18 Nov

Why Burger King launched new products in 3Q14


Product launches increased traffic

In the last part of this series, we learned that Burger King Worldwide (BKW) had an impressive quarter compared to the same quarter last year. Same-store sales in the US grew 3.6%. This was higher than McDonald’s (MCD) -3.3% and KFC’s 2%—under the umbrella of Yum! Brands (YUM)—over the same period.

Same-store sales are driven by two key factors:

  1. the traffic
  2. the ticket

The traffic and the ticket are also driven by several factors. During the earnings call, management credited its product launches for increasing the traffic. Traffic means the number of guests walking into a restaurant and making a purchase. Let’s look at the new introductions during the quarter.

Why Burger King launched new products in 3Q14

Product launches

During the third quarter, the company launched the A.1. Ultimate Bacon Cheeseburger as part of its two for $5 sandwiches. The A.1. burger includes two beef patties, thick-cut bacon, and A.1. steak sauce. A.1. steak sauce is also sold independently by Kraft Foods (KFT).

The company also launched the Mushroom and Swiss Bacon WHOPPER. It includes sautéed mushrooms and thick-cut bacon. Finally, the company introduced the Mushroom and Swiss BIG KING sandwich.

During the quarter, Burger King also expanded its Summer BBQ line of products internationally—in the United Kingdom, Australia, and Spain. According to the company, this initiative helped drive traffic in these countries during the quarter.

Refreshing the menu

New product launches refresh the menu and churn products that are seasonal. For example, cold beverages would be more relevant during the summer seasons. Starbucks (SBUX) runs its famous Pumpkin Spice Latte beverage during the fall season. Starbucks is also held by the Consumer Discretionary Select Sector SPDR (XLY).

Burger King didn’t stop by only launching new products. It also relaunched its discontinued product—Chicken Fries. We’ll discuss this is the next part of the series.

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