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Burger King Pulls Plug on Expensive, Futuristic Redesign

[Updated: Burger King says it is revising but not abandoning its 20/20 design concept. According to a company spokesperson, "Burger King Corp. believes its global 20/20 restaurant image program is the future of the Burger King brand and the company has no plans to move away from this image. … In an effort to provide franchisees with various remodeling options, BKC is currently testing new cost-effective remodeling solutions for free-standing restaurants in North America. This new 20/20 remodeling option will continue to maintain the contemporary elements of the 20/20 image." This information was not provided to securities analysts, who had asked during the earnings call for additional details on the lower-cost version.]

BK's "20/20" design has been downsized.

Burger King is rethinking the  flashy “20/20” restaurant design with red-flame chandeliers that cost about $500,000 per store to create. With comp sales still in the red, does Burger King have that kind of money for its 12,251-store network? Rival McDonald’s, however, has capital and plans, announced last year, to spend $1 billion on remodeling over the next several years.

In October 2009, former Burger King CEO John Chidsey announced a grand plan to remodel all 12,000+ Burger Kings worldwide to the slick “20/20” design, which he called “contemporary, edgy, futuristic.” Some franchisees called it expensive. On Thursday, with Chidsey having recently departed Burger King’s management team, EVP-CFO Daniel Schwartz told analysts the chain is testing a “lower-cost remodel solution” that will require “substantially, meaningfully less” than the $500,000 to $600,000 per store he says was previously involved. He declined to give details or estimate how much the new remodeling plan will cost, but some level of modernization is a must. Most of the chain’s stores sport a unit design that Chuck Fallon, who left his post as North American president last October, had called a “20-year-old” image.

In Japan, McDonald's is updating decor and (at right) uniforms.

Scaling back the futuristic remodeling dreams is in line with a new strategic approach for Burger King now that it is owned by private-equity firm 3G Capital. Schwartz emphasized that the brand is refocusing on the bottom line as it creates a new “sales-driven marketing culture” built around Burger King’s historic brand attributes: flame broiling of its burgers and “Have it your way” customization. Last month it parted company with lead ad agency Crispin Porter + Bogusky and is reviewing the account, worth $300 million-plus in the U.S.

Burger King introduced the “Have it your way” tagline in Japan this week, where the campaign includes a new beef/chicken/pork Meat Monster Whopper.

Burger King, which has shifted its fiscal-year close to Dec. 31 from June, released sales figures for the last six months of 2010. Same-store sales systemwide (company and franchise) were -2.7% (compared with -2.3% for fiscal 2010). The worst performances came in the U.S. and Canada for company (-4.9%) and franchised units (-5.0%). The lone positive was a +6.2% sales spurt for franchised stores in Latin America (from where new Burger King CEO Bernardo Hees hails). Unfortunately only about 9% of Burger King’s 12,251 restaurants are in Latin America. North America is 61% of the system. Average unit sales for Burger King was flat at $1.2 million.

McDonald’s, which had worldwide systemwide sales of $77.4 billion in 2010 (compared with an estimated $14.5 billion for Burger King) and has average unit sales above $2 million, isn’t pulling back on its remodeling plans. Last year, it announced plans to redo 2,000 of its stores in 2010 as it continues to refresh its 32,800 stores at a cost to operators of $250,000 to $500,000 per store. In January, CEO Jim Skinner told analysts that nearly 70% of European store interiors and 40% of exteriors have been remodeled, “making our brand more contemporary and relevant.”

That new global McDonald’s look is evident in Japan where, sadly, it had just completed a widespread reimaging program just before the recent earthquake. Interiors have been redone in brighter but more modern colors and new bistro-look crew uniforms are being introduced.

14 comments to Burger King Pulls Plug on Expensive, Futuristic Redesign

  • Frank Burke

    From a marketing standpoint, BK (and others in the business) would do better to utilize several visual approaches customized to a localized patronage demographic. Nothing gets older faster than a “futuristic” look, and a variety of approaches would provide greater interest and result in less radical and expensive remodeling over the long run.

  • Julie

    How about putting more money into making better quality food instead of redecorating, update the restaurants look but this is a little extreme.

  • James Andrus

    Who gives a damn how the store looks? We buy burgers for the taste and just about no one cares how the inside of the store looks.

  • Bill Smit

    Too many BK’s look old/drab. Every restaurant needs to run like a true individual business. Operators (or BKC mandate) need to either close the tired/underperforming units, invest/update or sell to someone who will run the restaurant as a true business. True business means great curb appeal (proper signage, intact/sealed/even parking lots, relevant landscaping, all accent and parking lot lights working, litter picked up, etc), clean and relevant interiors (proper colors, proper light bulbs (no daylight bulbs-ugh), spacious design), employees properly trained, groomed/showered/wahsed and in clean uniforms – with positive/friendly customer focused attitudes (have a business equity partner working at all times). Last and most important great/fresh food – hot off the broiler or freshly cut.

  • Justin ST

    BK’s real problem has always been its fries and chicken products. Improve them. The restaurants need a redesign like McDonald’s own. Make the chairs more comfortable and add wi-fi. This 20/20 design was idiotic. The previous CEO was an idiot. However, I have faith in the new management. Several of their recent decisions have been solid.

  • BURGERBOY

    BK has dug a deep hole over the last thirteen years. They missed every opportunity to generate momentum and they spent their efforts on counter productive “core marketing” and hi tech designs. The only 20/20 images that were built were done by very large franchisees to placate BK. It was not an investment in the brand, it was politics.

  • DonnaM

    I would suggest a bucket and a mop as Plan A.

  • N W. R Conley

    I have been with Burger King as a franchisee. I live in a rural area of the country. Every seven years we end up with new ownership who end up buying this brand in order to sell it. As long as we have that going on there will be a real challenge in that relationship. At the restaurant we need quality service and cleanliness as a priority everyday. In clean well maintained restaurants. Bless the BK brand with owners that stay long enough to see our common goals realized. I love Burger King. I’ve been in this brand approaching 30 years.

  • Anthony Theobald

    Our own experience is that their is no consistency in Burger King stores. The food was always good. Our last several visits show that this isn’t the case anymore. It is consistently poor. Many of the stores we have been in: The help is totally dis-interested in customer satisfaction The always seem to having an animated conversation about nonsense.

  • alain smithee

    As a consumer, I would love to see a chain add bicycle racks in the triangular shaped “dead space” at the end of a row of parking spaces.

    This would give me a place to lock up the bicycle without forcing me to find a light pole half a block away.

    Restaurants could also combine these bicycle parking spaces with their lower calorie/healthier menu options as a promotion to get more customers in the building at minimal cost.

    I can picture a commercial with a child riding with mom & dad (who are on a tandem bicycle) stopping at the restaurant to discuss their day and agreeing to do this again soon.

  • Michele

    I agree with DonnaM. The last time I was at Burger King my feet stuck to the floor. I am not kidding.

  • Robert Wilkins

    I am in Toronto and the several BK’s I have been in or near are sad looking has beens. They are perfect representations of corporate mistakes. Imagine using blue as a food colour? Impossible. (OK Greeks use blue) but fastfood places cannot get away with the prison cafeteria look. I am sure that plenty of people in the company would have spoken up but were forced to back down because of over confident CEO’s who know nothing about food and human beings bashed them down. COuld be the accountants have a lot to do with design decisions as well. If I had BK securities I would tell my broker to sell them immediately. This is a company on it’s way out.
    Look at the brown stuff on the menu. And the fonts and the letter sizes. Everything is wrong.
    And the public knows it. The people running the company into the ground do not.
    By the way. Every success that McDonalds is enjoying is the result of their experiences in Japan. They are still losing in Japan but their lessons there are paying off big.

  • Vijay Swearingen

    Places like BK and other QSRs should all be destroyed. I’m opening a Fast Casual concept pf my own based on my popular Food Truck which specializes in more locally and regionally purchased ingredients and an addictive menu which tastes like REAL food and is actually good for you. I applaud the better burger concepts for kicking that “old guard” in the teeth. Now, if we could just get In and Out Burger to supplant BK locations all across America!

  • OK, but In-N-Out is one of the QSRs you destroyed in your first sentence.

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