid for. These are the reasons why Burger King today is not just one of the fastest-growing chains in the world, but also one of the most profitable food chains in the world. Now, this brings me to the meat of the matter and that are the lessons from the.
Case study and the study material that is related to the case study to help you sharpen your business acumen. Before we move on, I want to thank our sponsors for today’s episode and that is Amazon sellers. If you’re someone who sells your products offline or has very less sales online, You should consider selling on Amazon. Now, I do have to introduce Amazon as a brand to you, but due to its sheer size, most sellers think that it’s very difficult to sell on Amazon. But the fact is that it’s very easy to register yourself as a seller on Amazon and grow your business. All you need is your GST, Pan, and email ID along with a product. So if you’re someone, who’s looking out to expose your products to crows of customers.
All across the country, and if you want to start selling online without having to worry about Inventory management or delivery across 100+ serviceable PIN codes, Then Amazon is the place for you. Amazon provides hassle-free home deliveries and the liberty to list your products at your own price. So to start selling on Amazon, use a link in the description and register yourself as a seller now. Moving on to the lessons from the case study, there are three important pointers that we need to learn from this case study. Number one, great leaders never shy away from getting their hands dirty, and they will go to any extent to understand their business to understand their company better. In this case, It was the humility and audacity of Daniel Schwartz to go and do the menial jobs at the store in spite of being the CEO. Lesson Number.
Two, micro cause and micro inefficiencies are more often than not, the heaviest expenses that go unnoticed, and they often lead to a chain of expenses and inefficiencies that will drag your business down without even you knowing it. So always try to keep the processes lean and the cost low, no matter how big your company is. For this, If you are at a sea-level position or at the management level, I would highly recommend you to do a quarterly review of the micro expenses at your company. And when you are done calculating, show it to your employees and tell them how important it is to spend cautiously. And lastly, conflict is a marketing superpower that breeds attention. So as consumers make sure that you don’t become.
A spectator of someone else’s stupid conflict. And from the business standpoint, you really need to study Why a big boss is a work of a genius.
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