Alasdair Murdoch, the man who turned around Gourmet Burger Kitchen (GBK), is now looking to do the same with the c500-strong Burger King UK business. He talks to Mark Wingett about changing people’s perceptions about the brand and the challenges he faces in doing so

A calculated gamble is the best description I heard about Bridgepoint’s decision last year to invest in turning around the fortunes of the c500-strong Burger King business in the UK. The private equity firm and its new investor have a clear sector leader to benchmark themselves against in McDonald’s. There is currently clear water between the two brands on several fronts, not least sales per store, marketing spend, store fit-out and brand affinity.

The man chosen to help bridge that gap is Alasdair Murdoch, who stepped down from GBK last year after leading the team at the better burger brand. Murdoch has already put in place a strong management set-up including Martin Robinson as chairman, former Casual Dining Group chief financial officer Tim Doubleday and ex-Nando’s man Richard Denning-Smith.

He says: “It been a busy six months, but it has also been very exciting, putting together a new team. This opportunity is quite unique in some ways as it is like having a global brand that is a start up. When we went to talk to people about the idea of taking on Burger King, everyone was initially cautious, but when we set out our thinking behind it, they all came back believing it was a good idea. Everyone has had an epiphany around it.”

Investment plan

As part of the deal, valued at c£50m in total, Bridgepoint laid a foundation down by acquiring Caspian UK Group, one of the UK’s largest Burger King franchisees with 74 restaurants. It is thought that it will look to double this base of equity stores over the next three years. At the same time, it will look to invest significant funds into buying out other individual franchisees. Burger King currently has more than 30 franchisees in the UK, including the likes of Kout Food Group, the Karali Group and the SBR Group. It will take Bridgepoint a while to unpick this part of the business.

Murdoch says: “The engagement with the franchisees has been good. We have had good feedback from them. They can see that we will work with them differently to how it had been in the past. Are they seeing the results they want at the moment? Probably not, but there has been some really good progress made.

“My challenge, as I see it, is that it is easy to understand what you need to do to take ad-vantage of the opportunity, but doing it is quite complex, be-cause you are dealing with franchisees, with two forms of stakeholders and, understandably when you have a global brand, you have all sorts of approval processes that you have to go through and work with. Navigating one’s way through that in a timely fashion is actually more challenging and requires a lot of my time to manage. I need to be broader and allow my team to get on with things, to break down the boundaries to allow them to do that. “Global brands don’t come about by accident, so there is a process. You have to be respectful and mindful of that. But that is not to say you can’t try to change it. That, however, will take more time.”

As Murdoch admits, it is no secret that the company is looking to further consolidate the business. “Do we want to own the whole system? No we don’t, but we would like geographically, well-capitalised, well-placed franchisees that push us and we learn from them and they learn from us,” he says. “Do we want more stores ourselves? Yes we do. We would like to add c20 stores a year – the majority would be new build. We will be opening a few of those type of Burger King 2.0 sites, for want of a better term, closer to the end of this year.”

Regaining scale

The openings will be part of an effort to regain scale, having dropped from a peak of 700 stores to 500 now. Murdoch says: “Every time Burger King was poised to go in another sort of growth cycle, they’d perhaps change the management again, and I think for the most recent part there has perhaps been a lack of reinvestment into the brand itself. If you go into a lot of our restaurants they are maybe more tired than we would want – not all of them, of course – so I think there are some fairly obvious opportunities around those sort of areas.

“With the equity stores we have acquired we are using them to try new things and also as a shop window to the remaining franchisees on what we can provide for the brand and them. Franchisees also respect that if they are feeling pain, we are also, and if they are feeling good, we are too.

“We operate the majority of the sites in Scotland, so we are using them as a test bed for the whole system. We are saying we will take the risk and maybe the pain on these new initiatives for the benefit of everyone else. For example at the moment there is some simplification work, some menu work, some layout work that is going on in these stores, which, if it works, we will roll out. That is a good advantage to have within our system.”

Opportunities ahead

Of the current estate, Murdoch says that c330 are everyday restaurants – high street and drive-thrus – and 170 are captive locations, such as airports or motorway services or holiday parks. “There is a lot of runway to go after for this brand, particular if you look at the number of KFC, McDonald’s, Greggs and Subway sites there are currently,” he maintains. “I am not saying we are going to chase that, but there are opportunities out there. We have to stand for something different and be more relevant to the population than we have been over the past few years.

“I think one of the opportunities that we are benefitting from is the slowdown in the market that other people are struggling with means that landlords are much more realistic about rent, and secondly there are many more sites available. We are not finding it difficult, at all, to find opportunities. We see a lot of opportunities from a real estate point of view in a way that people perhaps weren’t seeing a year ago.

That said, it doesn’t necessarily mean we will go where casual dining has been, because one of the main consumer feedback pieces we hear is around convenience… ‘there isn’t a Burger King near me’. There are also developments out there, where, perhaps two years ago, institutional landlords would not have considered a brand like ourselves, but now see us as an opportunity. They have become more realistic. The strength of our covenant is also helping us here. I have been quite critical about landlords in the past, but they are now more realistic on prices.

“A lot of expansion will be driven by customer experience and the look and feel of our restaurants, which aren’t as good as they should be. Technology is ever important and we are way behind on that. We need to jump ahead on this, not just follow, which is a challenge but also a great opportunity.”

Enhancing delivery offer

In terms of delivery, the company is currently with Just Eat and Deliveroo, but is looking to extend store hours where possible to enhance its delivery offer. Murdoch says: “It is an obvious opportunity, but at the moment our tech isn’t ready for the complete integration needed, so that needs to be step one. We need to develop an integrated plan, focusing first on what we need to do – for example getting our teams to embrace using delivery.”

Murdoch’s former company GBK announced in May that it plans to close six restaurants, slash its openings pipeline for this year and refresh 30 sites, as it seeks to turn around sales, which fell 6.8% on a like-for-like basis in the year to 28 February. It follows the CVA process undertaken by rival Byron and the administration of Handmade Burger Company.

Waking up to coffee

Murdoch says: “It’s tough seeing brands like GBK and Byron go through trickier times. The key for those businesses is to really meaningfully stand for something different. Perhaps we thought we were more different than we were. The newer ones coming through need to be aware of that.

McDonald’s have been clever on how they have messaged the value end of their menus, we need to look at that. In that respect you are getting yourself away from the lower end of casual dining, where you can’t offer that experience but can offer convenience. On the back of that one of our priorities is coffee, everyone in the business is selling it and selling it consistently well. We are also looking to simplify our breakfast offer.”

After seven years at GBK, Murdoch is not tired of burgers and with a new team around him, seems re-energised by the challenges ahead of him. “This brand needs some love,” he says. “This is a long-term opportunity and results may not come overnight, but we are ready for that and up for the challenge.” A whopper of an opportunity indeed.