Burger King

Burger King is flamed-broiled burgers, fries and soft drinks at a good value, served quickly and consistently by friendly people in clean surroundings. Burger King claims its grilled burgers are better than competitors McDonald's and Wendy's fried burgers. The firm launches a $70 million french fry advertising campaign; Grand Metropolitan merges with Guinness to form Diageo plc. A group of investors led by Texas Pacific Group acquire Burger King. Burger King Corporation is the second largest fast-food chain in the United States, trailing only McDonald's. The company franchises more than 10,400 restaurants and owns about 1,000 for a chainwide total exceeding 11,455, with locations in all 50 states and 56 countries. The company serves 15.7 million customers each day and over 2.4 billion Burger King hamburgers are sold each year across the globe. In the late 1990s and into the new millennium, Burger King was plagued by falling sales and deteriorating franchisee relationships. Burger King's parent, Diageo plc, sold the company to a group of investors led by Texas Pacific Group in late 2002. Miami entrepreneurs James McLamore and David Edgerton founded Burger King Corporation in 1954. Five years later, they were ready to expand their five Florida Burger Kings into a nationwide chain. By the time they sold their company to Pillsbury in 1967, Burger King had become the third largest fast-food chain in the country and was on its way to second place, after industry leader McDonald's. The story of Burger King's growth is the story of how franchising and advertising developed the fast-food industry. McLamore and Edgerton began in 1954 with a simple concept: to attract the burgeoning numbers of postwar baby boom families with reasonably-priced, broiled burgers served quickly. The idea was not unique: drive-ins offering cheap fast food were springing up all across America in the early 1950s. In fact, 1954 was the same year Ray Kroc made his deal with the McDonald brothers, whose original southern California drive-in started the McDonald's empire. By 1959 McLamore and Edgerton were ready to expand beyond Florida, and franchising seemed to be the best way to take their concept to a broader market. Franchising was booming in the late 1950s because it allowed companies to expand with minimal investment. Like many other franchisers, McLamore and Edgerton attracted their investors by selling exclusive rights to large territories throughout the country. The buyers of these territorial rights, many of them large businesses themselves, could do what they wanted to in their territory: buy land, build as many stores as they liked, sell part of the territory to other investors, or diversify. McLamore and Edgerton took their initial payments (which varied with the territory) and their cut (as little as 1 percent of sales) and left their franchisees pretty much on their own. The system worked well, allowing Burger King to expand rapidly. By 1967, when the partners decided to sell the company they had founded, the chain included 274 stores and was worth $18 million to its buyer, prepared-foods giant Pillsbury. The Burger King franchising system also worked well for the franchisees. Under the early Burger King system, some of the company's large investors expanded at a rate rivaling that of the parent company. Where this loosely knit franchising system failed, however, was in providing a consistent company image. Because McLamore and Edgerton didn't check on their franchises and used only a small field staff for franchise support, the chain was noted for inconsistency in both food and service from franchise to franchise, a major flaw in a chain that aimed to attract customers by assuring them of what to expect in every Burger King they visited. It was up to the new owner, Pillsbury, to crack down on franchise owners. But some large franchisees thought they could run their Burger King outlets better than a packaged-goods company. Wealthy Louisian