Ten years ago at the blog -- I may owe Burger King an Apology
2 June 2023 | 12:00 pm

Not because BK has notably upped their game, but they don't seem to have had any big screw-ups lately and they certainly haven't done anything as mind-numbingly stupid as firing the firm largely responsible for turning around probably the most damaged brands in the industry.

 AdWeek from 2015:

Instead, the fast food chain stopped working with Secret Weapon last month. The client is now “working to…determine our formal relationship” with L.A.’s David&Goliath, which joined its creative roster early this year and created  its “Legendary” ad for the Super Bowl. The decision to switch agencies also follows Jack in the Box’s promotion of Keith Guilbault to the chief marketing officer role in late 2013.

 (I looked up "Legendary" on YouTube. I believe I'd seen it before, but I'd almost completely forgotten it.)


Friday, May 31, 2013

Burger King vs. Jack in the Box -- More thoughts on corporate competence


While on the subject of corporate competence, this recent story  seems like a good excuse to do a post on on one of the most consistently incompetent companies on the business landscape.

One of the most intriguing and for those inclined toward schadenfreude entertaining things about Burger King is the way that for about the past thirty years, with a variety of managers and owners, the company has been so bad at so many things.

Their PR is often clumsy (you generally want to avoid headlines about you copying your competitor's products).

Their relationship with their franchisees is terrible.

Relations became so antagonistic that last year the [franchisees'] association took the extraordinary step of filing two class-action lawsuits challenging management decisions. One suit, filed in U.S. district court in San Diego, came after the company sought to divert to national advertising millions of rebate dollars that franchisees get from Coca-Cola Co. and Dr. Pepper Snapple Group Inc. for selling their beverages. That suit was dropped after the company agreed to augment its ad budget by other means.

The other association suit opposed a company mandate that franchisees sell a double cheeseburger for $1. That suit, still pending in federal district court in Miami, contends that management can only suggest prices franchisees charge. Franchisees had voted down the proposed sandwich, arguing they would lose money at $1, but Burger King introduced it anyway. In court papers, the company argued that an appeals-court ruling in another suit involving pricing gave it the right to make the move. Since the filing, Burger King has taken the double cheeseburger off its $1 Value Menu, and raised its suggested price, but announced plans to add more items to that menu.

Burger King also faces a suit brought by three franchisees—two are in the company's Hall of Fame for exceptional franchisees—challenging a mandate that they keep their restaurants open late at night. It "costs franchisees $100 an hour, but they gross only $25 to $30 an hour," says Robert Zarco, a Miami attorney representing the plaintiffs. The two sides are awaiting a hearing on the company's motion to dismiss that litigation, which was filed in Dade County Circuit Court in Florida in December 2008.
The dealings with the franchisees demonstrates another reason why BK schadenfreude is so satisfying. The incompetence often comes mixed with a curious nastiness.

Here's Eric Schlosser, author of Fast Food Nation, writing for the New York Times:
In 2005, Florida tomato pickers gained their first significant pay raise since the late 1970s when Taco Bell ended a consumer boycott by agreeing to pay an extra penny per pound for its tomatoes, with the extra cent going directly to the farm workers. Last April, McDonald’s agreed to a similar arrangement, increasing the wages of its tomato pickers to about 77 cents per bucket. But Burger King, whose headquarters are in Florida, has adamantly refused to pay the extra penny — and its refusal has encouraged tomato growers to cancel the deals already struck with Taco Bell and McDonald’s.
Telling Burger King to pay an extra penny for tomatoes and provide a decent wage to migrant workers would hardly bankrupt the company. Indeed, it would cost Burger King only $250,000 a year. At Goldman Sachs, that sort of money shouldn’t be too hard to find. In 2006, the bonuses of the top 12 Goldman Sachs executives exceeded $200 million — more than twice as much money as all of the roughly 10,000 tomato pickers in southern Florida earned that year. Now Mr. Blankfein should find a way to share some of his company’s good fortune with the workers at the bottom of the food chain.
And then there are the ad campaigns. You would be hard pressed to find a comparable company with a worse run of advertising. You have to go back to the Seventies and early Eighties to find effective BK commercials. Since then a variety of agencies have produced a steady stream of mediocre ads ranging from forgettable to off-putting (try Googling "creepy Burger King").

Actually, there is at least one BK campaign that people in the advertising industry are still talking about, but not in a good way. In response to the proto-viral success of Joe Sedelmaier's "Where the Beef" ads, BK engaged J Walter Thompson (who were and are kind of a big deal) to set up a massive nation wide campaign of ads and cash prizes for people who spotted "Herb."

Here's Wikipedia's description of the aftermath:
The promotion met with some positive reviews. Time called it "clever", and a columnist for the Chicago Tribune stated that Herb was "one of the most famous men in America". Ultimately, however, the Herb promotion has been described as a flop. The advertising campaign lasted three months before it was discontinued. One Burger King franchise owner stated that the problem was that "there was absolutely no relevant message". Although some initial results were positive, the mystique was lost after Herb's appearance was revealed during the Super Bowl. Burger King's profits fell 40% in 1986. As a result of the poorly-received campaign, Burger King dropped J. Walter Thompson from their future advertising. The US$200 million account was given to N. W. Ayer.
Recently, an MSNBC article listed this as the second worst Superbowl ad of all time.

Burger King has little competition for worst managed large fast food company and absolutely for worst marketed. McDonald's, Wendy's, Subway, Hardee's/Carl's Jr, and the Yum brands have all had better campaigns, but my vote for best (at least for the past 18 years) is the smart and innovative regional chain Jack-in-the-Box.

The commercials come from the aptly named ad agency, Secret Weapon which has an interesting policy.
We will never take on more than three clients at a time. This means our clients get hands-on attention from the principals of the agency. You may have been promised this before by other agencies, but it’s tough to give 25% of your time to 18 different accounts.

Our three client rule means you get to work with the people you meet in the pitch. And since we rarely pitch we’re able to keep our attention on existing clients, not potential ones. As it should be.
The ads are sharp and funny (sometimes too sharp -- certain competitors were decidedly unamused by an ad for a sirloin burger that pointed at a diagram of beef cuts and asked "where's the angus?"). More importantly, they're good ads; they focus on the product.

Check out Jack's expressions on this one.

The following comment appeared on the site where I found the following mini sirloin burgers ad.  Could say something about the cultural impact of advertising but I'll just leave you with the image.

"Shit you not, guard controlled TV for the cell block, most of 128 inmates singing along to this. Almost magical except for the whole incarceration thing."

And in the did-they-just-say-that-? category.

Thursday Tweets
1 June 2023 | 12:00 pm

I only watched the first season so it is possible Succession got much better later on. It is not, however, possible that it got good enough to justify the coverage the finale has been getting. Thank God for Pitchbot.

A few choice moments with today's GOP

The best part is when she misses the bags completely.

And you thought being fired by email was bad.

I prefer to think of it as the politics of catharsis, but it's basically the same concept.

Republicans are providing the opposition with plenty of ammo. Now if the Democrats will only use it.


For example.

The line between satire and...

A Mount Everest of false equivalence. Remarkable even for the New York Times.

The trouble isn't that this is what Heritage has become; the trouble is that too many journalists still think they're dealing with the old Heritage

Back in the USSR

[I feel like there ought to be a smooth segue from Russia to failed policies and food shortages...]

Checking in with Elon.

You know those stories where bigotry is overcome by a parents love of an LGBT child? This is not one of those stories.

Conversations in AI


The essay on The National Library of Thailand thought experiment is highly recommended.


And one more from Pitchbot.

When looking at the debate over Samuelson's USSR forecasts, at least we can all agree that somebody comes off looking bad.
31 May 2023 | 12:00 pm

I've been meaning to write this up for a few months now, but recent events have pushed it back to the forefront.

A number of times over the past few years, Andrew Gelman has revisited this Marginal Revolution post from Alex Tabarrok. (emphasis added.)

In the 1961 edition of his famous textbook of economic principles, Paul Samuelson wrote that GNP in the Soviet Union was about half that in the United States but the Soviet Union was growing faster.  As a result, one could comfortably forecast that Soviet GNP would exceed that of the United States by as early as 1984 or perhaps by as late as 1997 and in any event Soviet GNP would greatly catch-up to U.S. GNP.  A poor forecast–but it gets worse because in subsequent editions Samuelson presented the same analysis again and again except the overtaking time was always pushed further into the future so by 1980 the dates were 2002 to 2012.  In subsequent editions, Samuelson provided no acknowledgment of his past failure to predict and little commentary beyond remarks about “bad weather” in the Soviet Union (see Levy and Peart for more details).

I've always had the nagging feeling that this was not the whole story, a reaction I often have with Marginal Revolution posts, but it wasn't until recently that I came across this very good Paul Krugman piece discussing how the collapse of the Soviet economy helped put Vladimir Putin in power that I found out what Tabarrok had left out.

First, some background: Nowadays everyone views the old Soviet Union, with its centrally planned economy, as an abject failure. But it didn’t always look that way. Indeed, in the 1950s, and even into the 1960s, many people around the world saw Soviet economic development as a success story; a backward nation had transformed itself into a major world power. (Killing millions in the process, but who’s counting?) As late as 1970, the Soviet Union’s success in converging toward Western levels of wealth seemed second only to Japan’s.

Nor was this a statistical mirage. If nothing else, Soviet performance during World War II demonstrated that its industrial growth under Joseph Stalin had been very real.

After 1970, however, the Soviet growth story fell apart, and by some measures technological progress came to a standstill.

 If you follow the link to the Robert C. Allen paper, you'll find the following graph:

Assuming that the US was one of the boxes on the far right, when "Paul Samuelson wrote that GNP in the Soviet Union was about half that in the United States but the Soviet Union was growing faster," he was simply stating the facts.

To be clear, I didn't know any of these things about the economy of mid 20th century USSR. The only reason I started to look into it was because I happened to read the Krugman op-ed. Before that my knowledge was be limited to the memory of some disastrous famines and a few anecdotes about Soviet factories turning out concrete couches, and I would have had no idea that Samuelson's models were consistent with the actual GDP/GNP data.

Quick caveat. Neither GDP nor GNP is a measure of quality of life. The Soviet Union was a terrible place. As Krugman points out, Stalin's policies killed millions of his own people. We should also note that economies are complex things that can never truly be boiled down to a single scalar. The same country that could build the world's second most powerful military could also be comically inept at making consumer goods and tragically bad at producing food.

But this is a conversation about growth, and given those terms, there are three great unresolved questions about the Soviet economy. Why was growth so good for forty plus years? Why was it so stunningly bad after that? And what changed?

This opens up multiple really big warehouse-store cans of peas, but if we keep focused on the question of Samuelson's treatment of the Soviet economy, it certainly looks reasonable up to say the late 60s or early seventies. After that, the performance of the Soviet economy started to rapidly collapse. What exactly do we expect a modeler to do under those circumstances? The first option is to treat the new numbers as an outlier. The second is to treat them as a trend. The third is to attempt to incorporate the new data while still not ignoring the bulk of the numbers. It appears that Samuelson went with door number three which would seem to be the most reasonable choice.

There were certainly issues with Samuelson's approach. Ironically, by editing out the genuinely impressive and largely uncontroversial period of Soviet economic growth, Tabarrok missed the chance to point out a real and fairly obvious flaw in Samuelson's forecast. Small economies modernizing often rack up impressive growth rates but they by nature follow S curves. You can create a big bump in GDP by moving a peasant or surf from the fields to the factory, but you can only do it once.Linear extrapolation was clearly a mistake.

In general, though, if you start with the fact that the observed data included a 40 plus year run of extremely high GDP growth, then look at where the data was at the point in time when Samuelson made a particular statement or assertion (taking into account a one or two year time lag between the analyses being run and the copyright date on the textbook), most of it looks okay. Were there changes that should have come one edition before? Sure, but the impression of clownishness which the George Mason crowd is pushing here only works if the audience doesn't know the history of Soviet economic growth, but does know how the USSR ended up. Taking all of that into account, Samuelson comes off looking not all that bad. Alex Tabarrok, on the other hand...

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