Interesting little battle shaping up in the fast-food realm, and it isn't between restaurants -- it is within one. According to the Associated Press, Burger King (BKC) franchisees are suing the company over its recent $1 double cheeseburger promotion.
The reason for the lawsuit is that the franchisees are losing money on the deal because the company is setting maximum menu prices, which Burger King is not allowed to do. The National Franchise Association (NFA), which represents more than 80% of Burger King's U.S. franchise owners, says that the promotion is forcing restaurant owners to sell the quarter-pound burger at a 10-cent loss. One Burger King franchisee said that the burger in question typically costs franchisees $1.10.
The buck burgers were launched last week across the country, although it was twice rejected by franchisees thanks to the cost. Another franchisee said that "The current management team has disregarded rights that Burger King franchisees have always had."
This really is an interesting situation, as the company thinks that it knows what is going to make money, but the franchisees (the ones in the trenches) feel differently. I may have to side with the franchisees on this one, as selling those burgers at a loss cannot be good for the individual franchisee. They are in this business to make money, right? I know that the company is as well, but the bigger picture may be overshadowing what is happening to the individual franchisees.
Burger King believes that it will sell enough of the peripheral products (onion rings, fries, other sandwiches) to make up for the money lost on each double cheeseburger. However, with purse strings tight, the fast food customer may opt to buy a couple of double cheeseburgers and nothing else. If this is the case, then the franchisee eats the loss. The company will make its money on another sale in another area, but the franchisee doesn't have that luxury.
What will the outcome of this situation be? I'm not sure, but I think that the individual franchisees could be getting the shaft here.
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Reader Comments (Page 1 of 1)
11-13-2009 @ 1:57PM
John said...
I want my $1 Double Cheesburger!
11-13-2009 @ 2:04PM
rich said...
Guess who owns BK ?????
11-13-2009 @ 5:44PM
Ken said...
Sounds like a government run operation.
11-14-2009 @ 3:07AM
Titangirl said...
Fine, we just make our own $1 burger.