Burger King RecipeBurger King (BKW) might still be home of the Whopper, but it's far from ruling the burger industry these days.

The fast-food restaurant ranks third among the hamburger giants: Last year, Wendy's (WEN) unseated the chain for the No. 2 spot, and it has never been in range of McDonald's (MCD), the undisputed leader, according to consulting firm Technomic.

But Burger King's new status as a public company could give the place to "Have it your way" a fresh start, and energize its recent efforts to woo back shoppers, Steven West, an analyst with ITG Investment Research, tells DailyFinance.

The company returned to the New York Stock Exchange last week, its home from 2006 until 2010, when it was acquired by private investment firm 3G Capital.

Burger King Corp. CEO Bernardo Hees, accompanied by members of the Burger King Corp.'s leadership team

3G's revival strategy for Burger King included its biggest menu expansion ever last year -- adding items from premium salads and frappe drinks to bacon sundaes -- and a star-studded national ad campaign that ditched its (arguably creepy) "King" mascot for celebrities like soccer star David Beckham and Jay Leno.

Fast-food lovers seemed to respond: For its most recent quarter, Burger King posted its best comp-store sales performance in more than two years.

But there's still work to be done at the No. 3 burger chain if it's going to take a bigger bite out of the fast-food market, West says.

Here's the analyst's recipe for the burger chain.

BBQ1. Stare Down Those Towering Golden Arches

In the battle for burger supremacy, McDonald's has been eating the competition's lunch for the past eight years, West says.

"They're on their second remodeling effort in the U.S., and they have definitely raised the bar when it comes to consumer expectations," he says.

Meanwhile, Burger King "has been trying for a decade to replicate the McDonald's playbook and has failed to do so."

But the IPO could mean a reversal of fortunes for Burger King. "Their new restructuring plan, the use of joint ventures and the procurement of financing through the IPO could spell good times ahead for the 'king of the Whopper,'" West says.

2. Cook Up a Post-IPO Game Plan

First, Burger King will use its newly public status to get its financial house in order, West says.

"In this case, the proceeds will be used to pay down debt, thus lowering interest expense, and helping with net earnings."

Then comes reinvesting in the business and stepping up expansion -- especially overseas. "Over the next few months, Burger King will see accelerated re-franchising of company-owned stores ... then accelerate unit growth both domestically and internationally, though about 80% to 90% of unit growth will likely be international," he predicts.

Burger King Bacon Sundae3. Answer the Question: Where's The Beef?

Burger King will "continue to bolster their menu offerings in the U.S." -- but new items must be "innovative" if the chain wants to win over more fast-foodies, West says.

That push should go hand-in-hand with beefing up customer service, he says. Indeed, new and more complex menu items, like smoothies, frappes and wraps, have slowed down its service because they reflect "new ingredients, new processes, etc., and thus take [workers'] time to become efficient at making them fast-enough for a drive through operation."

4. Build Castles Fit for a King

McDonald's has fancied up its units with store remodels that include new half-moon-shaped booths, wooden blinds and even flat-screen TVs, which have changed the popular idea of how a fast-food chain should look these days.

Hence, Burger King needs to spruce up its digs, too. "They need to remodel the store base," West says. "As McDonald's CEO says, 'You can't sell a $6 burger out of a $3 store.' "


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Kev132kwa

Definitely agree that we should eat less fast food. I think the biggest reason most of us resort to fast food places like McDonald's, Burger King, Wendy's and the likes is that we don't have time to get food anywhere else. There is a solution, though! Food Trucks! Food trucks serve better food, serve MUCH healthier food, at a cheaper price, and are just as quick getting the food to you. For those of you who have negative preconceptions of food trucks, give them a try, I bet you're pleased. Oh, and for fellow New Yorkers, check out Foodtoeat. com, NYC's new online ordering site that allows users to place orders for pick up from food trucks, saving even MORE time and saving you from standing on line! Enjoy, ladies and gentlemen, and stay away from all those nasty "burgers" and "fries."

August 08 2012 at 1:57 PM Report abuse rate up rate down Reply
carl

Burger King has the better food and my grandkids love to go there to play also. I have noticed that they all should be cleaning a little better and more often. Nothing ruins my appetite more than to see food on the floor and in the play area. Mcdonalds has gotten so bad that we do not go there at all anymore. Wendys used to be clean but now even a brand new one is dirty. Hardees seems to be the cleanest, but children do not seem to like the place altho I dont know why. Maybe lack of a real childrens menu--

July 02 2012 at 10:31 AM Report abuse rate up rate down Reply