Why "Burger King" is failing

The fast food industry in the Unites States is one of the largest industries in the world dominated by global fast food giants such as McDonalds, Subway, Wendy’s and Burger King. In 2010, the revenue of this industry was about $184 billion, with more than 300,000 restaurants worldwide and 3.9 million employees. The majority of these fast food restaurants are franchise-owned businesses which allow individuals to purchase a franchise in exchange for an annual fee that can be fixed or a defined share of the revenue. These franchises follow strict guidelines from the parent company in order to provide the same food quality and service all over the world. As of 2010, McDonalds is ranked number one with a market share of 12.7% in the industry. Yum Brands, the parent company of Pizza Hut, Taco Bell, KFC, and Wing Street is ranked number two, with a market share of 9.7%. Other major franchises are Wendy’s, Starbucks, and Burger King, which follow Subway in the ranking. These six fast food franchises generate almost half of the revenue of the fast food industry in the United States, which demonstrate that the industry is highly competitive and has a low degree of concentration (Statista, 2012).

In recent times, the fast food industry has seen changing trends in consumer preferences. Today consumers are asking for healthier options at fast food joints. The majority of fast food franchises are offering healthier options to target health conscious consumers and increase sales (Mashal, 2012). While the majority of the fast food franchises are struggling to keep up with growing trends toward healthier product offerings, Burger King in particular has been facing a consistent decline in sales for quite a few years. The once biggest competitor in the industry is now incurring low profitability at a rate much faster than its competitors. This is not only because of increased healthy eating trends but intense rivalry with competing brands like McDonalds (CNN, 2013). This rivalry has led to price wars from time to time that have decreased overall industry profitability, and the overuse of advertising without proper research that offended various cultures and regions. The franchise has been caught in disastrous situations multiple times, corrupting its image in the eyes of the fast food consumers. One example of this is giving taste test to rural Romanian farmers, and Thai villagers, people who had never eaten a burger before. Using Goddess Laxmi as a brand image, a Hindu Goddess and meat, was another faux pass, since meat is prohibited in Hinduism (Russell, 2012)(Exhibit A). In addition, the current product offering do not completely satisfy the demands of the increasing multicultural society.

Hence, Burger King is in dire need of a new strategy to regain a significant share in the fast food market and sustain itself to be well positioned in the face of competition. This involves not only repositioning itself by formulating and executing an effective communications plan to regain customer trust but also offering products to the culturally broadened customer base.

Exhibit A