CHICAGO --- Burger King franchisees sued the hamburger company this week over its $1 double cheeseburger promotion, saying they're losing money on the deal and the company can't set maximum menu prices.
The National Franchise Association, a group that represents more than 80 percent of Burger King's U.S. franchise owners, said the $1 promotion forces restaurant owners to sell the quarter-pound burger with at least a 10-cent loss.
While costs vary by location, the $1 double cheeseburger typically costs franchisees at least $1.10, said Dan Fitzpatrick, a Burger King franchisee from South Bend, Ind., who is a spokesman for the association. That includes about 55 cents for the cost of the meat, bun, cheese and toppings as well as 45 cents that typically covers expenses such as rent, royalties and worker wages.
"New math, or old math, the math just doesn't work," Mr. Fitzpatrick said.
After testing the $1 deal in markets across the country, the discounted burger went on sale nationwide last month even though franchise owners, who operate 90 percent of the company's 12,000 locations, twice rejected the product because of its expense.
"The current management team has disregarded rights that Burger King franchisees have always had," Pennsylvania franchise owner Steve Lewis said in a statement.
Denise Wilson, a spokeswoman for the nation's No. 2 hamburger chain, said the Miami restaurant company believes the litigation is "without merit," particularly after an earlier appeals court ruling this year showing the company had a right to require franchise owners to participate in its value menu promotions.
Restaurants, especially fast-food chains, have been slashing menu prices because of the poor economy. Executives hope the deeply discounted deals will bring in diners who are spending less when they eat out, or opting to stay home altogether.
When the $1 double cheeseburger was announced this fall, analyst said it could increase restaurant visits by as much as 20 percent. But despite that boost, a Deutsche Bank analyst said as much as half of the gain recorded from increased traffic could be lost because customers were spending less when they ordered food.
The lawsuit was filed Tuesday in U.S. District Court in Southern Florida.
Burger King shares fell 18 cents, or 1 percent, to $17.12 in Thursday trading.
The Augusta Chronicle ©2010 Morris Communications, LLC. All Rights Reserved.
Surely they make enough profit off their drinks to cover this promotion.
These franchise owners better be careful before uncle barak steps in and tells them all to start selling those double cheeseburgers for seventy nine cents, just to make himself look good to those that can't afford the $1.00 or the .99 cent burgers...............
I went to BK today, for the first time in a good while, because I heard about the double cheeseburgers. I did buy some chicken fingers and fries while there also though so in a way hoping is right. I still understand the franchise owners desire not to be told to sell something at a loss though. ODB, you are just retarded.
APEX aka Jeff Stonner, aka JUSTUS, bet you thought it was about something else? LOL
How was that BK double cheeseburger, imdstuf? Was it delicious or did it taste like a dollar? Just wondering...
In California, the McD's sold 44 oz Cokes for $.79. The place was packed at all hours. And I know they still made a profit on them.
I'm sure they are making up the last 10 cents in the extra food people buy along with it. If this little promotion is breaking them, maybe they shouldn't be running burger joint. If they really want to make some money, change those nasty wax sticks they call fries! Every once in a blue moon I may go to get a whopper, but their fries are so bad and they stopped the chicken whopper, nothing else they have is worth driving out of the way for! I'm guessing they depend on their breakfast menu!
The only things good on the BK menu in my humble opinion are the Double Stacker and their Big Fish sandwich.