Tuesday, May 3, 2016

Burger Kings Hot Dogs Had Hidden Value

The unintended consequences of a planned promotion can at time become a key drive of ongoing strategy and that just might have been the case for Burger King.  With the launch of Grilled Dogs and other new products that have been a boon to Burger King’s comparable sales, which grew 4.6 percent during the first quarter, according to the chain's parent.

The one unintended consequence of the hot dog product introduction was a consumer price point that was again attractive to consumers but may have resulted in a reduction of overall average check. The flame-grilled hot dogs, which debuted in February, have “quickly become guests’ favorites,” Restaurant Brands International (RBI) CEO Daniel Schwartz told analysts last week.

In addition Grilled Dogs have served as an entry point for new customers and are ordered by guests as both an entree and meal add-on, Schwartz said, adding that RBI is “really pleased” with the item’s performance. The hot dogs sell for $1.99 or $4.49 as part of a combo meal slightly less than most burger offerings.

Product launches have propped up sales at Burger King, as the chain attributed growth during recent quarters to new products such as Fiery Chicken Fries and the Extra Long Jalapeno Cheeseburger.  The unintended consequences of one product can provide a platform for long term growth. 

Currently Burger King is running its 10 Chicken Nuggets for $1.49 which is a product price point that drives sales.  Price matters and Hot Dogs, Chicken Nuggets are both familiar items with a twist which is branded differentiation.  Don’t worry about Burger King they are tracking success with a keen eye on the consumer. 

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