John W. Chidsey will resign next month as co- chairman of the board of directors at Burger King Holdings Inc., ending his tenure with the quick-service chain he led as chief executive prior to its September 2010 acquisition by private-equity firm 3G Capital.
Since that nearly $4 billion deal, Burger King largely has cleared the decks in its executive suite, accepting the resignations of Chidsey, controller and chief accounting officer David Chojnowski, global chief marketing officer Natalia Franco, and general counsel and chief compliance officer Anne Chwat.
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According to Burger King’s most recent filings with the Securities and Exchange Commission, Chidsey’s resignation will be effective April 18. He currently is co-chairman of the board with Alex Behring, a managing partner at 3G. Bernardo Hees replaced Chidsey as chief executive of Burger King in September.
Burger King has had trouble matching the successes of rival McDonald’s, in both sales and marketing prowess. As McDonald’s hit all strides, Burger King struggled with menu pricing uncertainty, franchisee discontent, a breakfast rollout and ad campaigns that had trouble gaining traction.
Same-store sales continued to fall for Burger King, especially in the United States, in the fourth quarter of 2010, according to its most recent filing with the SEC. Same-store sales for the quarter ended Dec. 31 fell 5.8 percent in the United States and Canada, compared with a 3.3-percent decline a year earlier, when the chain was promoting a $1 double cheeseburger.
Burger King did not respond to requests for comment by press time.
Burger King’s global same-store sales for the quarter decreased 3.7 percent, as softness in North America and a 1.8-percent decline in its Europe, Middle East, Africa and Asia-Pacific division were offset by a 5.6-percent same-store sales increase in its Latin America system.
The operator or franchisor of 12,251 quick-service restaurants worldwide also recently ended its seven-plus-year relationship with advertising agency Crispin Porter + Bogusky.
According to the SEC filing, Chidsey will receive the balance of his transition bonus, a sum of $2.5 million, following the end of the transition period. At the time of the acquisition, Burger King built in an option to keep Chidsey on as a brand consultant for six months after the transition period, but the brand chose not to exercise that option. Because of the early termination of the consulting agreement, Chidsey also will receive 100 percent of funds deposited into a trust account totaling slightly more than $3 million, as well as severance payments and benefits.
Miami-based Burger King’s system of restaurants in 90-percent franchised.
Contact Mark Brandau at mark.brandau@penton.com.
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What was 3G thnking? Texas Pacific has spent the last nine years destroying the brand. When they bought it, their handpicked exec that BK put in place to sell the brand created two disasters, the Back yard Burgers and the 99cent menu. That saved Tex Pacific $700M as the damage reduced the purchase price from $2.2MM to $1.5MM and BK (Diageo) had to guarantee a large portion of the debt.
Turn back the clok to 1993. The first franchisee convention is in San Francisco. Mr. McLamore is there. The new CEO is there. The next five years are great.
Then Grand Metropolitan-Diageo makes its first mistake. It lets the CEO leave because someone offers him more money. What a surprise; he did a great job. BK lost millions over the next four years as the exec office door rotated over and over.
When the new BK Holdings went public in 2006, it cut all ties with the franchisees. It created "hand picked" committees. It ignored the franchisee's demand for family marketing. It decided to venture into the "cutting edge" of marketing, which is another way of saying fringe marketing. So you abandon the majority of your customers and put your faith in the "heavy users." Meanwhile, the quality of your product steadily deteriorates. The buns fall apart, the meat is steamed in holding devices until the flavor is lost and the company proves incapable of bringing new products to the market.
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The Burger King path to destruction
Every change in ownership, every change in management, puts Burger King further behind McDonald's and Wendy's.
R. Adams
Franchise Equity Group