After just 18 months on the job, Burger King's chief executive is leaving the fast food giant, citing "strategic differences" with the company's board of directors.
Bradley D. Blum had been Burger King's eighth leader in the past 15 years, a time when the nation's No. 2 fast-food chain has struggled to keep its niche between McDonald's and Wendy's, which has been closing in on the top two. In recent years, hundreds of Burger King restaurants have closed and franchisee profits have suffered. The chain has 11,220 stores, mostly franchised, and global sales last year of $11 billion.
In the same period, its rivals have grown. McDonald's, which is after the same customers as Burger King, has engineered a surprising turnaround after improving the quality of its food and refocusing its advertising. It has reported 13 consecutive months of growth.
Wendy's, too, has gained market share. That is attributed in part to its focus on more upscale customers and its image as a more healthful fast-food choice with more menu options. That has helped sales at a time healthy fare is a driving force in the restaurant industry.
Burger King's sales have improved this year under Blum, with sales rising for the past four months after the successful introduction of several new sandwiches and salads.
So some industry observers questioned whether the company's owners -- investment firm Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners -- gave Blum enough of a chance.
"Getting your arms around a business that big and that complicated in a very short order of time with a number of personalities involved can be difficult," said Dean T. Haskell, director of restaurant research for JMP Securities in San Francisco, who has no financial relationship with the company. "You really have a lack of direction and a lack of focus at the top." Burger King's board rejected the notion that it has been impatient with its top executive.
"A turnaround of this nature takes three years and that's not the issue," said Owen Blicksilver, a spokesman for the board.
Blicksilver said employee morale is improving at the chain's restaurants and that new products and advertising have helped improve sales. The board's differences with Blum did not stem from a lack of improvement, he said, but rather from divergent ideas about the future direction of the company.
"They do own the company, so they are entitled to select the chief executive," Blicksilver said. "In the meantime, they've got a very strong management team -- seven senior managers who are very capable of running this company."
Blum was quoted in the company announcement as saying: "While there remains much work to be done, good progress is being achieved and the team is committed to accelerating this growth. I have enjoyed my relationship with the company's many employees and franchisees and wish to thank them for their support in building the Burger King brand."
A big part of the new chief executive's role will have to be smoothing the ruffled feathers of franchisees who have been hurt by constant changes in top management, to say nothing of changes in ownership. The investment group that owns Burger King bought the company from the foreign restaurant conglomerate Diageo PLC in 2002. Blum had a sometimes testy relationship with franchisees from the time he took over, which was widely reported in industry trade publications.
The frustration of franchisees was on display this spring in the year-end financial reports of Carrols Corp., which operates 351 Burger Kings and is the company's largest franchisee.
"The performance of our Burger King restaurants suffered during 2003 from the ineffectiveness of a number of unsuccessful system-wide marketing and product initiatives," the company said in a statement, "many of which have been abandoned in the past few months." Carrols went on to express optimism about the coming introduction of premium sandwiches and salads, such as Burger King's Angus Steak burger and its grilled chicken and shrimp salads.
As it turned out, those new products have been instrumental in raising the chain's sales in recent months.