Burger King – Still in McDonald’s shadow?

Something’s been bothering me … where have all the great rivalries gone? On one hand I might cite the waning cases of Man United vs Liverpool, Proctor & Gamble vs Unilever and Ferrari vs Lamborghini. And on the other, and closer to our F&B home, Coke vs Pepsi, Sainsbury’s vs Tesco and Burger Kings vs McDonald’s. The latter example is particularly pertinent as it is now 18 months since Bridgepoint acquired the UK master franchise rights, with the hope of cashing in by closing the performance gap against its key rival – and it is worthwhile having a brief look to see the extent that progress is being made.

From MCA’s Eating Out Panel it is easy to look at how the share of eating out visits to specific operators is changing, and also, to see some of the accompanying customer satisfaction ratings. So we can take insights from the year to March 2017 (i.e. pre-acquisition) and compare these to the year to March 2019 (i.e. post-acquisition). Unfortunately, those with interests in Burger King might want to look away now …

Firstly, looking at share of consumer visits across the breakfast, lunch and dinner day-parts. Burger King is seen to be losing share at all three of these day-parts – in contrast to its growing rival. And unsurprisingly perhaps, Burger King performs particularly relatively poorly at breakfast. Secondly, looking at Net Promoter Scores, and while McDonald’s has achieved rating improvements across all three day-parts, this is only the case at dinner with Burger King. Even then, its score of 7 is very low and again compares unfavourably with the 25 claimed by McDonald’s. This 18 point differential is even more marked at breakfast, where it rises to 31. Finally, Burger King used to be perceived as a more grown-up version of McDonald’s, with a greater focus on a better quality burger. Disappointingly, the consumer ratings for product quality/taste at Burger King, from being on a par with McDonald’s, have now slipped behind the improved McDonald’s scores. Plenty for Bridgepoint, and the well-qualified Burger King chief executive Alasdair Murdoch, to ponder on here I might suggest.

At the outset, I asked the question about whether great rivalries were in decline. I do believe this to be the case – particularly where market entry barriers are low and where competition is more easily able to expand and intensify trading pressures. These characteristics apply to the no small matter of burger retailing and of course, present major challenges to established operators. The growth in the plethora of burger chains, not least the likes of Byron, Five Guys, GBK and Honest Burger, (many of which have clearly not been immune to difficulties of their own) – have all contributed towards consumers reappraising their perceptions of what constitutes a ‘great burger’.

Within the traditional fast food market segment, this has resulted in more customer missions being convenience-led, as opposed to more destination oriented. Given that McDonald’s has greater strengths in convenience, low prices and product diversity, then it has more defensive attributes to offset market evolution pressures than Burger King. By contrast, Burger King faces greater competitive squeeze from both above and below. This is clearly not an appetising prospect, and I suspect that Burger King’s management needs to carve out a stronger identity for the brand – and one that is not just supported by productivity gains from even more efficient business practices.

MCA estimates sales through total UK dedicated burger operators at just under £4bn, with the lion’s share of this generated by McDonald’s. This skew inevitably follows from McDonald’s large store portfolio advantage and high average sales per restaurant. Burger King should look to find a way to take a bigger chunk out of its main rival than to try to pick up small morsels from much smaller scale operators. Revitalising a greater competitive spirit of doing all manner of things smarter, quicker and cheaper than McDonald’s might just help.