Burger King shifts marketing chiefs: irate franchisees spark latest upheaval

Nation's Restaurant News,  Dec 19, 1988  by Peter Romeo

Tags: Burger King Corp., marketing

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Burger King Shifts marketing chiefs

MIAMI -- While Burger King's fate is being decided in a Minneapolis boardroom, the fast feeder is attempting to put its house in order by changing marketing chiefs for the second time in six months.

The chain has returned Dom Dempsey, formerly executive vice president of the Northeast region, to the position of marketing director, a job he originally held three years ago.

The reassignment comes at a time when Burger King is considering the possibility of hiring a second advertising agency to improve its much-criticized television commercials.

Dempsey succeeds Tony Lavely, who resigned at Burger King's request because of franchisees' strong dissatisfaction with recent marketing efforts.

"There was a difference in philosophies about how we are positioned," he said a Burger King spokeswoman.

Burger King's parent, Minneapolis-based Pillsbury Co., desperately needs licensees' support to spin off the chain as a separate company. Pillsbury is wagering that the maneuver will thwart a hostile takeover attempt by Grand Metropolitan PLC, the British foodservice giant.

Burger King franchisees are opposed to Pillsbury's divestiture plan because it would sadle the chain with about $1 billion in debt. Licensees said they are worried that hefty loan repayments would prevent the chain from investing more funds in marketing.

"Pillsbury said it's going to put $30 million more into advertising. We need $200 million more," said one operator, asking that his name not be used. The chain spends about $214 million annually, compared with McDonald's yearly expenditure of more than $918 million.

Pillsbury executives have been meeting with franchisees to develop a spin-off plan that the operators would accept.

In addition, the conglomerate indicated in government filings that it is assessing the possibility of selling Burger King to a third party. Many franchisees have said they would favor such a deal.

Grant Met has identified Burger King as one of Pillsbury's most attractive holdings. A divestiture might dissuade the British company from pursuing its takeover attempt if Burger King is not part of the booty.

Although franchisees have criticized Burger King's advertising efforts for serveral years, the grousing hit new heights with the recently concluded Triple Jump Checkers promotion. Lavely had boasted that the $140 million sweepstakes, which awarded cash and prizes to customers who won a scratch-off card game, would boost traffic by 7 percent to 12 percent.

"We ended up discounting a lot of food to customers who were coming into our restaurants anyway," lamented Gary Cain, a franchisee in Battle Creek, Mich.

"We did not see the sales that we could have with Triple Jump Checkers," the company spokeswoman admitted.

While the promotion was under way, consumer awareness of Burger King actually declined, according to adtrack, Nation's Restaurant New's exclusive gauge of advertising effectiveness.

Franchisees expressed guarded optimism about the reassignment of Dempsey, who helped develop such successful past Burger King campaigns as "Have It Your Way" and "Aren't You Hungry For Burger King Now?"

"There's dissatisfaction in the franchise community [with Burger King's marketing program], but they're moving in the right direction with this appointment," said William Pothitos, a Montreal licensee who serves a chairman of the chain's franchise association.

"It could be a very positive move because of Don's experience," said Cain, referring to Dempsey's previous stint in Burger King's marketing department. "He's a good man."

Dempsey has the added appeal of coming from operations.

"He's got a good feel for marketing and a good feel for Burger King. If you put the two together, it's a very good combination," Cain added.

Franchisees have criticized Pillsbury for transferring control of the fast-food chain in October to Jerry Levin, a mergers-and-acquisitions expert with virtually no prior experience in the restaurant business.

Pillsbury recently sought to quell those gripes by promoting Ron Petty, a seasoned fast-food veteran, to president of Burger King Corp. He reports to Levin, who remains chairman.

Dempsey reports to Petty. The same relationship existed when Petty headed Burger King's international division and Dempsey served as second-in-command, with the title of vice president of international operations.

In his new post, Dempsey is responsible for developing a marketing strategy that will pull in enough customers who end Burger King's prolonged sales slump. The chain has been searching for such a program since the "Aren't You Hungry?" campaign concluded in the mind-1980s. Since 1985 it has tried six different approaches, including the current "We Do It Like You'd Do It."

Dempsey joined Burger King in January 1984 as senior vice president of marketing after directing McDonald's marketing program in Japan. He rose to Burger King's top marketing post within 15 months.