021202 Burger King Approves 99 Cent Whopper

Des Moines, IA - Escalating their price war with McDonald's Corp. Burger King franchisees narrowly approved a proposal to put the Whopper hamburger on sale for 99 cents for a limited time in January.

The controversial move, which required backing from at least two-thirds of the franchisees, won 69.6% of the vote. Burger King had lobbied hard for the promotion, saying it was necessary to hold market share.

If the tactic is successful, it could put pressure on McDonald's to respond by marking down its flagship sandwich, the Big Mac.

The world's two biggest hamburger chains are fighting for customers by offering big discounts at a difficult time for both. McDonald's is seeking to regain momentum at its 13,000 U.S. restaurants after months of disappointing sales. Burger King is struggling to meet performance goals critical to its pending sale to a private investor group by parent Diageo PLC .

Plans call for the Whopper to be marked down to 99 cents for 17 days in January. The suggested retail price for a Whopper is $2.19, although the price varies by market. The Whopper promotion would follow a current limited-time sale of a double cheeseburger for 99 cents that expires Dec. 29.

Burger King officials have said they were being forced to put large-sized sandwiches on sale to counter a $1 price point for McDonald's Whopper-like Big 'N' Tasty burger.

"You can never let a competitor take market share away from you with price," a Burger King executive told Dow Jones Newswires.

Discounting the Whopper generated considerable controversy among the chain's franchisees.

"A price war with McDonald's will destroy Burger King," one Florida restaurant operator contended in an e-mail sent to others in the system. But the head of the chain's New York franchisee association, which supported the discount, warned that many franchisees were in financial difficulty and "will not get through the winter unless immediate and aggressive action" is taken against McDonald's.

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