Between financial year 2009 and 2010, the company experienced net negative growth in its total revenues due to the negative 4 percent dip from it’s US and Canadian businesses. The EMEA region and Latin America had 8 and 10 percent positive revenue growth within the period (Burger King Holdings 2010). Not surprisingly, within this period it is the same EMEA and Latin America regions that had 44 new restaurants opened in contrast to 24 restaurants being shut in the US and Canada region. To mitigate this trend the corporation continued to invest in a U.S. and Canada re-imaging program, deployment of new restaurant equipment and developed innovative products. The company’s worldwide sales growth has been on a general downward slope from the third quarter of 2008 and moved into negative territory from the second quarter of 2009 to date (Burger King Holdings 2010). We shall use the rest of the paper in seeking to explain why Burger King has been experiencing a decline in revenue especially in the US.
The PEST (Political, Economic, Social and Technological) factors have long being used to explain the macro environment of a business which has to be factored in the development of any corporate strategy. The political front has been favourable for the fast food industry in the US with no major legislations or regulations that would hinder growth of the industry taking place. We therefore rule this out of Burger King’s problems. In contrast, the economic environment has never been worse for major US corporations like Burger King. Costs are going up at the producer level but companies are unable to match this up with corresponding increase in prices because of the current high inflation and high unemployment i.e. economic recession. Burger King’s applied two strategies here. First it reduced its offering on its $1 menu by removing a slice of cheese and then raised the price of its double cheeseburger from ...
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