Case Analysis Of Burger King
Can low prices really come at a high cost? Is it fair for corporations to implement policies that force privately owned franchises to sell goods at a loss? This question was asked in 2009, when The National Franchise Association (NFA) filed a lawsuit in Miami-Dade County against the Burger King Corporation over the pricing of products on this value menu, specifically its $1 double cheeseburger promotion. The NFA, which represents 80 percent of Burger King’s U.S. franchise owners, said the $1 promotion forces restaurant owners to sell the quarter-pound burgers with at least a 10-cent loss. Analysts disagreed on what the promotion would cause – while some believed the promotion would increase traffic and sales, others thought that while traffic …show more content…
Founded in 1953 as InstaBurger King in Jacksonville, Florida, the chain quickly became popular due to the use of an “insta-burger” machine. By 1954, the chain encountered financial difficulties and two franchisees purchased the chain and renamed it “Burger King”. While the company changed ownership a few times since 1954, it was the combined ownership of TPG Capital, Bain Capital, and Goldman Sachs Capital Partners who took the company public in 2002. In 2010, 3G Capital of Brazil acquired a majority stake in the company, valued at $3.3 billion. Burger King was subsequently merged with Tim Hortons, a Canadian-based doughnut chain. Combined, Burger King, Tim Hortons, and Popeye’s operate as Restaurant Brands International, Inc. RBI is traded on the New York Stock Exchange and the Toronto Stock Exchange under the ticker …show more content…
The most common choice was to up-sell customers by adding additional items to the transaction, or attempt to cross sell them into a different choice all together. While the promotion was given the designation of “at participating locations” being a non-participatory franchise in company promotions can also result in potentially devastating consequences within public opinion and loss of consumer confidence in the brand. It should be noted, that most of the non-participatory locations of these promotions are locations within larger areas of commerce (i.e. Airports, Shopping Malls, Sports Events etc.). This left some franchises in the position of having to just accept the loss and try to continue maintain revenues through other streams within the
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