CNNMoney.com:
Burger King Holdings Corp.’s (BKC) wants to beef up its national advertising budget, but franchisees are worried the plan will take a bite out of rebates they get based on soft drink syrup purchases.
Burger King, the number two burger chain in the world, is planning to increase its U.S. media presence up to 25% in 2010 compared to 2009 to communicate a stronger value message in the face of competition from McDonald’s Corp.’s (MCD) and Wendy’s (WEN) value menus and to showcase new products like ribs and a ” game-changing” extra-thick burger developed for the chain’s new batch broilers.
To foot the larger bill, Burger King will allocate a portion of “restaurant level” funds to the national ad budget. It’s something the chain hadn’t done in the past but acknowledges the need to do so since competing fast-food chains use between 20% and 80% of those funds for their ad budgets.
“It’s a matter of being competitive with very formidable competitors who have spent and continue to spend at least as much or more of these type of dollars in media,” said Russ Klein, president of Burger King’s global marketing. “Not only is it a long overdue move, but a timely move.”
Klein declined to comment on specifics, but said the amount diverted was modest compared to competitors and was confident the move would boost sales. Company-owned stores will also see money come out of their restaurant funds to go toward national advertising.