Mcdonalds vs Burger King Research Paper Example | Topics and Well Written Essays - 1750 words

Mcdonalds vs Burger King - Research Paper Example Over the years the two companies have had advertising wars over product superiority such as the French fries wars. The purpose of this paper is to compare and contrast the business models, advertising strategies, and financials of McDonald’s and Burger King. McDonald’s Company Profile McDonald’s was founded in 1955 by Ray Kroc. The hamburger chain restaurant has brought innovation into the industry since its inception. In 1975 they became the first company to ever offer a drive-thru window. Today the firm enjoys market leadership in the industry. The company achieved global sales in 2010 of $24,075 billion. The firm is a public company whose common stocks are traded in the NYSE under the symbol MCD. The company has over 32,737 restaurants across 118 countries worldwide serving nearly 64 million customers each day (Aboutmcdonalds, 2011). About 80% of the firm’s restaurants are independently owned franchises. The chief executive officer of the company is Jim Skinner. The organization has 1.7 million employees worldwide. Burger King Company Profile Burger King was founded in 1954 by James McLamore and David Edgerton. The company first TV advertisement aired in 1958 and by 1961 the firm began selling franchises. Burger King has 12,078 franchises worldwide. The firm has established operations in 73 countries. In 2010 Burger King achieved total revenues of $1,839 million. The firm is traded in the NYSE under the symbol BKC. The firm franchises nearly 90% of its stores. Burger King is the second largest fast food company in the world serving over 11 million customers worldwide (Bk, 2011). Business Model Comparison Burger King and McDonald’s both have similar business models. They are both burger chain franchises that have domestic and international operations. McDonalds has a larger operation than Burger King with over 20,000 more stores. McDonalds is a bigger international player with 17,276 foreign stores located across 118 countri es (Worldfranchising, 2011). McDonalds has a better brand value than Burger King. The firm has capitalized on that brand value by charging a 12% royalty fee which is 8% higher than the 4% royalty Burger King charges to its franchises. Both companies sell products of equal nutritional content. Burger offers in its combo better value due the fact that their hamburgers are bigger and of better quality meat. US customers prefer McDonald’s French fries over Burger King French fries. McDonald’s has a better $1 menu than Burger King. The organic growth model used by McDonald’s has been more effective at achieving a higher market share than Burger King’s growth strategy. Both companies were founded at around the same timeline. A difference between the franchises in terms of store capacity is that Burger King requires a building of a minimum size of 3,600 square feet, while McDonald’s stores can be located in buildings as small as 2,000 square feet. Marketi ng Comparison McDonald’s and Burger King both spend millions of dollars each year in marketing budget. A great portion of the marketing budget of these companies is financed by a special advertising fee the company charges to its franchises. Burger King and McDonald’s both charge their franchisees an advertising fee of 4% of the store’s revenue (Worldfranchising, 2011). McDonald’s has been more effective over the years at targeting children in comparison with Burger King. â€Å"