Why Burger King is improving its traffic through product innovation

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Nov. 20 2020, Updated 1:47 p.m. ET

Product innovation

Burger King (BKW) introduced premium products internationally that should complement its menu. It launched a Hashbrown Whopper in Korea, a Barbecue Bacon Whopper in the U.S., and a Mexican Whopper in Spain.

Management believes these products are consistent with Burger King’s brand identity. Brand identity is the outward expression of a brand, which includes visual appearance, name, communications, and trademark, according to Marty Neumeier in his book The Dictionary of Brand.

The company has also targeted price points as an entry to product innovation. For example, it launched the Chicken Big King sandwich and Extra Long Barbecue Cheeseburger in its two-for-$5 menu, where it offers two select sandwiches for $5, in the second quarter.

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The company also introduced the Cheeseburger Deluxe as a part of its Value Menu, called King Deals. In the King Deal menu, Burger King offers a different sandwich each day of the week. Offering items at different price points enables the company to serve a wider audience. This, in turn, should help drive traffic and bring more revenues.

Restaurants constantly innovate menus to keep up with trends and keep their customers excited. Market Realist recently explained that Yum! Brands (YUM) introduced new menu items in Taco Bell and Pizza Hut. Click here to learn more.

To take advantage of stock price growth from these innovations as a whole, you can consider exchange-traded funds (or ETFs) like the Consumer Discretionary Select Sector SPDR Fund (XLY), which includes McDonald’s (MCD) and Chipotle Mexican Grill (CMG).

Improving operations

Improving operational efficiency is also important when we talk about the introduction of new products to generate revenues.

The company launched a total of five new products that had only one SKU. SKU stands for “stock keeping unit,” which is an identification code to track inventory. According to the company, a single SKU should help improve franchisee margins.

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