Burger King Unveils Action Plan To Franchisees (4/00)

At its annual business information meeting for franchisees here, Burger King Corporation (BKC) will unveil its action plan for rolling out major transformation initiatives announced to franchisees late last year. Many of the initiatives have already been implemented in 18 company-owned restaurants in the Orlando test market, where comparable sales since the Transformation have increased an average of 30 percent and customer satisfaction has shown marked improvement.

"We have a clear strategy for moving the brand forward and it is already paying dividends," said Dennis Malamatinas, chief executive officer of BKC.

"The strategy focuses on investing in facility enhancements as the first step toward revenue growth, followed by a ruthless focus on speed of service, accelerated product innovation and superior marketing," he said. "We have invested hundreds of millions of dollars in the brand over the past several years, and will continue to spend hundreds of millions on our Transformation strategies between now and 2004."

After testing in the company's Orlando restaurants, the National Franchise Association has endorsed the program. Elements are now ready for roll out in 8,400 Burger King® restaurants in the U.S. Malamatinas said that, in just a few short months since its announcement, more than a third of all Burger King restaurants in the U.S. have signed up for the Transformation plan being implemented in the next 18 months.

During the NFA annual meeting in Orlando, franchisees had the opportunity to view key elements of the Transformation plan during tours of the company- owned restaurants. Elements include a new Burger King logo and signage, interior and exterior Restaurant re-imaging, a Virtual Fun Center™ computer game system and a new Drive-Thru 2000 system to make order and confirmation faster and more accurate for Burger King customers. A majority of franchisee crews are also wearing new uniforms and using new packaging, both of which feature the new logo.

In addition, Burger King Corporation is now testing a new Have It Your Way® kitchen in Greensboro, N.C., with features that will improve quality, consistency and speed of service. Tests will be completed in June 2000.

In April of 1999, Burger King Corporation unveiled a prototype restaurant in Reno, Nevada. The company used the model to test interior and exterior image, a new drive-thru package and other operational concepts. After impressive sales results, late last year the company developed a Transformation package for franchisees that is cost-effective and manageable to implement. To speed implementation, the company also announced an Early Successor Incentive Program, a financial package designed to help share the risk and rewards of Transformation with franchisees.

New Products, New Advertising

This week, the company launched the X-treme Double Cheeseburger®, a product the company believes will capitalize on its competitive advantage of taste and product quality. This move follows the recent launch of four other new products: the Chicken Club, Italian Chicken Crisp, Bacon Cheddar WHOPPER®, and Pancake-minis™.

Burger King will also unveil a new national advertising campaign to franchisees, focusing on great taste. The television and radio campaign uses the alluring voice of Kathleen Turner to draw attention to the Burger King Whopper sandwich and scheduled new products, with a tagline, "Got the Urge?™" The new spots will run on national network and cable television programming beginning this week.

In addition to improvements in the U.S., Burger King Corporation has made strides in strengthening the Burger King brand through international growth and development. The company has increased international profit contributions from nearly zero in 1997 to between 17-18 percent in fiscal 1999. "We are building a strong, global brand that will bring increased value to our franchisees, our shareholders and Burger King consumers," Malamatinas said.

Burger King Corporation and its franchisees operate more than 10,850 restaurants in all 50 states and 57 countries and international territories around the world, with more than 92 percent of BURGER KING® restaurants owned and operated by independent franchises. Since the company's founding in Miami in 1954, the BURGER KING® brand has become recognized for great flame- broiled taste and HAVE IT YOUR WAY® food customization. In fiscal year 1999, the BURGER KING® system has system-wide sales of $10.9 billion. Burger King Corporation is a part of Diageo, the international food and drinks company, that includes such brands as Pillsbury, Haagen Dazs, and Guinness.