One on One with John Chidsey , CEO, Burger King
Monday, July 09, 2007
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SUSIE GHARIB: Our guest tonight has been the chef behind Burger King's revival. John Chidsey has been cooking up changes at the world's number two hamburger chain since he took over as CEO a year ago and he joins us now. Mr. Chidsey, welcome to NIGHTLY BUSINESS REPORT.
JOHN CHIDSEY, CEO, BURGER KING: Thank you, welcome.
GHARIB: You made so many changes at Burger King, just to name a few of them, a new menu, longer hours. What's the focus of your mission now?
CHIDSEY: I think it's twofold. One is really a growth unit story, if you will, because we have such a tremendous runway in front of us in terms of building out the brand across the globe. And secondly in existing restaurants it is really to continue to work on menu innovation and continue to drive improved operations.
GHARIB: You mentioned about building out around the globe. You have been expanding everywhere. What are your growth plans both internationally and in the U.S.?
CHIDSEY: Well, we've set for Wall Street a long-term target of growing about 3 to 4 percent net unit growth a year. But just simple math when you look at McDonald's with about 30,000 units around the globe and Yum at about 30,000 as well compared to our 11,000, that clearly demonstrates how much growth we have in front of us.
GHARIB: I know that China is a big battlefield for fast-food giants. What is your China strategy?
CHIDSEY: In China we really just got going in the last year, year and a half. And again McDonald's has about 800 restaurants in China. We've just gotten going. We've got about 20. We certainly have plans to grow that rapidly but for us, Japan and Indonesia would be just as big an opportunity as China certainly over the next five to seven years.
GHARIB: But in terms actual aggregate numbers in China, what are your plans for opening restaurants there over the next year or two or three.
CHIDSEY: Certainly there's nothing to stand in our way of opening anywhere from 50 to 75 restaurants in the next few years, per year.
GHARIB: OK. Now I understand that you just recently made the switch to transfat-free cooking. I'm sure that is going to help your image in terms of being more health conscious, but what will it mean in terms of an impact on sales and profits?
CHIDSEY: Well, we obviously Susie don't think it's going to have any impact, certainly in the negative, maybe somewhat on the positive if terms of the image from a health standpoint. We did extensive testing on all of our products using these transfat-free oils that we tested and we saw zero degradation. In fact a lot of them were either at parity or better. So we certainly would expect to see sales remain the same, on the same upward trend they've been over the last few years.
GHARIB: What makes someone decide to go to McDonald's over Burger King and what can you do to influence them to come more to Burger King?
CHIDSEY: Well, I think the world has really become almost product focused to a certain extent. A lot of the signature products, we came out with a new product called chicken fries. We were the third player in the space to have handheld premium chicken and through some innovation in terms of how we actually produce the chicken and the packaging that it comes in, we are now the number one seller of premium handheld chicken in the U.S. So to me, it's got to be a high-quality product but again it's got to be innovative and different for the consumer to recognize why they want to go out of their way to get that product.
GHARIB: What is the next new thing that Burger King is going to come out with to get more people walking through your restaurant?
CHIDSEY: Like any quick service restaurant, we have lots of products in test at the moment. Some great innovation around the whopper. This is the 50th anniversary of the whopper by the way, so we've got some great whopper products coming out as well as some new chicken products, in addition to (INAUDIBLE) product that we are actively testing as well.
GHARIB: Looking at your stock, Mr. Chidsey it has done really well since it went public a year ago and it did very well today. But for investors what is going to take the stock even higher?
CHIDSEY: You are right. The stock is up over 50 percent the first year we were trading so obviously we're very pleased with that. We very much trade in line with our peers today even though our growth rate would probably put us in the top one or two in the QSR space well. So given that we have a faster growth rate and again we have all this unit expansion that I just talked about, both of those factors really should drive a higher stock price over the coming years as long as we execute.
GHARIB: All right, well, thank you very much for coming on our program. We really appreciate it.
CHIDSEY: Thank you.
GHARIB: My guest tonight John Chidsey, CEO of Burger King.
