Grand Metropolitan
Between the time of the initial sales agreement in November 1988 and the finalization of the acquisition of Pillsbury in January 1989, Grand Metropolitan set about putting its own corporate stamp on Burger King; the stated goal of Grand Met CEO Allen Sheppard was to upgrade the overall performance of the chain and improve its standing as the second largest fast-food burger chain globally. To that end, he had the company initiate a three-prong strategy of evaluation of operations, personnel moves, and structural changes and improvements to fortify the company.[24]
Following through on the CEO's opinion that the company needed a consistent marketing plan and management team to succeed,[25] the company began its moves by replacing its chairman and CEO Jerry W. Levin with its own choice of executives, Barry J. Gibbons, chairman and managing director of Grand Metropolitan Retailing, Ltd., as chief executive and Ian A. Martin, Grand Met's top executive in the United States, as chairman. The moves came to no surprise to Wall Street analysts and franchisees, as they were expected due to reservations about Levin after his appointment by the outgoing management at Pillsbury.[26] Grand Met's first major restructuring move was the dismantling of Burger Kings 50-year-old purchasing and distribution arm, Distron. Unhappy with the distribution group, the company originally thought to dispose of the division after the purchase but instead decided to reorganize it into two separate groups, one for procurement (Burger King Purchasing or BKP) and another for distribution (Burger King Distribution Services or BKDS). With the restructuring, the company eliminated many positions and ended up laying off over a hundred staff members as a consequence.[27][28][29]
During the five years that led up to the purchase, the restaurant chain had a series of a half dozen ad programs accompanied by even more marketing directors, a situation that led Adweek to describe it as "ill-conceived marketing and downright sloppy strategic planning" in 1987. In order to reverse the trend, in December 1988 Grand Met set about reevaluating all aspects of the programs from the messages the company was sending to the customer through its commercials to the possibility of dropping its advertising agency of record, N. W. Ayer.[30] After a six-month evaluation, BK dropped Ayer in favor of a two-way combination of D'Arcy Masius Benton & Bowles (DMB&B) for overall programs and Saatchi & Saatchi for specific advertising programs such as the introduction of new products. The company hoped that the "dual-agency partnership" would provide a synergy that would bring together "some of the best minds in the advertising business" to establish a brand identity, or as a company spokesman stated, "what the consumers take away with them after they visit us--what we stand for..."[31]
Grand Met also made several moves in an attempt to broaden BK's business operations while expanding its presence globally. The first move by the company was the creation of the BK Expressway business concept, a new store format designed for locations where a traditional stand-alone restaurant was impractical. The company introduced two separate formats designed to operate in different business environments; the first concept was intended as a kiosk-type store that would be placed in locations such as sports venues and airports. The second concept store, designed with two drive-thrus and a minimal or even non-existent dining room, was designed to go in locations that were limited by high land costs or limited space. Both types of these new, smaller stores operated with a condensed menu prepared on new equipment designed specifically for the more compact footprints of the new locations. Expressway locations were also designed with lower start-up costs in mind; franchisees were wooed with the promise of a much smaller investment, approximately one third as much, than would be required to open a more traditional location.[32] In August of the same year, Grand Met set about expanding Burger King's operations in Europe by acquiring UK-based United Biscuits restaurant operations, including the nearly 400-location burger chain Wimpy. With the purchase, described as a "rare opportunity" by CEO Sheppard, Grand Met set about converting certain Wimpy locations that employed a counter service system into Burger King locations.[33] The merger of the United Biscuits properties with BK grew the company from about 30 restaurants in the UK to more than 60 within a year of the purchase, with another 30 locations added in early 1990.[34] While other "Wimpy" locations are still in operation presently, they are now independent from BK and no longer have the presence they once did.
The 1990s led off with Grand Met taking Burger King's soft drink contract to Coca-Cola from Pepsi.[35] Traditionally Burger King had sold soft drinks from the Coca-Cola Company in the United States, but in 1983, PepsiCo was able to garner the US$444 million beverage supplier contract from its rival. Despite extreme market debate over the future of the contract, it was renewed for a second term in 1987.[36] A sweetened contract that strengthened marketing and advertising program ties between Burger King and itself allowed Pepsi to keep supplying soft drinks to BK. Leading up to the decision, Pepsi had sponsored over 100 separate cross-promotions and product tie-ins, including a Fourth of July promotion where BK gave away a free Pepsi with each purchase. This fit into the goals of BK, which was looking for a partner that would provide "outstanding, impactful promotional support."[37][38] However, the contract only lasted three more years when, partially based upon Pepsi's growth as a restaurant operator with Pepsico's own fast food division (which is now an independent unit called Yum! Brands), Burger King moved its beverage contract back to Coca-Cola.[39]
The company made an advertising coup that same year when it signed a 10-picture contract with the Walt Disney Company.[4] The deal, which included such Disney films as The Lion King, Aladdin and Toy Story, came at the height of Disney's commercial rebirth. Accompanied with the new BK Kid's Club program, the company saw an impressive growth within the children's market. The company's new Kid's Club, its first major foray into a children's targeted ad campaign since the Burger King/Burger King Kingdom program of the 1970s, saw phenomenal growth with more than one million children signing up for the program within two months of its introduction.[4]
While many of the moves made by Grand Met were successful in generating additional sales and growth, the company continued to experience problems. While Fortune Magazine named CEO Gibbons as its Turnaround Champion for his success in reversing the fortunes of the company,[41][42] several news outlets claimed that the changes he introduced were problematic because they deprived the company of valuable assets. In 1992, Hurricane Andrew destroyed the company headquarters. The building, located on Old Cutler Rd. in Miami, was right in the center of the path of the hurricane. Located on the shoreline at the terminus of 184th St. (Eureka Drive), the highest storm surge levels was recorded (16.9 ft) at the site.[43] The building suffered more than $24 million in damage and pushed the company from its offices during one of its more significant product pushes.[44][45] Not only was the company forced from its facilities, roughly 300 members of its 700+ staff were left homeless.[44][45]
Not only did Gibbons work to repair the damage to the company offices, he made it a priority to allow its staff to deal with their personal situations. He made staff members job descriptions more flexible, encouraging staff members to take the initiative to perform a wide range of tasks. A corporate day care system was established, allowing staff to bring their children to work. Staff members were allowed to take off as much time as needed to reestablish themselves and corporate dress codes were relaxed. The company brought in counselors, insurance experts, tax consultants, child care advisers and construction companies to help the staff reorient themselves. The company also went so far as to arrange emergency loans for its employees.[45] By 1993, Gibbons had tired of the post, and named a new successor to the post. He initially resigned his post as CEO of the company and was replaced by his chosen successor, COO James B. Adamson.[48][49] Gibbons retained his position as chairman until he left the company
Adamson continued the company's plans to expand into new markets such as universities, gas stations, airports and sports arenas with the intention of looking into new channels of distribution.[48] Over the next year and a half he worked on a series of initiatives to strengthen the company; in a back to basics campaign, he oversaw a streamlining Burger King's menu and worked to improve and strengthen relations with franchisees. His changes were credited with a 28 percent increase in sales in BK's fiscal year 1995 and same store sales that were up 6 percent.[50] He left in early 1995 when Denny's made him an offer to take the reins of the competitor; he left the company credited with fixing the deficiencies left by Gibbons and was temporarily replaced with David Nash.[50][51] He was elevated to chairman in July, with Robert Lowes as CEO. Lowes became chairman in November.[52]
