The story of fast food giant Burger King began in 1953 with two aspiring entrepreneurs in Jacksonville, Florida. Keith J. Kramer and his wife’s uncle Matthew Burns were inspired by McDonald’s franchise success in San Bernardino, California. They opened their own restaurant, which they named “Insta-Burger King.” They built a stove, the “Insta-Broiler,” where they cooked their burgers.
Several years later, their business expanded into several locations. In 1954, a pair of Cornell University classmates James McLamore and David Edgerton, purchased one of Insta-Burger King’s franchises. The two franchisees initiated a corporate restructuring of the chain, and the first step was to change the restaurant’s name from Insta-Burger King to simply Burger King.
In 1955, Burger King made its debut in Miami, Florida. In 1957, Burger King introduced their own hamburger, the Whopper, which would become the chain’s signature item.
In 1959, Burger King Corporation opened its doors to franchising, expanding the business even further. After running Burger King successfully for eight years, McLamore and Edgerton sold it to Pillsbury for $18 million in 1967. At the time, Burger King had over 275 locations in the U.S. and became the second-largest burger chain, just behind McDonald’s.
Ups and downs
Now under Pillsbury, Burger King even grew more exponentially. One of Burger King’s most significant corporate moves was to “pirate” McDonald’s former executive, Donald N. Smith, in 1978, to help revamp the company. Under Smith’s direction, Burger King underwent several changes, including changes to their menu, updates on their franchise agreements, and new store design. By broadening the menu, Smith introduced new items such as the Original Chicken Sandwich. These new items became successful, and sales jumped by 15%.
After Smith left Burger King in 1980, the chain saw a decline in sales. Norman Brinker, who had been brought into Pillsbury when the latter bought his chain Steak & Ale, was appointed as Smith’s successor. When Brinker took over, he started what would become known as the “Burger Wars,” running commercials that proclaimed Burger King’s flame-broiled burgers were bigger and better than McDonald’s. Burger King’s move was bold and, as expected, controversial as it was (or might be) the first political-style “attack ad” in the food industry. Despite (or because of) the controversy, not to mention a lawsuit from McDonald’s, Burger King’s sales shot up.
As with Smith, Brinker’s work with Burger King helped the company turn around. But just like with Smith’s departure from Burger King, Brinker’s own exit was followed by another downward slump for the burger chain. Pillsbury did all that it could to resist a hostile takeover bid by Grand Metropolitan PLC. But in 1988, Pillsbury gave up in the end and allowed the British company to acquire Burger King for the sum of $5.7 billion.
A series of ownership changes
Already having a global focus, Grand Met changed Burger King’s distribution system as part of its restructuring. As a result, several employees were laid off. It also switched their soft-drink contract from Pepsi to Coca-Cola. Grand Met continued on its plans with Burger King’s global expansion by partially buying British company United Biscuits, which also owned a chain of Wimpy burger restaurants. As a result, many Wimpy restaurants were converted into Burger King’s. Grand Met also partnered with Disney to tie in with Walt Disney movies, which was met with success.
In 1992, Burger King’s headquarters in Miami, Florida, was destroyed by Hurricane Andrew. But Grand Met’s proactive efforts helped the company to rise quickly. In 1997 Grand Met merged with brewing behemoth Guinness to form Diageo PLC, which proved to be detrimental to Burger King. Franchisees alleged that Diageo ignored the burger chain in favor of its liquor business.
Soon, Burger King found itself slumping once again. TPG Capital, through assistance from Goldman Sachs and Bain Capital, came to save Burger King by buying it at $1.5 billion. In 2006, Burger King’s initial public offering (IPO) was launched, generating $425 million in stock sales. Under TPG’s direction, Burger King introduced the “BK Whopper Bar” concept, allowing customers in some branches to see the burgers being prepared.
The latest chapter in Burger King’s ownership history occurred in September 2010 when 3G Capital bought the burger chain for $3.26 billion. That same year, the company was made private. 3G sought to restructure Burger King by revamping its menu, remodeling its stores, and changing its ad agency, among other things. In 2012, Burger King went public again on the New York Stock Exchange with the symbol BKW.
In 2014, it Burger King merged with Canadian coffee shop and restaurant chain Tim Hortons in a deal worth $18 billion (or Canadian $19.6 billion). That same year, Canadian-based Restaurant Brands International was created. The move was deemed controversial because it meant that the burger chain would pay less in taxes to the U.S. government (tax inversion).
Restaurant Brands’ acquisition of Popeye’s chain in 2018 further expanded Burger King’s menu offerings beyond hamburgers and donuts by adding chicken dishes. As of 2018, Burger King has reclaimed its place as the second-largest burger chain in the U.S. with sales of $9.6 billion.
Only time will tell whether Burger King’s recent ownership by Restaurant Brands can help achieve its future goals.