International Business: JAPAN
BURGER KING WANTS TO BUILD A KINGDOM IN ASIA
The giant is mounting a push, but it is far behind McDonald's
When Anthony Carter came to Tokyo to teach the Japanese how to make a Whopper, he found they made it precisely right--just not fast enough. So he bought a stopwatch, speeding them with the cheer, "Hungryhungryhungry!" Says the 40-year-old Burger King Corp. manager from Orlando: "Meticulous is great, but in fast food you gotta be fast."
Burger King has been anything but fast in reaching Asia's growing ranks of burger-eaters. With only 333 outlets throughout the region, compared with McDonald's Corp.'s 2,409, America's No.2 burger chain is far behind. But faced with a saturated market in the U.S. and poor sales in Europe following the mad-cow scare, Burger King is embarking on an aggressive expansion in Asia. "We want to be the best in the world--bigger, better, and more profitable," says Chairman and CEO Robert C. Lowes, who's on a swing through Asia.
FREE TIME. The key to Burger King's new Asia strategy is Japan, where teenagers are awash in cash and free time. But Burger King has just 43 outlets in Japan. McDonald's, meanwhile, has half Japan's burger market, with 1,860 stores and sales topping $2.3 billion. In second place is local Mos Burger, with 25% of the market. "We don't consider Burger King a competitor," sniffs a spokesman for McDonald's Japan.
Lowes aims to change that. In May of this year, Burger King's owner, British food conglomerate Grand Metropolitan PLC, joined with Japan Tobacco Inc. to form Burger King Japan. The tobacco giant, two-thirds owned by the government's Ministry of Finance, brings deep pockets to the party. For openers, the joint venture bought the struggling Love Burger chain. The $90 million acquisition gave the latecomer a jump-start, with 35 outlets. In Korea, Burger King intends to expand in a partnership with retailer Il Kyung Ltd.
Lowes plans to open 200-plus stores annually for at least three years--mostly franchises, which will ease the investment burden on the company. "Our problem is lack of convenient [locations], and more outlets are the way to solve that," says David J. Chapman, vice-president for Burger King Asia Pacific.
Burger King turned to Japan Tobacco after first trying retailing giant Seibu Ltd. in 1993. But the companies had different visions of how fast to expand. "The aggressive scale we wanted wasn't what they wanted," says Lowes. "Japan Tobacco and its financial muscle give us the strength we need."
Some analysts suspect the company may be putting its Asia strategy on fast forward as a prelude to a sell-off. Other fast-food watchers note that Asia will be a huge marketing challenge. "They don't have the natural international cachet that McDonald's would have," says Jack Trout, a marketing strategist in Greenwich, Conn.
But Burger King has catchy ideas that it hopes will grab customers. Outlets are being decorated with 1950s and '60s U.S. pop-culture memorabilia. In some stores, Hollywood sets the tone, with Marilyn Monroe, Marlon Brando, and James Dean pouting from posters. For younger crowds, rock 'n' roll history lines the walls in original albums by Elvis Presley. The look is enhanced with checkered floor tiles and other items. "I just love these chairs," says 26-year-old Shinobu Fukushima of the sparkling red diner seats at the outlet in Tokyo's trendy teen district. Sales have jumped 40% to 50% with the pop theme.
While McDonald's is known for such local variations as teriyaki burgers and fried rice, Burger King wants to promote a traditional taste. It hopes lettuce and tomatoes will help win customers. "There's not enough vegetables at most other places," says approving mother Midori Morisaka, who brought her 5-year-old son to a Tokyo outlet on a recent holiday. But there's no Burger King near the Morisaka home in suburban Chiba, only established competitors. So if Burger King wants more Asian customers, it will have to hurryhurryhurry! The stopwatch is ticking.By Edith Hill Updike, with Gail DeGeorge in Miami and Heidi Dawley in London