Introduction
Burger King is a popular fast-food chain that has a strong presence in many markets all over the globe. Recently, the company started planning an expansion to Sub-Saharan Africa in order to improve financial performance by reaching a new market (Gray & Fontanella-Khan, 2018). However, there are several important considerations with regards to this expansion. The present paper will examine the viability of Burger King’s expansion to sub-Saharan Africa and provide recommendations for proceeding. The research question for the analysis is “How should Burger King address the opportunity of expanding its fast-food chain to sub-Saharan Africa?”.
General Environment
Burger King operates in the fast-food market, which involves several large companies, such as McDonald’s and KFC. The fast-food market is generally profitable, as it is popular among people from the consuming class. Food in fast food restaurants is usually affordable and tasty, which allows the company to attract regular customers. In sub-Saharan Africa, the fast-food market is soon expected to reach the same size as in the United States or Europe (Zion Market Research, 2018). Due to the overall trend towards increased income, sub-Saharan Africa has a large consuming class, and many fast-food chains are capitalizing on this new opportunity (Veselinovic, 2015). Thus, the expansion would grant Burger King access to a potentially profitable market.
Industry and Competitor Analysis
Due to the high profitability, the fast-food market is characterized by severe competition. Burger King’s main competitor is McDonald’s, which is the largest fast-food restaurant chain in the world. McDonald’s and Burger King have a very similar menu, as both fast-food chains focus on burgers as their main product. KFC is also a prominent competitor of Burger King, particularly because it has an attractive selling point. KFC does not sell products made from pork, veal, or beef, focusing solely on chicken. This appeals to customers who do not like red meat or do not eat it for ethical reasons, as well as to people from various cultures and religions, such as Islam. Thus, KFC’s unique selling point contributes to the company’s global expansion strategy while also ensuring that it remains popular in culturally diverse markets, such as the United States.
Besides global fast-food restaurant chains, Burger King also faces competition from local fast food companies. In most countries of the world, there are numerous local companies that sell particular types of fast food that are popular in the region.
For example, in the United States, there are various Mexican fast-food restaurants, such as Chipotle and Taco Bell. In Japan, there are fast food restaurant chains offering sushi and other traditional foods at affordable prices. These local chains influence the competitive environment in the fast-food market while also threatening companies that are willing to expand abroad. In sub-Saharan Africa, the competitive landscape is affected by both global and local competitors. McDonald’s and KFC are present in many countries of the region, and there are also multiple local takeouts and fast food chains that are popular among residents.
Internal Firm Analysis
There are three key factors that influence the performance of fast-food chains. First and foremost, profitable fast-food companies have a strong supply chain in order to ensure that they have all the products required at all times. Burger King has a reliable supply chain management strategy that has helped it to expand in the United States and many other countries. For instance, in India, Burger King is focused on strengthening relationships with existing suppliers rather than looking for the ones providing the best price (Mullan, 2018).
This enables the company to ensure a high quality of its products, thus contributing to its popularity among the customers. In fact, quality management is the second significant advantage of Burger King that enables it to be profitable. Popular fast-food restaurant chains all have an established quality management system that allows ensuring that each product offered to customers is of excellent quality. In Burger King, the menu does not differ significantly from one market to another, which helps its quality management efforts. With a relatively small menu, the company can create strict preparation guidelines and characteristics for each of its products and require staff to comply with them.
Thirdly, marketing is an important factor affecting the development of fast food chains on national and global levels. Due to its marketing strategy, Burger King has a strong brand image, which allows it to remain among the key fast-food market players in the world. According to Roderick (2017), the brand has a long-standing commitment to creativity, which enables it to win customers through marketing. The most recent marketing strategy of Burger King was to capitalize on its rivalry with McDonald’s using edgy slogans for advertisements and posters. Roderick (2017) reports that Burger King even suggested collaboration with McDonald’s to celebrate World Peace Day, but the rival company refused.
A strong marketing strategy benefits Burger King by allowing it to expand where competitors struggle. The brand has been continuously opening new stores in the United States, while McDonald’s has been closing restaurants in its home market (Roderick, 2017). With regards to international expansion, marketing is crucial, as it would attract customers to switch from brands that are well-established in the area to Burger King.
SWOT Analysis
The key strengths of Burger King are its established brand, successful supply chain management, and high quality of food. These qualities enable the company to attract customers that would otherwise eat at other fast-food restaurants, thus contributing to profitability. Excellent supply chain management also allows Burger King to cut down on costs, which helps to save resources for opening new stores or investing in marketing. The primary weakness of Burger King is its limited menu.
It increases the company’s similarity to McDonald’s and influences its success in other parts of the world. For example, in sub-Saharan Africa, Burger King is likely to struggle due to the high price of beef (Ford, 2014). Product diversification would help to ensure that customers can get burgers at an affordable price while also controlling business costs.
Burger King is a famous brand that operates in a highly popular market, and thus it has few opportunities. One particular way in which Burger King could become more profitable is by opening new restaurants. However, as the company already has a lot of restaurants in most countries of operations, global expansion is a potentially lucrative opportunity. Another possible opportunity for Burger King is to improve its product range, thus achieving a competitive advantage over McDonald’s. The biggest threat faced by Burger King is that of competition.
As discussed above, the company operates in a highly competitive market where customers’ decisions are usually influenced by convenience and affordability rather than individual preferences. Competition with other well-established companies means that there are always more alternatives for customers to choose from, and thus Burger King will struggle to achieve a leading position in the market. The competition also influences the labor market, which is critical to providing great customer service. Burger King’s employees are mostly young people who are in need of money, and thus they might choose to work for one of its competitors if it pays more.
Strategic Alternatives
The key challenges to Burger King’s expansion are its product range and high competition. Therefore, the main recommendation would be to enhance the menu by adding new items. For instance, Burger King could improve its selection of chicken burgers or add more vegetarian menu items. In addition, it would be beneficial to add culture-specific items to the menu, such as traditional foods. This would help to achieve two significant advantages that would help the company’s growth in the area. On the one hand, it would assist in attracting more customers from various cultural and religious backgrounds. On the other hand, it would provide a competitive advantage by distinguishing Burger King from McDonald’s, its principal competitor.
The second strategic alternative for Burger King would be to avoid expansion to sub-Saharan Africa at this time and focus on growing operations in existing markets instead. This is a low-risk alternative that would have a high chance of success, as Burger Kind already has a strong market presence in many countries and could thus improve financial performance by opening more restaurants. It would also help the company to avoid the risks associated with the expansion, such as high business costs and competition.
Finally, the third strategic alternative is to penetrate the new regional market starting from a country where the presence of other fast-food brands is not too strong. For instance, McDonald’s is yet to expand to Nigeria, which could prove to be a significant market opportunity for Burger King. Being the first foreign burger fast-food chain would offer several significant advantages. Firstly, it would help to influence people’s preferences, thus undermining the success of future rivals upon their entry into the market.
Secondly, it would help to reduce the potential risks associated with the expansion by avoiding the most significant threat influencing Burger King’s performance. Moreover, it would also help to minimize losses in case the expansion efforts fail and Burger King fails to attract a high number of customers in sub-Saharan Africa.
Strategic Recommendation
The preferred strategic alternative for Burger King’s expansion is to open several spots with a diversified menu in one particular country in sub-Saharan Africa. Indeed, entering this emerging market is a critical opportunity for Burger King due to the high popularity of fast food and the continuous population growth in the area (Gray & Fontanella- Khan, 2018). However, the company should conduct extensive market research to determine a target country where the threat of competition is low and the potential for growth is significant. This is essential due to the high number of local fast-food chains, as well as the strong presence of global competitors, such as KFC.
The menu should be expanded to include traditional foods and a more comprehensive selection of chicken burgers. This would help Burger King to appeal to local customers while also reducing the costs due to high beef prices (Ford, 2014). Overall, proceeding with the expansion and following the recommendations provided here would help Burger King to improve its profitability and achieve a larger share in the global market.
References
Ford, T. (2014). Challenges in Africa for fast food restaurants. Global Edge.
Gray, A., & Fontanella-Khan, J. (2018). Burger King looks to expand in sub-Saharan Africa. Financial Times. Web.
Mullan, L. (2018). How Burger King India aims to boost its share in the QSR market. Digital Supply Chain.
Veselinovic, M. (2015). How Africa is giving fast food a new spin. CNN.
Zion Market Research. (2018). Fast food market share 2016: Global industry growth will reach USD 690.80 billion by 2022. Globe Newswire.