The arrival of new hamburger chains to Mexico, the emergence of small businesses, and street trading impacted Burger King's business in the country, which in addition to closing branches had to cheapen some of its products, which affected its profitability.
In the last nine months, the chain closed 23 branches in Mexico, out of 452 with which it had at the end of 2017, it now only has 429. "When you enter a price war, you enter to have a lower price and that leads to a hamburger that is not the best ... When there are so many food options, the client starts to leave the category," he told Forbes Mexico Renzo Casillo, CEO of Alsea.
According to the publication, while the company in Mexico closed branches, in other countries of Latin America it expanded its business, for example, in Argentina it opened eight establishments, in Chile, it inaugurated four and in Colombia, it added six.
"The closing of units was part of the process of profitability ... now we are working hand in hand with the Burger King Corporation to exercise programs that continue to contribute to the sale, the brand is growing to same-store sales almost double-digit in the month, it is increasing in transactions and ticket, which is very good, "Casillo told reporter Fernando Celis.
According to the publication, to improve the brand and recover profitability, the company has also focused on a communication and marketing strategy focused on experiences with better quality products that may have additional ingredients. "Although it has improved, the brand is still below the level of investment we have compared to other brands until we get there we will evaluate the plan to add more units under Alsea," said Renzo Casillo.
Among the new players in the hamburger, the market is the US chain Shake Shack, which in October 2018 announced its project to open branches in Mexico City in association with the restaurant chain Toks, a subsidiary of Grupo Gigante. Even informal trade affected sales of the franchise. In the country, McDonald's disputes the market, which in 2017 also closed branches. The two chains have had to make changes to adapt their offer to a more healthy and natural eating style.
In 2018, Alsea ceased to be the owner of the rights to develop the Burger King brand in the Aztec land, however, it will continue operating 181 restaurants (corporate units), in addition to another 248 sub-franchises.