The other week we mentioned the indifference shown by Ken Ferree, CEO of the Corporation for Public Broadcasting, in a NY Times Sunday Magazine profile.
Compare Ken's indifference with the endearing comments from Burger King’s CEO, Greg Brenneman.
In a recent Wall Street Journal article, Brenneman comes off as being down-to-earth, transparent, and downright giddy about Burger King and its products. It’s also worth noting his responses use crisp and clear language. (How rare is it to hear a CEO not use vapid and vacuous jargon? Too rare.)
Highlights from the very smart interview are below and you can download the article by clicking here (.doc).
WSJ: Your turnaround formula includes boosting a restaurant's average annual sales from $970,000 to about $1.3 million. How will you do this, and sustain it?
Brenneman: It's the million dollar question. We knew Wendy's was at $1.3 million. McDonald's was at about $1.9 million. I said, what's a good interim goal? If you said $1.9 million, everyone would look at you like you're on drugs. We said, we can get at least as good as $1.3 million. That doesn't happen in a year. You can only develop things so fast.... There were a ton of gaps that existed in our offerings versus our competitors. The pantry was fairly bare. There was no thick burger. No whole-muscle chicken sandwiches. No salads. No chicken strips. No limited breakfast menu.
WSJ: Speaking of indulgent, you call your best repeat customers "Super Fans" -- the 18-to-34-year-old males who come in three to four times a week. How are you strengthening efforts to appeal to them?
Brenneman: If you think about what drives our business, "Super Fans" are something like 25% of our customer base, but 50% of spending. If we just get one more visit out of the Super Fan, it's like a 10% increase in comparable sales. It's about understanding who the core consumers are and getting the kind of indulgent products they want. You can't be everything to everybody. If you look at the Enormous Omelet Sandwich, we didn't beat around the bush with the name. It's an indulgent breakfast sandwich, and it's absolutely geared at the Super Fan.
WSJ: What do you eat?
Brenneman: I'm a Double Whopper fanatic. What I go in for on a regular basis is the salad. With chicken on it, it's terrific. You can put reasonable dressing on it and have a terrific meal if you need to watch your girlish figure.
WSJ: You've described Burger King's culture as having had an "entitlement attitude." What do you mean?
Brenneman: We were part of Diageo. This was a subsidiary of a British business. Because no one told people how they were doing, no one knew if they were making money or losing it. People just began to think of it as something they were entitled to -- this salary, these benefits. It was coming from a booze business that made 80% margins. So we started telling people...we're making this much money, we got bonuses tied to profitability. We're just ourselves now. The guy who's saving us is the guy who's looking in the mirror.
WSJ: How does your relationship with Burger King's owners help, since you answer to them rather than to public shareholders?
Brenneman: We have a great relationship... because they're friends, they're business partners, they're incredibly smart businessmen and women, and they're a phone call away. Sales are up. Profits are way up. They go work on whatever else is troubling them in their portfolio.
WSJ: You've got about 11,000 restaurants globally. How many do you think you can reach in the next five years?
Brenneman: I don't have a number. The thing in the past was, let's just grow. I'm more concerned about profitable growth. As the cost of building the restaurant comes down, the return on capital changes dramatically...that will drive how many restaurants will get built.
There are many places where we want to put more Burger Kings. Internationally, we are in 65 countries around the world. Not one of those 65 countries [is] totally built out. We entered Brazil this year, it's growing like gangbusters. We'll enter China later this year. We have many markets where we can grow our presence without over-saturating or cannibalizing our own sales.
WSJ: How soon might we see an IPO?
Brenneman: If we do an IPO -- and that'll be up to the sponsors how they want to exit. I don't think they're in any hurry, but everybody knows these guys don't hold onto things forever. My guess is not in calendar year '05, maybe in calendar year '06. To do an IPO you need company performance, and it's good right now. You also need the market to be solid. I think it'd be a great thing for our system. Being able to read about yourself in the stock exchange everyday is something our franchisees look forward to. But it's by no means critical to us.
It's been interesting to see how working with Crispin Porter + Bogusky has effected their mindset over there, and generally in a pretty good way.
Posted by: Aaron Dignan | May 02, 2005 at 06:33 PM