What should you do if you are #2?

July 29, 2004

Number 2 Burger King has problems. Greg Brenneman is the ninth CEO appointed by Burger King in the past 15 years.

According to the Wall Street Journal on July, 13, 2004:

“Mr. Brenneman’s arrival will come as Burger King struggles to maintain its place as the second-largest hamburger company, after McDonald’s Corp. Nearly 20% of Burger King’s units are losing money, and three of its 10 largest franchisees have filed for bankruptcy-court protection in recent years. Some restaurant-industry analysts project the company may shutter as many as 1,000 units in the coming years. At the end of last year, it had 7,904 units. Burger King has been steadily closing units as Wendy’s International Inc. opens them. Wendy’s has 5,761."

So, what when wrong at Burger King? They didn’t do what a #2 brand should do.

A #2 brand should never try to emulate the leader. And that is exactly what Burger King has been doing for decades. McDonald’s strength is with kids who love Ronald McDonald, happy meals, burgers, fries and the playground. Burger King has copied McDonalds with kiddie meals, a magical Burger King and playgrounds. Only to have the kids still flock to the real thing, the original, McDonalds.

A strong #2 brand needs to position themselves as the opposite of the leader.

Listerine: bad-tasting mouthwash
# 2 Scope: good-tasting mouthwash

Home Depot: messy, male-oriented
# 2 Lowe’s: neat, female-oriented

Coke: older people
# 2 Pepsi: younger people

Microsoft: proprietary-software
# 2 Linux: open-source software

Wal-Mart: always low prices, messy
# 2 Target: cheap chic, wide aisles, neat

Mercedes-Benz: big, comfortable cars
#2 BMW: smaller, “driving” machines

Republicans: conservative
# 2 Democrats: liberal
(Rank determined by which party is defending the White House)

One reason third political parties have never done well in America is because the two major parties are almost mirror images of each other. There’s literally no room for a third party.

Republicans are pro-business, Democrats are pro-labor. Republicans are pro-life, Democrats are pro-choice. Republicans are for less government, Democrats are for more government. Etc. Etc. Etc.

If Burger King were the mirror image of McDonald’s there would literally be no room for third-party hamburger chains. But in reality, third-part hamburger chains are flourishing.

Look last year’s per-unit sales of the top five burger chains:

In-N-Out Burger $1,976,900

McDonald’s $1,632,600

White Castle $1,308,300

Wendy’s $1,293,500

Burger King $ 987,100

All three third-party hamburger chains outsell Burger King by a wide margin. In-N-Out Burger by 100 percent. White Castle by 33 percent. And Wendy’s by 31 percent.

The hamburger chains that are doing well are the ones that are as different from McDonald’s as possible.

In-N-Out Burger from California, for example, only sells: hamburgers, cheeseburgers, French fries and drinks.

While Castle is focused on little square burgers affectionately known as “sliders.”

Wendy’s is focused on older kids, a positioning strategy which would have been ideal for Burger King.

Good luck, Mr. Brennenman. You’re going to need it.