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Show Me the Money: Why Burger King Is Leaving
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Show Me the Money: Why Burger King Is Leaving

Burger King made headlines last week with their announcement to buy Canadian fast food chain Tim Horton’s and move their corporate offices to Canada. Why a classic American company would make such a move has left some cheering while others cry foul.

But why would the self-appointed King of Burgers pick up and leave the West’s haven of milk and honey? Here are three factors which played into this decision:

1. Money

In 1954, James McLamore and David Edgeron established the first Burger King restaurant in Miami, Florida. Three years later, the Whopper was born. Then, in 1967, Pillsbury acquired the Burger King Corporation, and James McLamore joined Pillsbury’s board of directors (where he would maintain involvement with the Burger King brand until his retirement). As it celebrated its 20th year, Burger King debuted the “Have it Your Way” campaign in 1974… and the rest is history.

burger king storeWhen McLamore and Edgerson opened their little restaurant in Miami, they didn’t do so with the goal of contributing to American capitalism, creating a world-renowned burger franchise, or supplying the US with thousands of jobs. These were merely the by-products of two men’s desire to make money, care for their families, and live out the American dream… the dream of owning one’s one company, being self sufficient, and having a successful business.

And successful they were. Burger King is currently the 5th largest food chain in the United States with 7,233 stores, beat out by rival McDonalds at #2 with 14,000 US locations, but ahead of #7 Wendy’s 5,877 restaurants. According to Burger King’s 2009 Year End SEC filings,

“As of June 30, 2009, we owned or franchised a total of 11,925 restaurants in 73 countries and U.S. territories, of which 1,429 restaurants were Company restaurants and 10,496 were owned by our franchisees. Of these restaurants, 7,233 or 61% were located in the United States and 4,692 or 39% were located in our international markets.”

There’s no questioning that American money, workers, and patrons built Burger King into the fast food giant it is today. But good business is growing business, and if there’s more money to be had from a corporate move outside the US, well, follow the…

2. Money!

It’s one thing to be successful. It’s another thing to be held responsible for the success of others. Yet, that is exactly what our corporate tax structure demands of American business. Success is penalized. The more you make, the more they take.

taxes

You can’t simply create a business and make money in today’s America. Now you have to create a business that makes enough money to sustain you and the tax burden you’ll face.

This mentality is not simply questioned when franchises like Burger King seemingly flee our corporate tax structure, it is also causing young American entrepreneurs to question the idea of starting their own businesses. Yes, despite what many politicians would have us believe, start-ups play a minimal role in the US corporate world.  Now, thanks to The Affordable Care Act, one must also answer the dilemmas of if you truly want to build a business, how many employees are too many and how many hours may they work for me to pay the least in tax penalties?

When a business becomes more concerned with its survival than its success, drastic actions must be taken.  But Canada? Why?

3. Money!

The left cries foul at the thought of an American company fleeing the US tax structure; the President himself objecting and calling on Congress to act in response – which begs the question, what exactly does the President think that action would be, exactly? He has no plan for ISIS, but appears to have plans for stopping a private company from doing as it wishes. His may believe his pen can override courts and Congress, but it can’t stop a company from leaving a state of survival for one of success.

Consider this graph showing the US corporate tax rate compared to some of our economical rivals:

US tax rate

That’s right. The United States has the highest corporate tax in the world. We’re kidding ourselves if we think other American businesses won’t follow Burger King’s lead if given the opportunity. No wonder Warren Buffet is helping to finance the Burger King move. Because when it comes to money, he’s a very smart man. And again, that’s what this is about.  Money!

Does a desire to keep more of the MONEY it earns make Burger King an evil company, or does it make them a hero?

While the left cries, the right cheers… is Burger King John Galt come to life? Is he the corporate hero who stands up to the insanity of the American tax culture and says, “No more!”?

Good question. Burger King says its decision isn’t tax driven, but about the global growth of both Burger King and Tim Horton’s (the company BK would acquire in the corporate move). Say what they will, a move to Canada is estimated to save the company potentially $8 million yearly, if not much more. In a company that clears well over $320 million pre-taxes each year, that may not seem like much. Unless you think about it this way: $8 million makes 8 millionaires. $8 million is approximately the equivalent of the profit on 8 million BK burgers. Further, the average American Burger King employee makes $8/hr, making $8 million the equivalent of roughly one million US working hours. More savings, more doing, that’s the power of… Burger King? (Not to mention an $8 million tax savings could potentially fund future raises for those minimum wage workers, couldn’t it?)

burger king king

So does this desire to increase the bottom line make Burger King a hero or villain in the American narrative? Is their motive of greed to be scorned or success to be envied?

I’d venture the unpopular opinion of quite simply, neither. Business is business and a good business does what is best for the company, both financially and for its personnel.

If Burger King can make more money by moving to Canada, why shouldn’t they? Doing so doesn’t make them a hero or a villain. It’s just good business.

Agree? Disagree? Sound off in the comments below or write a letter to the editor!

 

 

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