The Most Detailed Analysis of Burger King Selling Hot Dogs You’ll Ever Read
Tired of fast food chains grasping for a competitive edge by claiming to go wholesome? Don’t care about cage-free, antibiotic-free, weird-chemicals-free fast casual? Well, Burger King is with you. Today the Home of the Whopper is taking a step back in time to bet on America’s favorite retro mystery meat: the hot dog.
For about $2 ($4 if you want a meal deal), you can now buy a grilled Oscar Mayer wiener at any of Burger King’s 12,000 U.S. locations. If that sounds like a bizarre move, that’s because it is, at least in the context of prevailing cultural trends. Burger King itself has done its share of experimenting with new “healthier” products, namely its “Satisfries,” which were supposed to have as much flavor as normal fries with less fat. They didn’t, so they were pulled before you ever heard of them.
Now BK is taking a very different tack. Their communications teams have been busy, ahem, hamming it up on Twitter and churning out quippy Vine videos to promote its dogs. They even “leaked” this throw-back of a training video featuring Snoop Dogg (because of course).
So why is Burger King taking a flyer on hot dogs in the age of the kale salad? It’s for the same reason your grandma once fed you boiled hot dogs in your macaroni: economics. If your grandma was anything like mine, she probably had half a freezer full of cheap, filling, protein-rich frankfurters “just in case.” Turns out, Burger King has access to its own secret stash of sausages. If it can strike up just enough nostalgia to get you to buy them, hot dogs could make Burger King, well, the king of something else, too.
To understand the business rationale behind Burger King’s decision to sell hot dogs, first take a look at the ingredients. Burger King is selling its 100-percent beef “grilled dogs” two ways: the chili dog, which is covered in a bit of chili and sprinkled with a puny amount of shredded cheese, or a regular hot dog covered in the classic condiment trifecta of ketchup, mustard, and relish. The hot dogs are made by Oscar Mayer, owned by Kraft Foods. Kraft Foods is now part of the Kraft Heinz Company, which also owns Heinz, which makes ketchup. And Heinz is backed by 3G Capital, the multibillion dollar Brazilian investment company behind Burger King’s recent buyout of the Canadian coffee-and-donuts chain Tim Hortons. Burger King’s hot dogs, it turns out, are vertically integrated. And that makes them a no-brainer for 3G Capital, as well as Warren Buffett’s Berkshire Hathaway, which also backs Kraft Heinz.
“If you’re going to introduce hot dogs, you’re going to want to keep it in-house as much as you can,” explains Bret Thorn, senior food editor at Nation’s Restaurant News, a trade publication that analyzes restaurant chains. Take, for example, the time that Taco Bell started selling tacos with shells made from Doritos. Doritos is owned by Frito-Lay, which is owned by PepsiCo. Taco Bell is owned by Yum! Brands—a company spun off from PepsiCo back in 1997. By the time Taco Bell decided to start selling its Doritos Locos Tacos, it already had close ties with its supplier for the funky new shells.
In-house sourcing for the ingredients you need for a massive menu change keeps costs down and simplifies processes, which is important because introducing a new product across tens of thousands of stores is complicated. It’s easier to manipulate the supply chain when you know the suppliers are all working toward the same bottom line. It’s a delicate balance of marketing hype, logistics, and math. If it works, big money: Locos Tacos, for example, were a blockbuster success—a match made in corporate synergy heaven.
But failure could also come in several forms. Burger King could wind up diverting customers from hamburgers to hot dogs, a mishap that industry folks refer to as “cannibalizing” sales. Or, of course, people just don’t buy them. McDonald’s once peddled its McHotDogs in the UK, plus a couple small towns in the U.S. back in the 1960’s, for a limited time, but there wasn’t enough demand to keep it on the menu permanently. Wendy’s, on the other hand, seems to have had some success selling hot dogs in Australia, which come wrapped in pink sleeves covered in hearts and a side of cream cheese or something called “cheese butter.”
To avoid disasters, Burger King spent over a year testing its hot dogs in places like Salt Lake City and Kansas City—large metropolitan areas with a sizable number of customers but not as likely to draw hype—and people liked them. To reduce chaos in the kitchen, the company had employees grill the hot dogs the same way they already grill the hamburgers. And the condiments aren’t exactly new either—they’re already used for the hamburgers and fries.
“The introduction of Grilled Dogs just made sense to our guests and for our brand,” said Alex Macedo, president of Burger King’s North America brand, in a statement. “We’re applying over 60 years of flame-grilling expertise with the Whopper sandwich to make Grilled Dogs the next great American icon.”
Lest you think the hot dog’s iconic days are in the past, BK is quick to point out that Americans eat more than 20 billion hot dogs a year, which came down to a solid $2.5 billion in 2014 alone, according to the National Hot Dog and Sausage Council (which, yes, is a real thing!). Those numbers seem likely to grow once Burger King joins in. With its massive distribution, Burger King will serve more hot dogs throughout the US than any other fast food chain. Even as food trends lead customers away from fast food, the conglomerate has maintained a massive and loyal customer base, which, unlike you Soylent chuggers, doesn’t go to Burger King for the low fat fries or the white meat. They go for the classic junk foods that were once the pride of the industry.
“Every kid had an Oscar Mayer hot dog back in the day,” says Andrew Alvarez, a fast food analyst at IBISWorld. “Burger King thinks there’s a market for these more traditional fast foods that appeal to their core customers—they’re re-articulating something familiar.”
Whether the rest of the US is as charmed by the Americana of processed meats as Salt Lake remains to be seen. But it won’t take long to know one way or another. According to Alvarez and Thorn, if the Grilled Dog doesn’t take off immediately, it will likely get pulled before the year is over.
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