• Why did Burger King attract aggro with the discontinuation of Whopper

Yesterday, the Whopper discontinuation was a mess in all the Kakao chatrooms. Even Burger King Kakao Channel dragged the aggro, making it even more popular. The aggro was organized as a heaping called Whopper Renewal, but it should be noted why Burger King attracted the aggro.

The direction established by Affinity, which acquired Burger King in 2016, was to expand its appearance. Burger King, which had 200 billion won in sales and 700 million won in operating profit in 2012, was acquired by its former owner VIG Partners and revived it with 250 billion won in sales and 10.8 billion won in operating profit in four years.

With 266 stores, it had to expand its size in order to sell it at a higher price than the purchase price, since it had 250 billion units of sales and an operating profit of 4 to 5%. Since then, Burger King has increased its number of stores, overtaking McDonald’s, and expanding to about 470. And sales have also tripled to 700 billion won. Of course, it was the result of not only increasing the number of stores but also actively utilizing discount coupons and developing a lot of new menus at Burger King, which was regarded as a Whopper one-tool.

The scale grew but the profit did not increase. The operating profit of Burger King’s operator, BKR, was close to taking a backward step compared to the increase of 1.4 billion (2017), 8.7 billion (2018), 18.1 billion (2019) and 8.1 billion (2020). Although the figure recorded 24.8 billion won in 2021, it fell back to 7.8 billion won in 2022. Given this situation, it is frustrating for an appearance that wanted to sell Burger King.

Then, the 23-year-old BKR achieved a reversal of 23.9 billion won in operating profit. If you look at this, it will be successful. What’s the problem?

For now, sales are down. The key to Burger King’s strategy was to scale up, and it has been steadily rising year after year, but this is the first decline since the acquisition of Affinity.

Although operating profit has rebounded, the key to operating profit growth is to reduce sales costs by 26 billion won, especially in the use of raw materials and storage products. In other words, cost reduction. This means that the company has increased operating profit by saving material costs.

Consumers are expected to immediately respond to the reduction of ingredient costs in food. Burger King, in particular, has a thick fanatic base who adheres to the Whopper. Changes in raw materials are a factor that consumers may perceive as a change in taste. And in the long run, it may act as a negative factor for the brand’s fans to turn their backs on.

At this point, it is understandable why BKR attracted Tim Holton to Korea last year. Until now, Burger King has shown a strong emphasis on growth. Although it has endured a decline in profits for its growth, it is in a situation where it is less attractive as a sale. That’s why growth slowed down last year. In this situation, I think Tim Holton has been used as a new growth engine for BKR. In terms of sales, it is more advantageous to stick with Tim Holton than Burger King alone.

Let’s come back and talk about the Whopper.
Let’s understand in this context the action of declaring a renewal of the Whopper while Burger King is attracting aggro. The Whopper is a key item of Burger King, so it is difficult to make a change. Many consumers will oppose the Whopper by saying that it is not the Whopper it used to be.

If so, the way to make changes but accept changes is to create new ones. If the new Whopper is launched, it will be ignored by Whopper enthusiasts as it has been. However, if you replace the old Whopper with a new Whopper, you can accept the change at least. Of course, this could help some of the existing fans fall out, but if you keep the majority of consumers, your profit margin will improve. Perhaps he decided that this would be better than continuing the situation with an operating margin of 1%.

Of course, the real reason may be known inside BKR. At least, I think this is the case if we infer from the factors that seem to be on the surface.

People generally don’t make a difference in what goes well. It is better to interpret making a big change as at least the decision maker sees the situation as not easy.