Burger King stays relevant by tapping what people are talking about and adapting technology to meet consumer needs, says Fernando Machado, who spoke to WARC as part of a series of interviews with CMOs for the Toolkit 2019 report.
What are you proudest of in 2018, and what have you learned this year?
We are doing pretty well when it comes to sales. We’ve seen double-digit growth, or close to double-digit growth, in the first part of the year. And it’s just great to see that the company and the brand continue to believe in creativity, in doing brave and bold work.
I think the biggest challenge that we have is to keep raising the bar. It sounds silly, but we are very ambitious creatively here. We’ve had four or five years of very strong results. Last year, we were the number one brand in terms of effectiveness in the WARC 100 rankings. It’s very hard to beat that. It’s very hard to keep the pace and keep everyone energized and trying to continue to disrupt.
You can only accomplish that if you manage to inspire the whole organization to buy into this high-creative, ambitious mindset.
We are a brand that wants to move at the speed of pop culture, and we want to be part of the conversation. We want to be relevant. So what we are constantly doing is seeing what’s relevant for people out there, and then finding a creative way to link back to our brand.
This interview is part of WARC’s Toolkit 2019 series
I remember at the end of last year, we noticed that net neutrality and other hashtags were trending super strong. They were trending stronger than Star Wars in the week that the new Star Wars movie was released. And to be honest with you, I didn’t even know what net neutrality meant. The agency [David in Miami] came to us with an idea that takes a point of view, puts the brand as part of the conversation, and also links it back to our positioning. We as a brand want to be perceived as a brand that’s very democratic. We allow people to have it their way. And we felt that the undermining of net neutrality kind of goes against people ‘having it their way’ on the internet. And then we used the Whopper as a metaphor to make a point.
So that’s part of what we do. It’s about identifying what's going to trend or what’s going to be relevant to people, and find creative ways to hack into that, in a way that is not just self-serving, - because that wouldn’t work - but in a way that adds value to people, adds value to the society, and adds value to the brand.
If you had to name your biggest challenge your brand faces in 2019 what would it be?
If we want to succeed, we cannot be playing catch-up on the areas that are going to disrupt the market. We’ve been doing a terrific job in terms of advertising, pricing, promotions, becoming effective, and we are putting a lot of effort behind technology and food quality. The challenge is how can we do that faster, better, smarter then competition?
What does that disruption look like?
One aspect has to do with the quality of the food. A lot of people think that fast food is crap. But the reality is that most of the big quick service restaurant brands are improving the quality of the food. The food is actually better than it gets credit for.
I would say that almost half of my time goes on food quality. I get a lot of airtime in terms of advertising because it’s flashy and there are award shows, but half of the time that I’m in the office, I’m talking about product quality. One-third of my team is working around authentic ingredients, nutrition, sustainable sourcing, and sustainability. We are creating a roadmap of communication. My team is leading the charge there.
The other thing, and I know it sounds a bit of a cliché, is the rise of digital. Usually, when people say digital, they are talking about social media, and it comes with a speech around how people are watching less TV. But my point is more about technology than social media. We are seeing the rise of home delivery, fuelled by Uber Eats, DoorDash – there are so many different players. For fast food to do delivery, you would have needed to have your own fleet, or rent a fleet to do it for you. That's not the case anymore.
We are seeing the rise of technology in ordering and payment. Starbucks has done a terrific job. You go to a Starbucks and you see everyone ordering on their cellphone. And that’s just a better experience to the guest. So you’re going to see a lot of self-ordering kiosks in the restaurants. And if more people are ordering on cellphones or self-ordering kiosks, there will be implications for the design of the restaurant. Today, you have a counter and a metal board, but if people are ordering from a kiosk, maybe they have table service, you don’t need that counter, or maybe the metal board loses its function. So technology is disrupting the way the guest interacts with the brand in the moment of consumption. It has implications on restaurant design, it changes the expectation that people have, it may affect the level of customization you can offer, it has implications in terms of your marketing because you can do much more CRM today than you could in the past.
What tech are you investing in?
We are investing and focusing on technology that will improve the experience of the guest. So things such as home delivery, cellphones and kiosks, mobile order and payment, digital couponing, CRM; we are doing things that will benefit the largest segment of guests we have.
Every now and then, we try to do something that’s a little bit more out there to stretch our knowledge. So for instance, voice. Voice is not necessarily at the centre of what we’re doing because we think that we can make a bigger impact for our specific business in other areas.
In terms of the team you have, what kind of skills do you feel you need more of internally?
I’m always trying to find people who can navigate both with a rational mindset and a more artsy, creative approach. It’s not necessarily easy to do that. I think that to survive and thrive here, you need to have a good balance of both.
Are you changing the way you work with agencies at all?
We have strong partner agencies across the globe, because we do a lot of local work. Food in general tends to be local. The rice that you eat in Mexico is different than the rice that you eat in Brazil, that’s different than the rice that you eat in Argentina. So we have very specific local needs and we have ‘master franchisees’ that help us manage marketing for individual markets. We work hand in hand with them on agency selection, but they have freedom.
As a result, we have a large roster of agencies. We are very happy with that model to be honest with you – it’s what most people would consider to be a very traditional model. We do most of our stuff with David Miami, but if an idea comes from Germany and we think it has global potential, we are going to make it happen. And everyone is fine with that.
We are not doing any in-housing. I think in-housing can work for things like social media. But I’m not the biggest believer of having one in-house creative team that only thinks about your brand. From my experience, they need to be thinking about more than one thing at the same time as they get really bored, and I like the fact that the creative folks at our partners live and breathe in a different environment, in a different culture than the culture that I have in the office. I would be afraid of bringing these guys in and turning them into us. I don’t think that we would get the best outcome when it comes to creative if I did that.
What about your media mix or your mix of spending – are you foreseeing any major changes there?
Traditional media, especially TV, is still the largest chunk of our media investments. QSR is super-competitive, very promotional. If I’m not on-air on TV, my sales drop. Literally. And we know that immediately. We have sales data twice a day for all countries – I receive it on my cellphone – so we really have a finger on the pulse of the business. So we are still very dependent on TV. With that said, we know that the younger audiences are watching less and less TV. If you want to capture the hearts and minds – and the stomachs – of the generation that’s coming, you need to strengthen your presence in digital, and content creation. So we are naturally seeing an evolution of spend in digital and social media. It’s still small relative to traditional media, but it’s growing very fast. But talk to a hundred CMOs, they’ll probably all say the same thing because we’re all looking at the same data.
So when you're looking at digital, what formats are you talking about?
We do more search, promoted posts on Instagram, Twitter, Facebook, digital video, social media influencers. We do less online display. I think that maybe online display will grow for us when we have a strong delivery business, when you can click through to sales.
Do you see the same impact on sales as you do from the traditional media work, or is it a different relationship?
I think it’s different because they are often using digital to increase reach. Not everything we do has the objective of driving short-term sales. Some of the things we do aim to strengthen certain specific attributes of the brand, which we believe can have an impact on the long-term health and sales of the brand. But in a category like retail, if you’re looking for short-term sales most likely nothing will beat price promotion, either on TV or pushing a coupon in digital. But if you do that all the time, you will be failing to build the brand. And maybe that’s why [our digital investment is] growing slowly. If we were seeing short-term sales jump with every single thing we did in digital, most likely the media mix wouldn't be minority in digital and majority on TV.
Do you use any particular frameworks to plan your spend?
If I were thinking about money, it’s probably like 90% on activities that will drive short-term sales and profit; if you think about time the proportion [of staff time, it] would probably be 60% on short-term sales and profit, 40% on building the brand. Because many of the things we do, they get a ton of media. Those activities are kind of like our dollar multiplier because I don’t have to invest as much as I do in traditional media, because I insert the brand into pop culture, and it then becomes part of the conversation.