Online Extra: Burger King's Brenneman: "Why Not?"
Gregory D. Brenneman isn't your average CEO. When he took over at ailing hamburger chain Burger King in July he was just 42. Most of his mornings begin with a Bible reading. He hopscotched through different industries -- accounting, consulting, and airlines -- before landing in fast food. And he has a penchant for plainspoken adages such as "the fastest way to make money is to stop doing things that lose it."
All this has made Brenneman a hot commodity. He was named president of Continental Airlines (CAL )at the tender age of 33 and is widely considered one of Corporate America's up-and-coming CEOSs. At privately held Burger King, however, he may face his toughest challenge yet. Thanks to stiff competition from McDonald's (MCD ) and Wendy's (WEN ), plus debt-ridden franchisees and a ho-hum menu, Burger King's profits and market share slipped dramatically in recent years.
Now, Brenneman aims to turn the home of the Whopper inside out. BusinessWeek Correspondent Brian Grow sat down with Brenneman on Oct. 14 to discuss his views on faith, management, and rekindling the flame at the nation's second-largest hamburger chain. Edited excerpts of their conversation follow:
Q: How does faith play a role in your management strategy? A:
Q: How does faith play a role in your management strategy?
A:When you run a company, you need to be pretty open-minded. There are a lot of different views on faith, on religion, on many different issues, and you can't let your own faith be the barometer. That said, there are a lot of lessons that come out of faith in terms of how you treat people that are very powerful.
Go to the golden rule: "do unto others..." The whole concept of treating people with dignity and respect is a concept that isn't a business concept, it's a life concept. It's who you are at the end of the day.
Q: Why do you gravitate to companies that have ruptured relationships, whether it's between an airline and its unions and employees, or a restaurant chain and its franchisees? A:
Q: Why do you gravitate to companies that have ruptured relationships, whether it's between an airline and its unions and employees, or a restaurant chain and its franchisees?
A:We have about 1,500 business partners [franchisees] out there that have their own capital and their own neck on the line. We would be foolish if we didn't take advantage of their knowledge and experience.
One way you can look at it is there are contentious relationships. I actually look at it in reverse. We were really fortunate to have a board of directors and 1,500 people that all have an opinion. As a manager, you have to cipher through that.
Q: How are you going to reduce the cost burden on Burger King franchisees? A:
Q: How are you going to reduce the cost burden on Burger King franchisees?
A:I can walk into the back of a [Burger King] restaurant in New York and play racquetball, which tells me that's pretty expensive real estate. Why do we have it? That leads you to: Boy, we probably could build these things a whole lot smaller and cheaper and have them look better and be standardized. That leads to: Well, if we build a little smaller building, we could go with two 20-ton air conditioners on top, instead of four 10-ton air conditioners. That's a huge cost savings.
Or maybe we could think about not having any material that you couldn't get at a Home Depot (HD )[where Brenneman is on the board of directors]. It's turning "We've always done it this way" on its head and saying, "Why not?"
Q: What is going to happen at Burger King under you? A:
Q: What is going to happen at Burger King under you?
A:Under our market plan called "Grow Profitably," we're basically doing [several] major things. The first is acting like a real franchisor and looking at costs: food, labor, insurance, payroll, supplies, waste management. [We want] to have global deals available for [franchisees] that help pull down their costs.
The next piece is profitability. We're dissecting how to get these restaurants up to $1.3 million in sales initially and then $1.7 million down the road.
The third piece is making this a global business. We need to have global image in advertising, a global operations platform, a global HR platform, a global finance platform, global communications.
On "Fund the Future," it's getting an IPO ready. Manage our cash flow, invest our assets wisely.
Then in "Fire up the Customer," it's really about taking some of the products we have and making them better. Our coffee will be a lot better by the springtime. We're putting in a hopper for our fries to keep them hotter and fresher and with more salt.
Then, we have a whole bunch of new products: the Angus and the TenderCrisp were launched, as were salads. But there are a lot of things we can do with those product platforms long-term. We'll be introducing a bunch of new breakfast items in the spring.
Q: How about the "Working Together" component of the plan? A: The first thing we really wanted to do as a company is get healthy in terms of our relationships with each other, across divisions and functions, between the U.S. and international operations. We've talked a lot about how we're going to behave. I'm so excited. When I show up in a country [now], they all take pictures.... They say, "We've been here for 15 years, [and] we haven't seen a CEO."
Still, we're nowhere near where we need to be.
Q: What percentage of Burger Kings will be company-owned? A:
Q: What percentage of Burger Kings will be company-owned?
A:I don't think there's any magic to it. Most of our competitors are somewhere between 20% and 30%. We're at 9%. We have a lot of runway. There's a unique financial opportunity. We're going to eat our own cooking. I'm not going to go ask a bunch of franchisees to build something they don't believe in.