Business / Corporate

Burger King to press ahead with expansion despite increasing competition

by Kazuaki Nagata

Staff Writer

Eight years after U.S.-based Burger King returned to the Japanese market, the world’s second largest hamburger chain has opened 93 outlets in the country and aims to have 200 by the end of 2017.

Burger King Japan says its strength is the taste of its food and menu range, and the right mix of local offerings and recipes that are popular globally.

The chain has also enjoyed success attracting media attention and social media buzz with original products like colored burgers without needing to employ a conventional media strategy such as TV commercials.

Nevertheless, Burger King Japan admits that it needs to improve its brand recognition here.

“I think our main strength is basically the taste. . . . We are developing our menus that will not disappoint the customers,” said Burger King Japan CEO Yasuyuki Murao in an interview with the Japan Times last month.

“We may not have that many customers since we still don’t have 100 stores, so it’s about how we can attract more customers. And once they come and try the Whopper, we are confident that they’ll choose us again,” he said.

Competition between hamburger chains is high. Also in the mix is competition with other casual eateries such as the gyudon beef bowl chains, ramen and soba noodle shops and even convenience stores.

Burger King itself withdrew from the Japanese market in 2001, as did several other U.S.-based burger chains including Carl’s Jr. and Wendy’s.

Murao, who formerly worked at McDonald’s, said there are several reasons why the Japanese market is difficult. For one thing, fast food restaurants need to localize their products for Japanese tastes, and to ensure its brand image is associated with safe food.

Burger King Japan, which is owned by South Korea’s Lotteria Co., has modified its buns to contain more water to match the taste of the Japanese, who the company says have less saliva compared to other people.

“People probably don’t notice, but we use water in the buns as much as possible,” Murao said.

Although its brand was damaged in the Chinese meat scandal last July, McDonald’s has been a dominant player with its 3,000 outlets nationwide, as the chain has adapted to local culture and made its brand name familiar to everyone, Murao said.

Another hurdle to running stores in busy cities is the high price of real estate, he said, as it is difficult to open a store in a high-traffic location and make it profitable.

Despite the difficulties, the Japanese market is still huge. New rivals are already on the way and further arrivals in the future are expected to toughen competition.

New York-based Bareburger opened its first store in Tokyo on July 19, while Florida-based Carl’s Jr. will re-enter the market in the fall and Shake Shack, also from New York, will come to Japan next year.

Having more rivals means “we will have to compete for a limited pie. Thus, I’d rather have fewer rivals,” Murao said.

At the same time, he said, a positive side to every new arrival is that the industry often captures the media spotlight — and Burger King may benefit from that.

“There are still a lot of people who have never seen Burger King,” he said, pointing to its low recognition outside the Tokyo metropolitan area.

The key to expansion is to use a franchise system, Murao said.

“There are quite a few people who have cash and want to do a franchise with Burger King,” said Murao, adding the company wants to increase the ratio of franchise stores to 70 percent from 10 percent currently.

While planning the expansion, Burger King has also been focusing on getting media and public attention through original products and social media.

For instance, the firm came up with a black-colored burger series whose buns, cheese and sauce are all black, making a big visual impact and receiving media coverage.

“I think we have created a healthy cycle of getting people’s interest and attracting them to stores,” Murao said.

He added that while seasonal localized menus have become magnets to draw new customers, the same can be said of the globally popular Whopper series, which enjoys a faithful following.

Burger King Japan does not disclose its sales or profit figures. Murao said the company was negatively affected by the McDonald’s chicken incident last July and August, but that sales have been recovering since September.

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