Published September 16, 2003
CHICAGO – Burger King Corp. (search) is planning to jump on the healthy fast-food bandwagon with low-fat baguette-style chicken sandwiches, its latest attempt to breathe new life into its struggling fast-food business.
The No. 2 U.S. hamburger chain, which was sold to an investor group led by private equity firm Texas Pacific Group in December, desperately needs to drive up sales. Several of its operators have been on the skids, hurt by big debt loads and over expansion, including AmeriKing Inc., its second-largest, which filed for bankruptcy in 2002.
Burger King's push toward a healthier menu follows similar efforts by rivals McDonald's Corp. (MCD) and Wendy's International Inc. (WEN), which have both heavily promoted entree-sized salads in response to increased concern about obesity and other trends.
The flood of health-oriented activity by fast-food makers could make it tougher for Burger King to make a big splash, analysts said.
"The whole industry is trying to go toward more healthy products," said A.G. Edwards & Sons analyst Jack Russo. "Burger King is coming from a very low base."
Burger King's new sandwiches contain only 5 grams of fat and use baguettes baked fresh at the restaurants, a company spokesman said. They will be introduced to the press with much fanfare by Chief Executive Brad Blum in New York on Thursday.
The Miami-based company begins the products' roll-out on Sunday, with an ad campaign developed by its lead agency, Young & Rubicam Inc., a unit of Britain's WPP Group Plc.
Burger King, which has about 8,000 U.S. stores, has struggled in recent years to carve out an identity, while its big rivals, despite competitive pressures, have maintained theirs, analysts said.
Industry leader McDonald's built its niche around speed, while Wendy's, the No. 3 burger chain, maintained its reputation as the slightly more expensive, better-tasting choice.
Burger King's share of the $47.5 billion U.S. hamburger market shrank 2 percentage points to 17.5 percent between 1997 and 2002, according to Technomic Inc. McDonald's held steady at roughly 43 percent.
"They (Burger King) have really tried a lot — veggie burgers, all different kinds of variety sandwiches," said Bob Goldin, a Technomic executive vice president. "I don't get the sense that anything has hit the mark with them."
Blum, a former executive of Red Lobster parent Darden Restaurants Inc. (DRI), took Burger King's helm in January. He is trying to build an identity around so-called fire grilling, seeking a healthier spin on what Burger King once distinguished as its flame-broiled taste.
Meanwhile, competition for healthier fast-food is heating up. McDonald's has already seen success with its meal-sized salads, which have contributed to a recent reversal in a longstanding sales slump.
McDonald's is testing a Mexican-style version of the salad as part of an adult-oriented Happy Meal that includes a fitness program from Bob Greene, Oprah Winfrey's trainer.
With or without healthy foods, Burger King still has a tough road ahead.
"One of the issues we face is that our menu needs to be more relevant to the consumer," said Joe Langteau, chief executive of AmeriKing, the bankrupt Burger King franchisee. Langteau said the new menu is "a necessary step for our business." AmeriKing expects to emerge from bankruptcy protection later this year, he said.