Burger King Corporation Shares Extensive Transformation Plans; Franchisees Get First Look at Work in Progress at Annual Convention.

RENO, Nev.--(BUSINESS WIRE)--April 14, 1999--

Burger King Corporation today announced its intentions to implement sweeping plans to transform its more than 10,000 restaurants -- both inside and out.

The consumer-driven plans call for a new cooking platform to further enhance product quality and to allow for greater product variety, as well as major initiatives to speed up drive-thru service, and to enhance the interior and exterior of restaurants. The new image will include a new exterior design and indoor decor, new uniforms and packaging, a new playground concept, even a new logo.

The multi-faceted improvements, which were unveiled this week in Reno, NV at the company's annual Business Information Meeting with franchisees, are designed to continue to strengthen the brand, which has experienced unparalleled gains in sales, traffic and share since 1993.

Strong Industry Position

"We are at an all-time high in terms of market share, and our traffic continues to grow," said Dennis Malamatinas, chief executive officer of Burger King Corporation, referring to the company's jump in QSR-Sandwich traffic share from 14.4% in 1993, to 17.9% today. Similarly, the company's share of the fast food hamburger traffic category increased from 17.2% in 1993 to 21.9% in 1998.

"Consumers acknowledge BURGER KING(R) restaurants as being the best place for burgers. But we also know, through extensive consumer research, that we have a tremendous opportunity to further distance ourselves from our competitors. Designing systems that will significantly increase our ability to deliver Gold Standard WHOPPER(R) sandwiches, as well as our other menu offerings day in and day out, served fast every time in pleasant surroundings, will bring huge rewards for both our consumers and our franchisees."

In fact, quantitative research indicates that the improvements planned could further increase average restaurant sales by hundreds of thousands of dollars per restaurant. Burger King(R) restaurants, on average, have already seen restaurant sales increase by more than 15 percent since the 1993-94 time frame when the company introduced value meals and adopted a "back to basics" approach, focusing on its core equities of flame broiling, HAVE IT YOUR WAY(R), and great tasting food, like America's Favorite Burger -- the WHOPPER(R). In the U.S., Burger King average restaurant sales are slightly more than $1.1 million a year.

Near Term Improvements

While the physical improvements unveiled in Reno will have a dramatic impact for the brand, the company acknowledged that systemwide changes will take a few more months to refine and several years to implement. In the meantime, the company has launched a series of executional mandates, including its "MAKE EVERY BITE...RIGHT!" initiative that focuses on flawless execution in every restaurant. The program, successfully launched in Europe more than a year ago, has been brought to the U.S., as well as Canada, Latin America and the Asia/Pacific region.

As part of the program, BURGER KING(R) restaurants are once again being monitored by "mystery shoppers," as well as a new Customer Satisfaction Index, which polls tens of thousands of consumers across the U.S. each year, measuring consumers' perceptions of each restaurant. "We are only as good as our worst restaurant," Malamatinas said. "We are becoming increasingly more demanding with our restaurants and with our franchisees and we aim to significantly improve our restaurant operations across the board."

Speed of Service

One of the first major initiatives expected to roll out systemwide are enhancements to make the drive-thru lane faster and less stressful for the consumer. The enhancements include new preview and menu boards, along with order confirmation units, improved sound systems and an "amount owed" display. New packaging components for the drive-thru include clear-view bags, which allow employees and consumers to "see" that the order is complete.

To complete the drive-thru experience, BURGER KING(R) will also implement a "customer courtesy zone" where consumers can simply pull over to an intercom, voice their request (e.g. for more napkins or extra ketchup), and a crew member will deliver the request right to their car. More than 50 percent of all BURGER KING(R) transactions occur in the drive-thru.

"Our goal is to attain a consumer-driven, sustainable competitive advantage at the drive-thru, which will improve restaurant sales and profits," said Paul Clayton, president, Burger King Corporation, North America. "It requires that we make the necessary changes to build our drive-thru share of traffic."

Product Consistency

The HAVE IT YOUR WAY(R) kitchen is capable of tightening the specifications of the company's sandwiches to ensure a hot, fresh product every time.

"The new kitchen focuses on a process that allows us to produce all of our sandwich products on one line. As a result, we will be able to dedicate one line for the drive thru and one for dine-in customers, which will not only speed up service but also ensure that we can make every sandwich, fresh, when the customer places the order," Clayton said.

BURGER KING(R) will introduce a new flexible broiler that will allow the company to expand its menu with products like a new thick burger, which is currently in test. The flexible broiler features multiple "chains" that allow a variety of products to be flame-broiled at the same time, for different cooking times. The new broiler even has an oven component for baking, and its sophisticated computer technology will continually monitor "cook temperatures," offering even greater food safety.

To date, three working versions of the HAVE IT YOUR WAY(R) kitchen have been in actual restaurant tests, with the most recent improvements installed in the new, state-of- the-art BURGER KING(R) restaurant, scheduled to open to the public later this week in Reno.

"We're still balancing and fine-tuning the elements of the new kitchen," said Tulin Tuzel, senior vice president of R&D and chief technology officer for Burger King Corporation. "But we are extremely excited about its prospects and look forward to rolling out the optimized design to the entire system."

The "New" BURGER KING(R) Restaurant

Transformation applies to the restaurant image as well. BURGER KING(R) is addressing both the curb appeal, as well as the inside "feel" of the restaurant. The new design is simple yet distinctive, marrying elements of the past with a contemporary, comfortable environment for customers of all ages. The interiors were designed to reduce stress in the customer's "journey" through the restaurant, with new, easy-to-read, daypart-specific menu boards, more comfortable dining rooms, and VIRTUAL FUN CENTER(TM) interactive computer game systems for kids...and their parents.

"Customers want fast food, not fast eating," said Jacqueline McCook, senior vice president of strategic planning and brand standards. "Our goal is to deliver food fast in a pleasant, relaxing environment. A great design allows us to capitalize on the fact that two-thirds of all consumer impressions are made at the restaurant. That means we've got more than 10,000 restaurants or "billboards" out there that can help us deliver a very strong message to our customers."

The HAVE IT YOUR WAY(R) kitchen and image designs, created for a wide variety of restaurant sizes, styles and locations, feature enhancements and upgrades that can be applied, as needed, to each specific restaurant. To demonstrate the power of these changes, Burger King Corporation, working in tandem with Reno-based Franchisee Don White, unveiled the "new" BURGER KING(R) restaurant, complete with all the operations and image enhancements, to demonstrate to franchisees the power of the look and feel of the new transformational initiatives.

New Logo

After more than three decades of use, the current BURGER KING(R) "Bun Halves" Logo will receive some updating to better reflect the company's core equities. The key design changes incorporate larger, more dynamic lettering bursting out of the buns with everything set on an angle to suggest motion and dimension. A third color -- blue -- was also added in the form of a crescent surrounding the bun halves. The result is the new "bun halves with crescent" logo.

"Evolving our logo is something we do not take lightly," McCook said. "But the research clearly demonstrated that the new logo dramatically outperformed the existing one in the minds of our consumers. To customers, the new logo said great taste, quality, and speed in a fun and exciting environment."

"We want the new logo to stand for excellence and to serve as a cue to consumers that something different and exciting is happening at the restaurant displaying it," Malamatinas said.

The company plans to phase the new logo in over time. New restaurants will display the new logo as they are built, while existing sites will display to new logo as they are remodeled and/or have installed the new kitchen.

Cost and Roll out

Burger King Corporation unveiled all of the transformation initiatives at the franchisee meeting this week to give franchisees a progress report on the work that has been done to date. The company will spend the next few months collecting data from the Reno restaurant, as well as from the 43 company-owned restaurants it will remodel in Orlando, FL starting this month. The Orlando restaurants will be completed by the fourth quarter of calendar year 2000. Burger King Corporation will continue working with the leadership of the National Franchisee Association to refine the new concepts, and to validate the work and the potential for it to generate an attractive financial return for franchisees.

Burger King Corporation and its franchisees operate more than 10,200 restaurants in all 50 states and in 53 countries and international territories around the world. Since the company's founding in Miami in 1954, the BURGER KING(R) brand has become recognized for great flame-broiling taste and HAVE IT YOUR WAY(R) food customization. In fiscal year 1998, BURGER KING(R) had systemwide sales of $10.3 billion. Burger King Corporation is a subsidiary of Diageo plc, one of the world's leading consumer products companies.