FAST FOOD INDUSTRY Burger battle shows how CEOs pile it on differently

Two very different chiefs are facing off in burger wars.
CHICAGO TRIBUNE
McDonald's Corp. tapped insider Jim Cantalupo to be its new chief executive officer in mid-December. A week later, rival Burger King Inc. appointed Brad Blum, a relatively obscure executive from Red Lobster-owner Darden Restaurants, to be its new chief.
The timing of the announcements inextricably linked measures of ground gained and lost on the cutthroat battlefield of the Burger War.
Both executives are fighting to keep their brands on the cutting edge in a rapidly changing market.
McDonald's is clutching its hard-won 43 percent of the market; Burger King is trying to loosen McDonald's grip to increase its 18 percent share. While no clear winner has emerged in the first nine months of battle, both leaders are refining their strategies based on early successes and failures.
On one side is Cantalupo, a ketchup-in-his-veins, accountant-turned-operator who loves to talk about his company's operations.
Refocusing
After nearly 30 years in the trenches at McDonald's, Cantalupo swept back into Oak Brook, Ill., in January, a few months after retiring at age 59. His mission: Refocus a company that failed to meet analysts' expectations in seven of the previous eight quarters.
Burger King's Blum is a stark contrast.
The 49-year-old CEO is a marketing whiz with an eye for broad vision, a penchant for fast cars and an ability to engineer quick turnarounds. He is credited with changing the fortunes of Olive Garden while at Darden.
Blum said he hopes to bring a culture of creativity to Burger King, emphasizing that he quickly ushered in a plethora of new executives, tapping allies from outside to help bring about his Burger King revolution.
A comparative Burger War novice, Blum has been handed a whopper of a challenge -- polish a tarnished brand weighed down by cash-strapped operators. Within three to five years, Blum says, he wants to take Burger King public.
But beyond the internal challenges they face, both CEOs must battle each other on several fronts. Here is comparison of how the two executives have fared in key areas so far:
UMarketing: Advantage Blum
Even before he took the top job at Burger King, the Kellogg MBA was thinking about how to market the company.
Although little has changed in the kitchen, the Miami-based company's burgers are no longer "flame-broiled." Blum calls them "fire-grilled." The term is part of a nomenclature that he hopes will help re-establish one of the essential differences between the chains.
In the other camp
McDonald's was slower to act but launched its own attack in September. Cantalupo took a far more measured approach, even though he quickly accepted the need for a much clearer marketing message.
His lieutenants pitted the company's many agencies against each other in a high-stakes, international search for an idea that would resonate with consumers. The fruit of the effort was served earlier this month in Germany, home to the winning agency.
There, Cantalupo unveiled McDonald's new "I'm Lovin' It" campaign, the burger giant's first fully global marketing push.
USales: Advantage Cantalupo
McDonald's CEO clearly has the edge when it comes to winning back customers.
A stellar summer culminated in July with a record 10 percent growth in U. S. sales at stores open more than 13 months.
New premium salads have created a buzz that has "at least got people talking positively about the company again," said Robert Goldin, a restaurant analyst with Chicago-based food service consultancy Technomic Inc.
Cantalupo followed the salads, served with actor Paul Newman's dressings, with the quirky McGriddles breakfast sandwich.
No comparable sales numbers are available for Burger King because it is a private company. But Blum did say he has stemmed the decline that saw revenues fall by 22 percent during the past six years. He said July and August sales picked up, with gains for 17 consecutive days at company-operated stores.
UFinance: Advantage Cantalupo
Blum said he and his team have put their money on the table to buy equity while operators have made more capital expenditures, and managers and other executives have forgone bonuses in favor of stock and options.
Struggling
In spite of this, Blum is well aware that many of his operators are struggling financially to execute the changes that are part of his vision.
Cantalupo, on the other hand, took over a stronger organization. Despite a miserable year, McDonald's still posted net income of close to $900 million in 2002.
Even with cash on hand, Cantalupo acknowledges that his first attempt to woo Wall Street backfired.
In January, he immediately signaled to Wall Street that he would go "back to basics." But instead of boosting confidence, his mid-January conference call sent McDonald's stock down 5 percent, to $15.85 that day.
"It was too early in the game," Cantalupo said. "I recognize it's a 'show-me' environment."
To that end, he has tinkered with the taste of burgers and increased cooking time of buns in an attempt to improve the food.
UOperations: Too close to call
In April, Cantalupo did the unthinkable for many at McDonald's: He acknowledged that the days of 10 percent to 15 percent annual growth were gone, at least for now.
In a sharp departure from the rhetoric of his predecessor, Jack Greenberg, Cantalupo said annual sales at the Golden Arches would hover between 3 percent and 5 percent until 2005, with operating profit increasing by about 6 percent.
At Burger King, Blum recently did away with the 99-cent menu that slashed operator margins. Instead, he has selected three burgers, served with fries and a soda, to offer as part of a new value slate.
And Aug. 28, Blum unveiled a new organizational structure that appears to borrow heavily from McDonald's playbook. According to the CEO, the moves are designed to improve U.S. restaurant performance and will put more personnel in the field to work with franchisees and restaurant managers.