Friday, May 31, 2013

Burger King vs. Jack in the Box -- More thoughts on corporate competence

While on the subject of corporate competence, this recent story  seems like a good excuse to do a post on on one of the most consistently incompetent companies on the business landscape.

One of the most intriguing and for those inclined toward schadenfreude entertaining things about Burger King is the way that for about the past thirty years, with a variety of managers and owners, the company has been so bad at so many things.

Their PR is often clumsy (you generally want to avoid headlines about you copying your competitor's products).

Their relationship with their franchisees is terrible.
Relations became so antagonistic that last year the [franchisees'] association took the extraordinary step of filing two class-action lawsuits challenging management decisions. One suit, filed in U.S. district court in San Diego, came after the company sought to divert to national advertising millions of rebate dollars that franchisees get from Coca-Cola Co. and Dr. Pepper Snapple Group Inc. for selling their beverages. That suit was dropped after the company agreed to augment its ad budget by other means.

The other association suit opposed a company mandate that franchisees sell a double cheeseburger for $1. That suit, still pending in federal district court in Miami, contends that management can only suggest prices franchisees charge. Franchisees had voted down the proposed sandwich, arguing they would lose money at $1, but Burger King introduced it anyway. In court papers, the company argued that an appeals-court ruling in another suit involving pricing gave it the right to make the move. Since the filing, Burger King has taken the double cheeseburger off its $1 Value Menu, and raised its suggested price, but announced plans to add more items to that menu.

Burger King also faces a suit brought by three franchisees—two are in the company's Hall of Fame for exceptional franchisees—challenging a mandate that they keep their restaurants open late at night. It "costs franchisees $100 an hour, but they gross only $25 to $30 an hour," says Robert Zarco, a Miami attorney representing the plaintiffs. The two sides are awaiting a hearing on the company's motion to dismiss that litigation, which was filed in Dade County Circuit Court in Florida in December 2008.
The dealings with the franchisees demonstrates another reason why BK schadenfreude is so satisfying. The incompetence often comes mixed with a curious nastiness.

Here's Eric Schlosser, author of Fast Food Nation, writing for the New York Times:
In 2005, Florida tomato pickers gained their first significant pay raise since the late 1970s when Taco Bell ended a consumer boycott by agreeing to pay an extra penny per pound for its tomatoes, with the extra cent going directly to the farm workers. Last April, McDonald’s agreed to a similar arrangement, increasing the wages of its tomato pickers to about 77 cents per bucket. But Burger King, whose headquarters are in Florida, has adamantly refused to pay the extra penny — and its refusal has encouraged tomato growers to cancel the deals already struck with Taco Bell and McDonald’s.
Telling Burger King to pay an extra penny for tomatoes and provide a decent wage to migrant workers would hardly bankrupt the company. Indeed, it would cost Burger King only $250,000 a year. At Goldman Sachs, that sort of money shouldn’t be too hard to find. In 2006, the bonuses of the top 12 Goldman Sachs executives exceeded $200 million — more than twice as much money as all of the roughly 10,000 tomato pickers in southern Florida earned that year. Now Mr. Blankfein should find a way to share some of his company’s good fortune with the workers at the bottom of the food chain.
And then there are the ad campaigns. You would be hard pressed to find a comparable company with a worse run of advertising. You have to go back to the Seventies and early Eighties to find effective BK commercials. Since then a variety of agencies have produced a steady stream of mediocre ads ranging from forgettable to off-putting (try Googling "creepy Burger King").

Actually, there is at least one BK campaign that people in the advertising industry are still talking about, but not in a good way. In response to the proto-viral success of Joe Sedelmaier's "Where the Beef" ads, BK engaged J Walter Thompson (who were and are kind of a big deal) to set up a massive nation wide campaign of ads and cash prizes for people who spotted "Herb."

Here's Wikipedia's description of the aftermath:
The promotion met with some positive reviews. Time called it "clever", and a columnist for the Chicago Tribune stated that Herb was "one of the most famous men in America". Ultimately, however, the Herb promotion has been described as a flop. The advertising campaign lasted three months before it was discontinued. One Burger King franchise owner stated that the problem was that "there was absolutely no relevant message". Although some initial results were positive, the mystique was lost after Herb's appearance was revealed during the Super Bowl. Burger King's profits fell 40% in 1986. As a result of the poorly-received campaign, Burger King dropped J. Walter Thompson from their future advertising. The US$200 million account was given to N. W. Ayer.
Recently, an MSNBC article listed this as the second worst Superbowl ad of all time.

Burger King has little competition for worst managed large fast food company and absolutely for worst marketed. McDonald's, Wendy's, Subway, Hardee's/Carl's Jr, and the Yum brands have all had better campaigns, but my vote for best (at least for the past 18 years) is the smart and innovative regional chain Jack-in-the-Box.

The commercials come from the aptly named ad agency, Secret Weapon which has an interesting policy.
We will never take on more than three clients at a time. This means our clients get hands-on attention from the principals of the agency. You may have been promised this before by other agencies, but it’s tough to give 25% of your time to 18 different accounts.

Our three client rule means you get to work with the people you meet in the pitch. And since we rarely pitch we’re able to keep our attention on existing clients, not potential ones. As it should be.
The ads are sharp and funny (sometimes too sharp -- certain competitors were decidedly unamused by an ad for a sirloin burger that pointed at a diagram of beef cuts and asked "where's the angus?"). More importantly, they're good ads; they focus on the product.

Check out Jack's expressions on this one.

The following comment appeared on the site where I found the following mini sirloin burgers ad.  Could say something about the cultural impact of advertising but I'll just leave you with the image.

"Shit you not, guard controlled TV for the cell block, most of 128 inmates singing along to this. Almost magical except for the whole incarceration thing."

And in the did-they-just-say-that-? category.

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