Burger King is on the upswing

Chicago Tribune

Chris Ondrula runs Burger King’s second-largest franchise operation, so he can’t ignore McDonald’s. It’s his largest competitor, and he drives by the chain’s global headquarters twice a day.

Oak Brook, Ill., has long been home to the golden arches, but the headquarters of a 412-unit Burger King franchise is less than 5 miles away.

The Miami-based brand is on the upswing, thanks to efforts courting women and families, including toned-down advertising, updated restaurants and a vast menu expansion that cribs from many recent McDonald’s hits, including lattes, smoothies, salads and wraps.

Burger King’s same-store sales rose 3.2 percent in 2012, following years of declines. The resurgence coincided with McDonald’s first monthly same-store sales declines in more than nine years. McDonald’s has reported two monthly same-store sales declines since October, though 2012 global same-store sales rose 3.1 percent. Analysts expect both chains to have a rough first quarter.

“I’ve heard a lot about McDonald’s and the negative impact that they’ve seen in their business that they haven’t seen in a few years,” Ondrula said in an interview. “I do go to bed at night very satisfied that we are seeing successes, and they’re building on each other.”

According to Technomic, a Chicago-based restaurant industry research and consulting firm, Burger King came close to retaking the No. 2 spot in the burger segment last year after losing it to Wendy’s in 2011.

Wendy’s and Burger King each have a 12 percent share of the $71.8 billion fast-food segment. Technomic estimates that Wendy’s 2012 sales rose 1.2 percent to $8.6 billion and that Burger King’s rose 2.9 percent to $8.59 billion.

Neither stands a chance of catching McDonald’s, which saw U.S. sales rise 4.2 percent in the U.S. despite a sluggish year, to $35.8 billion, or 49.6 percent of the domestic hamburger category.

Darren Tristano, executive vice president of Technomic, characterized 2012 as “a step in the right direction,” for Burger King, citing its expanded menu and remodeled restaurants.

“Burger King has been struggling for over a decade,” he said. “Sometimes it just takes some time to slow down the rhythm before you can change directions.”

Though copying McDonald’s on some items might not win originality points, it means “you’re not giving your customers an excuse to go to McDonald’s,” Tristano said.

Burger King was taken private in a $4 billion deal in 2010, kicking off a brand overhaul that’s focused on its menu, marketing, restaurant ambience and operations.

The chain has upgraded classics such as the Whopper and its french fries, and added new products to attract women, such as chicken, apple and cran-berry salads, caramel lattes and mango smoothies.

Ondrula, a jogger who played four years of college football and doesn’t eat much meat, is also a fan of the expanded healthier options. His favorite item is the veggie burger, with mustard instead of mayo.

Burger King also has refocused on breakfast, a meal where it’s been tough to gain traction because of McDonald’s dominance. Burger King now offers Seattle’s Best Coffee, espresso drinks such as lattes and options such as oatmeal, a Southwest breakfast burrito and a pancake and sausage platter.

After years of advertising to the young male “superfans,” who visit fast-food restaurants several times a week, Burger King has expanded its horizons to women and senior citizens. Burger King executive Steve Wiborg credited the new ads, featuring stars such as Sofia Vergara, with the chain’s strong third-quarter performance.

Updated restaurants are also a priority for the chain, which has been swapping its blue mansard roofs for black, boxy, exterior signage touting “Home of the Whopper,” or “Have it Your Way.” Inside, the chain is adding digital menu boards and shedding old booths with salmon or aqua upholstery for dark wood tables, softer lighting, some cafe-style seating and higher walls between booths.

“As those remodels come online in greater volume, I think it’s a place you will sit down with your computer and have some coffee or the specialty coffees we have,” Ondrula said. “This was a place where, yeah, you thought you were eating a burger, but now I think it would be dangerous just to think of us as a burger place.”

While Burger King has told franchisees to expect a 10 percent increase in same-stores sales, Ondrula said his stores have seen a 15 percent to 20 percent increase.

Ondrula’s franchise operation, Heartland Food Corp., has a track record of acquiring and turning around distressed Burger King franchises. Heartland is owned by GSO Capital Partners, an affiliate of Blackstone. Blackstone declined to comment for this report.