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Burger King and the Quick Service Restaurant (QSR) industry Jake Peng

Burger King and the Quick Service Restaurant (QSR) industry Jake Peng. An overview of the QSR industry. Restaurant industry ($1.75 trillion). Fine dining Quick service restaurant Annual revenue growth of 3% Approx. $238 billion in 2012 Buffet “Fast casual”. Key players in FFHR.

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Burger King and the Quick Service Restaurant (QSR) industry Jake Peng

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  1. Burger King andthe Quick Service Restaurant (QSR) industryJake Peng

  2. An overview of the QSR industry Restaurant industry ($1.75 trillion) Fine dining Quick service restaurant • Annual revenue growth of 3% • Approx. $238 billion in 2012 Buffet “Fast casual”

  3. Key players in FFHR On a larger scale (QSR) National Regional

  4. Unique features of the QSR industry • Very competitive • Few barriers • High volume, low cost and high speed product • Gross margin is usually less than 10% • Highly sensitive to commodity price • Raw materials take up 33% of total cost

  5. Unique features of the QSR industry • Franchising – A way to become “lighter” • Most of store are franchised (97% for Burger King and over 80% to McDonald’s) • Collect rental on property and royalty • Franchisers save huge amount of resources (e.g., labor and capital) • Far more profitable than owned restaurants (Gross margin of BK: 11% vs. 86%) • Changing customer eating habits and perception about health • e.g. concern for genetically modified food • Bad publicity about fast food • Less influenced by recession

  6. Overview of Burger King • World’s second largest fast food hamburger restaurant (FFHR) • 12,997 restaurants in 86 countries • 1.9 billion in revenues (63% from US and Canada) • 12% of total FFHR consumer spending (2012) • Privatized twice by equity firm to (re)join capital market • Acquired by a P/E consortium in 2002 and first went public in 2006 • Acquired by 3G Capital in 2010 and went public again 2012

  7. Key Strategies • Driving Sales and Traffic in the U.S. and Canada • New menu • Marketing communications – “Taste is King” • Accelerating international development • Establish joint venture with major franchisees in emerging markets • Refranchising Initiative • Refranchised 871 Company restaurants in 2012 • Goal is 100% franchised • Driving corporate-level G&A efficiencies • Zero-based budgeting

  8. Selected KPIs

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