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First Ever Store, Owner

Burger King is the second largest hamburger severing chain in the world (Burgerking, 2017). There more than 11 million guests who visit the restaurants daily across the globe. Founded in 1954, Burger King is also known by the abbreviation BK. It has grown to over 14,000 restaurants worldwide, and about 50% of those stores are located outside the US. Burger king's commitment has defined the brand for over 50 years by having "premium ingredients, signature recipes, and family-friendly dining experiences" (Burgerking, 2017).

As of 2010, Burger King Cooperation is now a privately-held company as it was bought by 3G Capital who are a global multi-million dollar investment company (Burgerking, 2017).

Despite the market constantly changing and intense competition, Burger King's marketing strategy has been successful as 2016 forecast shows, Burger King's revenue has grown over the last three years to 1.14 billion US dollar.

They have the diverse menu with items such as burgers, milkshakes, drinks, etc. being sold (Marketing Mixx, 2017).

Burger King's vision statement is "to be the most profitable QSR business, through a strong franchise system and great people, serving the best burgers in the world" (Lucas, J. R., 1998).

Burger King's mission statement is "offer reasonably priced quality food, served quickly, in attractive, clean surroundings" (Swales, J. M. & Rogers, P. S., 1995).

As you can see above, the UK burger market has been growing consistently over the last few years. The market is currently valued at £3.18bn and is predicted the market will reach £3.3bn by 2019. While a large section of those billions is from large burger giants such as Burger King and McDonald's, Childe, a senior food service analysis at Mintel, says the desire for better food in casual locations and quality of the burger has gained momentum within the couple years (Mintel, 2016).

Once upon a time, Burger King and McDonald's were the main choices, but now there are much more competitors with a multitude in premium burgers. Five Guys, Shake Shack, Byron and Honest Burgers are amongst the few growing rapidly in the UK market (Sedghi, 2015).

  • Strength in the industry- Strong franchise network in the UK is considered as the key strength of Burger King in the industry (Lang & Heasman, 2015). Furthermore, efficient acquisition policies and oversees operation have helped the brand to attract more customers in the country. The Strong product line of Burger king is the strength of the company in UK fast food industry.     
  • Position in the industry– Strong franchise network in the UK is considered as the key strength of Burger King in the industry. Furthermore, efficient acquisition policies and oversees operation have helped the brand to attract more customers in the country. The Strong product line of Burger king is the strength of the company in UK fast food industry.     

Understand of their market share, competitors and customers

The brand holds a strong share of the market in the UK and its key competitor includes McDonald's, KFC and The Wendy's company. Over the past few years, Burger King has also started facing intense competition from US based burger brands such as Fatburger, BurgerFi, and Smashburger (Nestle, 2013). The brand's key customers include children and youngsters which fall under the category of the middle and upper-income group.    

Analysis External Environment

In the modern era, analysis of external environment has become very important for the growth and success of a business enterprise. External factors such as social, political, legal, environmental etc. are beyond the control of a company and have direct or indirect impact on operations and practises. For examples changes in laws and regulations force businesses to carry out changes in existing practises and adhere to the same in best possible manner.  

Situation

The fast food industry is growing drastically throughout the United Kingdom as well as the number of competitors in the industry. To stay on top of this, analyzing the external environment is significant to ensure the business runs smoothly and long-term profits continue. Evaluating the fast food industry as a whole, detecting the attractiveness of the market, overcoming threats and seeing possible opportunities. Burger King is getting indirectly affected by different macro environmental factors. For example, the changes in tax rates and government policies encourage the brand to make some modification in its existing practices (Bernhardt et al. 2013)

Pestle

In order to examine macro environmental factors and their impact on organization, tools such as PESTLE analysis can be taken into consideration. Furthermore, the tool lays emphasis on examining six different factors which can have either direct or indirect impact on operations and practises of a business. The main benefit of using PESTLE analysis as a tool is that it helps companies to reduce the negative impact which can be caused by macro environmental factors. On the other side of this, the tool is also effective in understanding the overall potential of new markets.

The PESTLE analysis is one of the most vital analytical tools to use when analyzing the external market of an industry. It consists of political, economic, social, technological, environmental and legal analysis. It can then identify the trends and key drivers of the fast food industry.    

For instances, political factors could be the threat to the fast food industry due to government regulation on the packaging. Economic factors would lead the financial instability inside the industry through the recession of joblessness rate and high housing cost.

Social factors could introduce the health awareness tendencies among customers, technological factors increase the publicity about the fast industry through social media and relaxation level among customers, environmental factors could lead people to use environmentally friendly material and legal factors would promote campaign regulations and health complaints among consumers.

Table 1 - Analysis’s the macro

Pestle analysis

3 sentences

Strength

Political

Government regulation on packaging

Changing public health policies that discourage the consumption of fast food

+ + +

Reduce impact of taxation

Economical

Increasing consumer spending in the UK

Reducing inflation rate in the UK  

Increasing trend in disposable income among UK households

Social

Health awareness tendencies among customers

Changing lifestyles among the population with a propensity to east out

Expanding wealth gap

Technological

Increase the publicity about the fast industry through social media

Increasing sales via the use of social media and mobile devices

Fast food industry characterised by restrained R&D activities

Environmental

Lead people to use environment friendly material

Reusing used fat as biodiesel

Recycling promotional activities to conserve the environment

Legal

Promote campaign regulations and health complaints among consumers

UK to introduce new levels of legal minimum wage

Sourced by: (Harrington et al. 2017).

The two most important factors Burger King has to consider is the social, legal and political aspects.

Political – It can be stated that political changes such as modifications in public health policies have affected the sales and profitability of Burger King. The brand is now required to promote products which are healthy.

Social – the changing lifestyle of people, has also affected the plans and operating policies of the selected business enterprise (Eades et al. 2017). In the market such as the UK, Burger King is affected by increasing health awareness and wealth gap.    

Legal – legal practices such as the introduction of new minimum wages rate have forced the brand to make sure changes in existing policies related to pay. In addition to this, Burger King's operations are also affected by Health regulations in local schools and workshops.

Changing customer needs and demand can be considered as the key driver of change for the brand like Burger King. In the modern era, people in the market have become very conscious and careful about their eating habits. Nowadays, people usually avoid consuming food which contains fat, high oil, and cholesterol. Furthermore, burgers and buns are also avoided by individuals (Boje, Haley and Saylors, 2016). It has forced Burger King to carry out certain changes in its existing product line and come up with products which are healthy.

Situation analysis

 Changing environmental policies has also emerged as a key driver of change for burger king. The brand is now required to change its existing operations and adopt for practices which do not have any negative impact on the environment. Here, Burger King needs to focus on low energy consumption, waste reduction, and eco-friendly packaging. These changes will help the brand in long term sustainability and will also provide the competitive advantage over the other market players.

For instances political factors could be threat for the fast food industry due to government regulation on packaging, economical factors would lead the financial instability inside the industry through the recession of joblessness rate and high housing cost, social factors could introduce the health awareness tendencies among customers, technological factors increase the publicity about the fast industry through social media and relaxation level among customers, environmental factors could lead people to use environmentally friendly material and legal factors would promote campaign regulations and health complaints among consumers.

The trend is referred to the upward or downwards direction through the modification or development based on the preferences. The identified patterns (shown in figure 3) are analyzed in the fast food industry through the application of PESTLE tool.

The key drivers can be driven the consumers to make the profit and running the fast food business smoothly. The following primary key drivers (shown in figure 4) push the consumers to the fast food industry.

There are numerous firms in the fast food industry in the United Kingdom. McDonald's, KFC, Domino's Pizza, Burger King, Pizza Hut, many Subway are the most typical firms within the fast food industry in the United Kingdom. Each firm generates their key drivers based on their business strategies model. However, every company follows appropriate strategies to attract the consumers to their firm to run their business successfully along with profit. It is also noted that fast food industry is demanding rather than traditional restaurant due to quick service and ready to eat where consumers save their time. Hendry et al. (2015) reported that recently fast food industry customized their menu (not using Trans Fatty acids) to avoid dropping out the number of consumers in their industry due to lifestyle diseases for instances Coronary Disease, Obesity, and Diabetic Mellitus. Moreover, lowering the food price could be adopted in term of the recession of the economy or employment rate. Therefore, the fast food industry would be stable, and further market growth could be feasible with the changes of the population age group. 

The internal review of Burger King Corporation is vital as well as identifying the quality and core competencies to distinguish them from the competitors.  

Porter Five force model can be defined as a useful framework which is used to identify the overall competitiveness of a particular industry. Furthermore, it assists in determining the attractiveness of the industry and how different factors affect operations of a business enterprise.   

Table 1 – Porter five forces

Porters 5 forces  

Types

Description

Strength

Competitive Rivalry

Competition balance

The competition among businesses in fast food industry of UK is not balance and there are few players who are ruling the entire market (Gayle and Luo, 2015)

Burger King has managed to maintain second position in the fast food industry of UK

Industry growth rate

The industry growth rate is declining as people are getting more conscious about their health

Burger King has introduced a healthy product line and therefore it is able to attract customers

High fixed cost

High fixed cost has also resulted in increasing the overall competitiveness of the UK fast food industry

The brand needs to increase its sales to manage the overall fixed cost of operation

High exit barrier

The losses incurred because of ceasing operations is also  very high

Low differentiation

The companies operating in this industry are offering almost same products and services

Burger king is required to introduce products/ services which are different from what other players are offering

Threat from New Entrants

Scale and experience

To operate in UK fast food industry and compete with other market players, high scale production and experience is required

The threat from new entrant is very low for a brand like Burger King

Access to supply and distribution channel

For new entrants, access to supply chain and distributional channel is limited (Baron,  Neale and Rao, 2016) 

Being such a big brand in market, Burger King has adequate access to supply and has developed strong distributional network  

Expected retaliation

New entrants are required to deliver high quality and healthy products

Government legislation

The legislation and regulation of government also acts as a barrier for new entrants   

Burger king follows all the policies and regulations which are being developed by the government in UK.

Differentiation

New Entrants are also required to enter the market with new products/services and this acts as a obstacles for them

The brand needs to bring changes in its existing product range to enhance its competitiveness in the industry  (Dey,  2016)

Analysis External Environment

Threat of substitute

Availability of substitute

The availability of substitute product is very high and this affect the business practises of fast food brands  

Burger king is required to develop effective strategies to deal with substitutes such as home cooking and fine dining restaurants

Bargaining power of buyers  

Concentration of buyer

The performance of businesses in fast food industry is affected by customers

Burger king is required to make changes in products as per need and demand of people in the market

Low switching cost  

Low switching cost encourage customers to buy products and services from other market players  

The brand is also required to ensure that customers remains loyal and this can be done with the help of techniques such as offering discounts and schemes

Buyers competitions

The bargaining power of customer is also high because of organization such as Better Business Bureau and customer Union (Jabeen and Katsioloudes, 2013)

Market research at regular intervals can be carried out to understand changing trends and demand of customers in UK

Bargaining power of sellers

Concentration of sellers

Suppliers or sellers affect the fast food industry by variables such as supply control and price

Burger king needs to maintain strong relation with suppliers

Low switching cost  

The cost of switching from one seller to another is very low and therefore, the sellers in market are not able to dominate prices and conditions

Burger king has the option to switch from one seller to another because of the low switching cost

Sellers competitions

The supply of raw material and other related items is abundant and therefore sellers competition is intense

Change in prices and policies does not affect the operations of burger King

Analysis of internal environment

The analysis of internal environment helps organization to identify its key strength and weakness. It can be stated that business should carry out internal environmental analysis at regular intervals in order to stay competitive in the marketplace. On the basis of information collected through analysis strategies can be developed to maintain existing strengths and overcome identified weaknesses.   

The strategic resource and capability analysis helps companies to identify the effectiveness of existing resources and overall capabilities. The tool provides information about the fact that how capable a firm is in terms of converting resources into capabilities to gain advantage in the marketplace.

Resources

Physical Resources

Financial resources

Human resources

Things you have in your hand

Capabilities

Competencies

Ability to make use of your resources , convert your resources to make a difference

Threshold

Without this, you can’t do anything

 (university, class room, lectures, seats)

Burger King has effective human, financial and physical. It has helped the brand to stay competitive in the marketplace. The employees are highly skilled and able capable enough to understand customer needs   

Burger King’s core competency includes selling and advertisement of flame broiled burgers

Distinctive

R&D developing something

Burger King lays huge emphasis on introducing new products and services at regular intervals in order to maintain interest of customers   

Intense variety of burgers at affordable prices makes Burger King different from other brand in the fast food industry of UK  (Krishna,  2014)


This table leads to

  • understanding the core competency then competitive advantage
  • Ability to survive
  • Attractiveness in the market
  • Innovation
  • CC core competency turned into CA competitive advantage
  • Something that cannot be copied over night 

Value chain analysis 

Primary activities

  • Inbound logistics: Burger King purchases raw materials from its fixed suppliers. The key suppliers offer all the items used in the production of burger, fries, etc.
  • Operations: A well-designed kitchen where employees are assigned different responsibilities  such as one individual prepare burger through machine, preparation of French fries, milk shake machine, counters where customers place order.
  • Outbound logistics: Burger King is committed to delivering high quality of food items such as hamburger fries etc. The company has taken a large number of initiatives to reduce its environmental impact (Saad &  Badran, 2017).  Burger King works with its suppliers, employees and franchisees for satisfying customers need
  • Marketing and sales: The campaigns developed by Burger King are capable enough in attracting customers. Advertising with the help of print media has supported in enhancing sales
  • Service: Scratch card offers and free Wifi service has allowed in serving customers.

Support activities

  • Firm infrastructure: Burger king's infrastructure is quite advanced where it provides eco-friendly restaurants which are convenient for customers.
  • Human resource management: The work environment delivered by Burger King to its employees is quite convenient where they prefer to serve customers in the way they expect (Zabeen, Wei & Lu, 2016).
  • Technological development: In near future, Burger King will focus on modernized restaurants
  • Procurement:Burger king relies on effective procurement programs through which supply chain of business is also managed.

VRIO framework

  • Valuable: The resource which values a lot in case of Burger King involves human resource, infrastructure, technology and the quality of products offered.
  • Rare: All the resources present with Burger King are limited where they cannot be used by other organizations for serving customers (Zafar, Ghazi & Akram, 2016).
  • Costly to imitate: Core competency present with Burger King to imitate as company has well maintained its reputation in the market and is known for its quality products.
  • Organized: All the resources are arranged by the company in a proper manner so that its competitors may not take advantage of it.  

SWOT and TOWS analysis  

Strengths

· Product differentiation

· Strong brand equity

· Presence in more than 15000 locations and in more than 100 countries

· Wide range of products offered

Weakness

· High level of competition which denotes limited market share for business

· High calorie and fat products are not good for health

Opportunities

· Setting up new branches in other locations

· Promotional schemes for attracting customers

· Introducing home delivery options

Threats

· High food cost

· Threat from fast food restaurants

· Health concerns among general public in relation with consumption of fast food

Internal Strengths

· Wide range of product line

· Strong brand equity

· Presence in different countries

Internal Weaknesses

· Inefficiency to develop healthy products with low calorie and fats

· Heavy reliance on Super customers

· Vulnerability to labour and regulatory influences

External Opportunities

· Opportunity to set up new branches in other locations

· Advertising and social media promotion for attracting customers

· Introduction of healthier food items

SO:

· Develop new products to serve requirement of new markets

· Promote product range with the help of social media tools

WO:

· With expansion in new locations Burger King can focus on developing healthy products

External Threats

· Frequent change in customer’s eating habit

· Rise in level of competition in the  market

ST:

· Focusing on enhancing product line will allow to deal with the issue of frequent change in customer’s need

WT:

· Reduce the threat of competition by developing healthier product which contains less fat and calories

Five guys

Shake Shack

Honest Burgers

Bryon

The Gourmet Burger

First store in UK

2013

2013

2011

2007

2001

Stores

27

2

9

50

66

Average burger price  

£8

£5

£9

£7.95

£6.45

Most expensive burger

£8.75

£8.50

£11.50

£10.50

£10.95

Competitive advantage

Company only use peanut oil, fresh prime beef and nothing is frozen

Company offers frozen custard as well as sourcing premium ingredients such as 100% all natural angus beef

Simplicity – “simple, quality focused menu… to do one thing and do it well”

“Good beef from Scotland, mince it fresh and cook it medium so its pink, juicy and succulent… and serve with a smile” (Sedghi, 2005)

The company makes the source from scratch every day in store

(Sourced from, Sedghi, 2015 and Mintel). 

From the above mentioned table, it can be inferred that Bryon and The Gourmet Burger has emerged as two major competitors of Burger King. Since, their establishment, the above mentioned two brands has grown really well in the UK market. At present Bryon is operating with 50 stores whereas The Gourmet Burger has 66 stores in the country. Furthermore, both the brands have adopted for low price strategy and this has affected sales and profit of Burger King to a great extent. Apart from this, Five guys, Shake shack and Honest Burger are other competitors of Burger King. It can be stated that these brands are carrying out effective marketing of their products and services. Furthermore, the above mentioned brands are also focusing on enhancing the overall quality of services and products delivered.   

Ansoff analysis 

Existing

New

Existing

Offering discount and introducing more promotional schemes

Introducing combo pack schemes for attracting customers

Developing a new range of products

Focusing on health conscious food items

New

Promotion with the help of online tools

Expanding into the Indian market

Developing competitive strategies so as to deal with major competitors

Analyzing the changing taste and preferences of target market


Above shown is the applicability of Ansoff matrix on Burger King which represents that the new strategy of the business is product development where the company has to bring changes in its existing product range (Hurwitz, Montague & Wartella, 2017). Apart from this, promotional tools have to be changed so that customers can be attracted in short period. Further, expanding into the Indian market will also provide ample of opportunities to business, and in turn, all the desired goals can be accomplished quickly.

Segmentation: In UK market Burger King has segmented its market by age and their lifestyle. This segmentation criterion has allowed Burger king to target its customers properly. The company is not able to target people of every group, and due to this reason, youngsters are targeted by Burger King (Kotler, Kartajaya & Setiawan, 2016).

Audience: The primary target market of Burger King is youngsters who prefer to consume products such as hamburger, fries, etc.

Positioning: Burger King has positioned itself traditionally with the help of statements such as ("Have It Your Way"). This positioning statement has allowed the company to attract a large number of customers and in turn has enhanced the level of brand loyalty also (Daabes & Kharbat, 2017). So, this represents the effectiveness of positioning statement where products of Burger King are most popular in the market. The company can compete with its major competitors such as McDonalds etc.

Pestle

Based on the above analysis, the following short term objectives have been put in place to achieve the objectives by 2018.

  • To increase the healthy choices available for customers by 5% amongst the target audience of 18-30yrs in major cities like London, across the UK by July 2018.
  • To increase the delivery option for customers by 10% amongst the target audience of 18-30yrs in major cities like London, across the UK by July 2018.

Marketing objective 

  • To increase the market share in the UK by 3% by the end of July 2018
  • To increase the revenue (sales) by 2% by the end of July 2018

Financial objectives 

  • To increase the net profit increase in the UK by 2% by the end of July 2018
  • To reduce the operational cost in the UK

7p’s table 

  • Product: The key products offered by Burger kind involve hamburgers, fries, hash browns, onion rings, shakes, cookies, etc. The ranges of products offered are effective enough in attracting customers.
  • Price: Company has adopted competitive pricing strategy so as to compete with the major competitor such as burger king in the market. Burger King has set prices which lie under consumer purchasing power in the UK (Harrington et al.  2017).
  • Place: Burger king has outlet everywhere in the global market. All the stores are operated by the company, and it has become one of the main sources of attraction.
  • Promotion: Different strategies for development have been undertaken such as the advertisement, refurbishment of agencies. Along with this, the company has launched many campaigns with the slogan "Have It Your Way." Scratch card schemes of Burger King in the UK are also popular
  • People: All the employees working in Burger King UK are well trained where they know the way to serve customers (Kraak et al.2017). It is one of the main reasons behind the rise in the level of customer satisfaction.
  • Processes: Burger King methods are flexible through which services are rendered to customers in the lesser period. Customers are not required to be in the queue for the longer period, and their orders are delivered in minimum time.
  • Physical evidence: The internal structure of Burger King's outlet is quite attractive where ambiance and another sort of facilities attract customers.

For smooth functioning of business operations, Burger King is required to take measures. Firstly, company to search for the areas where cost can be monitored, and this can allow in enhancing the profit margin. Further, another control measure that can be taken involves optimum utilization of resources such as human and technology. Taking control measures can allow in serving customers and can act as the development tool for the business in the market. Apart from this, some other measures that can be taken involve training of employees, conducting market research, etc.  

  • It can be recommended that Burger King should carry out market research at regular intervals to identify changing customer demand and market trends

  • · It can also be suggested that aggressive marketing should be carried out by Burger King to create demand for its products and services among UK market

  • · It can be recommended that Burger King can introduce the new range of burgers which are free from fat, cholesterol and are healthy. It will help in attracting more customers.

Conclusion 

From the above research, it can be concluded that Burger King is getting affected by macro environmental factors. Furthermore, the bargaining power of customers and competition among fast food industry of UK is very high. It has affected the sales and profits of the selected business enterprise. It can also be concluded that customers are now looking forward to products which are healthy and causes less harm. Therefore, Burger King needs to make certain changes in its product line and should come up with healthier products.

Reference 

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