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BK Tries to Become King of Coffee, Might Need Food Service Market Research

Posted by TrendSource on 3/21/19 8:53 AM

In yet another example of our proliferating subscription culture, Burger King announced last week  a $5/month coffee subscription. Available exclusively in the Burger King app, membership entitles customers to one small brewed coffee per day and is available in the contiguous United States.

It would appear this is no mere publicity grab—there is no end date attached to the offer and the only discernable restrictions are that iced and café drinks are excluded and the coffee cannot be part of a delivery order.

In a move that is somehow out of the box yet entirely in touch with our current cultural moment, this amounts basically to giving away coffee. Why would Burger King and its parent company Restaurant Brands International (they of Tim Horton’s and Popeyes) do that?

Well, wake up and smell the subscription coffee because we are putting in some food service market research to frame and understand this loss leader as we see the proliferation of coffee concepts alongside slow-to-stagnant growth in the QSR sector. Why coffee, why subscription, and why now? The King has offers and we have answers.

Coffee as an Early Morning Loss Leader

Market Research Burger King Specials

Let’s start with some quick numbers. Over the last year, QSR visits have increased sales by only 1%; over the same time period, cafes grew 41%. The implications are clear: there’s not a lot of growth in fast food but there’s plenty in cafes.

This has food purveyors pivoting towards the beverage segment—that’s why Dunkin’ finally took our advice and dropped the Donuts from its title. It’s why McDonalds is testing Cold Brew in San Diego and recently added three new Espresso drinks to their McCafe lineup. And it’s why Starbucks is doubling down, opening new concepts and expanding delivery to ensure they dominate the café corner for years to come.

Stated simply, fast food is looking to get in on the coffee action, seeing opportunities to augment their sector’s modest growth.

Here are a few more numbers: A small coffee at Burger King goes for between $1.00-$1.29 depending on the market. That means that if a coffee club member makes it into the King’s house even five times in a one-month period, they are breaking even.

And as their marketing department has already helpfully pointed out, for the price of one large Starbucks cappuccino consumers can get an entire month of coffee at Burger King. They are obviously looking to shake up the QSR battle for breakfast supremacy, in which to this point McDonalds has basically been boat racing everybody.

The hope, of course, is that the coffee subscription will become a loss leader, drawing customers regularly into the restaurants where they will ultimately be unable to resist the sweet aromas of Sourdough King and Croissan’wiches. They also hope that, by forcing consumers to use the BK app everyday, they will gently push them towards digital literacy as QSRs prepare to meet emerging digital trends.

The Cost of a Cup of Coffee is Relative

Interestingly, Burger King is also lowering the cost of a small cup of coffee to $.50, half the cost of a small McDonald’s coffee. So even if you aren't a card carrying member, a BK coffee is still the cheapest cup in the game. Obviously, they are trying to make some noise in the café corner, and this is where things get really interesting.

While it is possible that BK is going to start syphoning breakfast customers from McDonalds and the like, that shouldn’t necessarily be competitors' primary concern. Rather, they should be worried that Burger King is lowering the perceived value of a small cup of QSR coffee (yes, that’s the kind of thing a competitor analysis can help with).

But even at such a low price point, it remains to be seen if consumers will sacrifice quality for cost because, well, nobody really loves their coffee to begin with. In Consumer Report’s recent 4-way taste test, the chain came in last place behind surprise winner McDonalds, Dunkin’, and Starbucks. Of Burger King’s coffee, the publication noted it, “looked like coffee but tasted more like hot water.”

Ouch, right? But you know what hurts more than finishing in last place? Not being invited to compete at all. That was the case in the Takeout’s recent to-go coffee sweepstakes, in which Burger King was not even considered a legitimate enough player to warrant inclusion in the contest. Hopefully, with this offer, they will compel customers to give their coffee another try, hoping that nothing tastes quite as delicious as a great bargain.

market research coffee bean

Fit for a King? A Word on BK’s Food

Speaking of which, we have to talk about their food, particularly people’s perceptions of it. There’s no kind way to say this, but, um, Burger King is generally seen as something that is tolerated in a pinch when few options are available. It’s not something people generally crave. Nobody to my knowledge says, hey, I really need to get some BK in me! I bet if you ask people when the last time they ate at Burger King, a lot of them would say at airports and/or rest stops.

This is especially true of the breakfast daypart. McDonald’s has the Egg McMuffin, Starbucks and Dunkin’ have the coffee, Taco Bell has the crazy (more on that later). Burger King now has a coffee subscription plan and they’re hoping it does the heavy lifting, putting them into consumers’ minds when they are evaluating their QSR breakfast options. Because right now, well, they aren’t there.

Burger King recently took last place, scoring a D+, in The Takeout’s 4-way competition to crown the nation’s best QSR breakfast sandwich. Sure, a D+ might be enough to get you into college if you have the wrong kind of parents (looking at you, Aunt Becky!) but the point is clear: Burger King’s breakfasts barely pass. 

Their recently-launched Sourdough King, the likeliest beneficiary from the coffee-as-Netflix plan, hasn't fared much better (C+), with one review noting, “The Sourdough King doesn’t have a lot of textural variance, nor flavor contrast; it’s mostly a bomb of like-tasting savory ingredients.”

food service market research breakfast sandwich

Food Service Market Research and Seal

To channel Seal just a bit, QSRs are never gonna survive unless they get a little crazy. Burger King has put in the food service market research, no doubt turning to panel surveys and voice of the customer methodologies, to find novel ways to get customers in their door. Now they just need to keep going with it.

And while their food and coffee might not actually be fit for a commoner much less a king, they are banking on sheer value perception to drive new business while also undercutting their most direct competitor.

So yeah, the coffee subscription plan might get people in the door, but what if they don’t like what they find there?

That’s why Burger King needs to be running food service market research methodologies. Some of this can be mobile since the program runs entirely through their app—they need to find out who is subscribing, why, and what if any additional items they are interested in. They need to understand what on their menu works, what doesn’t, who their customers are, and what they want.

They also need to be running primary market research and competitor analysis to better understand the QSR breakfast market they are trying to crack.

Because, as Taco Bell has taught us, you can go a long way in QSR breakfasts without a coffee game--does Taco Bell even serve coffee? I really don’t know. Regardless, maybe the breakfast daypart is more about value and creativity than coffee.

Taco Bell offers no less than 9 different breakfast items for $1, and these aren’t all run of the mill items. They’re things like waffle tacos, chicken biscuit tacos, and breakfast crunch wraps. If they have coffee, they certainly aren’t known for it.  Yet they continue to gain on McDonalds, both in mind and wallet share.

Burger King is hoping that with their subscription plan, they can soon say the same thing.

2018 Food Service Industry Report

Topics: Food Service, Omnichannel, Digital Technology, Food

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