Burger King CEO John Chidsey on Innovation, Trust, and “The King”

Published: November 15, 2007 in Knowledge@Emory

Given the choice between being the CEO at a successful company or taking the top spot at a failing one, John Chidsey rolls up his sleeves. "I'd rather take a company out of bankruptcy than lead a Microsoft or a GE," says Chidsey, CEO, Burger King Corporation.

Good thing he feels that way.

When he arrived at the burger chain in 2004, a third of the restaurants were in financial distress and sales stuck in a seven-year slide. Named Burger King's CEO in spring of 2006, Chidsey sees the task of rebuilding the company as "a dream come true," he says. "It's about making employees and franchisees believe we can win again and do well."

Last year, company sales were up over 9%. Revenues were $2.23 billion—a record for the company. In November 2006, Burger King Holding's stock traded around $17/share. A year later, the stock traded closer to $28/share.

 "I really like turn-arounds," the 44-year old Chidsey explains. Chidsey, who spoke as part of the Dean's Leadership Speakers Series at Emory University's Goizueta Business School, believes there is as much or more to be learned from failures than there is from successes. Much of what is making his reign at Burger King®

successful is what he learned not to do while working elsewhere. One of those things is how to communicate with people. "Far too often, people try to sugarcoat," he says. "People can handle bad news, but they want to be told as adults. Treating them fairly and telling them things up front goes a long way."

The world's number two fast food chain (Burger King trails McDonald's but edges out Wendy's) operates more than 11,200 restaurants in 69 countries, and although there are just shy of 4000 restaurants located outside the U.S., McDonald's international presence is closer to 16,000 restaurants. In an attempt to close the gap between it and the golden arches, Burger King expects about 80% of growth from International markets.

Although a distant second to McDonald's in overall numbers, there are, places where the Whopper® is King. Burger King will soon overtake McDonalds in Mexico, has already surpassed as of September 30th its top competitor in Spain and is looking to be a worthy competitor in other areas. To do so will require a new model. "McDonald's is a real estate company that sells food," Chidsey tells Goizueta students in the packed auditorium. Ninety percent of Burger King restaurants are operated by franchisees who control their own strategy and decisions.

Marketing-wise, Burger King's odd-on-purpose mascot has achieved notoriety of his own. "The King" has appeared on The Tonight Show with Jay Leno, is a YouTube regular and even has his own MySpace page. "The King was a big piece in getting people to talk about the brand again," adds Chidsey. "It got people to come back in the door." Likewise, Burger King's "subservient chicken" website (visitors to the site could command the chicken to do anything from "jump" to "walk like an Egyptian"), proved immensely popular, especially with the core customer Burger King is trying to reach, the 18 to 35 year old male. The site has racked up nearly a half a billion hits since 2004.

Besides the company's international expansion, Chidsey wants to "implement strategies that drive growth and make sure the company's menu offerings appeal to as broad a range of guests as possible, and gets people enthused about the brand. "Find creative ways to get people coming back," he explains. Recently, Burger King began testing powerful new broilers designed to reduce costs and facilitate a broader menu selection with new menu items, such as steak sandwiches. Given that the company has touted its "flame-broiled" burgers for years, replacing the broilers won't be without risk.

Chidsey would like the restaurants to be more responsive to what guests want and need—like less land. Only one in five Burger King guests actually eats in the restaurant. The company is also improving its packaging. While the company was the last in the market to offer hand held chicken strips, it made sure to differentiate its product. Burger King came out with the "BK™ Chicken Fries" and put them in a fry pod carton. The result? The company sells more servings per day than either McDonald's or Wendy's. Earlier this year Burger King launched "The Pipe," an extra-thick straw used to drink the extra-creamy Oreo BK™ Sundae Shake. It's been a big hit. "[Product and packaging] have to be innovative and creative and still be fun," Chidsey says.

Chidsey describes his leadership style as "pretty informal," noting that he's more apt to walk the halls and check in with people than he is to call a meeting. Given his background— an MBA from Goizueta, a law degree from Emory's School of Law, is a Certified Public Accountant and experience gleaned from several years as an investment banker—Chidsey is well versed on the technical side of business. However, one of his biggest leadership roles involves creating an environment where "people want to be a part of things," he says. He doesn't micromanage and he trusts his employees. "It's uninspiring and not empowering to not trust your people," he explains. "If you don't trust them, you're probably not hiring the right people."

People like to remind Chidsey that he's one in a long list of recent Burger King Corporation's CEOs—the twelfth CEO in the last 20 years. But he points out that the company's current leadership group has worked together for several years. "It's a small, tight group of people," he comments, noting that this gives the company a great advantage: nimbleness. In difficult situations, the group's ability to act quickly has been a boon. If Chidsey has a fear, it's that "when the patient is off the operating table, we'll still need to maintain a sense of urgency," he says. As the company moves forward, Chidsey wants to stock Burger King's bench with talent. So far, he has not been afraid to woo that talent away from competitors.

Before taking the top post at Burger King, Chidsey was the company's president and CFO. He'd been the CEO of two divisions at Cendant—the Vehicle Service Division, which includes Avis Rent-A-Car, and the Financial Services Division, including Jackson Hewitt.

In 1992, he joined Pepsi as CFO of PepsiCo World Trading Co., Inc. and Pepsi-Cola Eastern Europe. Although grateful for the chance to live abroad and experience other cultures, he qualifies his time with the beverage giant as "checkers checking the checkers." What resonated with him was the effect of international experience. "What motivates Europeans is not the same as what motivates people in the U.S. Travel helps, but living abroad is more helpful," he notes. International experience is one of the things Chidsey looks for when hiring executives, as is whether or not the candidate has spent an entire career at one company (indicating, in Chidsey's opinion, a question as to the candidate's ability to take risks).

In terms of plotting a particular career path, Chidsey encouraged the Emory students to learn how to read, write and think before worrying about anything else. "You can figure out the other pieces. See what the world is about," he says.

And while they're out exploring the other parts of the world, they should stop by a nearby Burger King. Maybe try the shrimp burger in Japan or the Korean barbeque at a Burger King in Seoul. When ordering chicken in China, take note. The Chinese prefer dark meat chicken, not white. "We definitely have to be cognizant of the local market and provide what the local market wants," he says.

 

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