Burger King Chief Executive Quits Suddenly
Burger King’s chairman and chief executive resigned Friday after starting a turnaround at the No. 2 hamburger restaurant chain, but Greg Brenneman’s departure raised questions about the company’s impending initial public stock offering and its continued revolving door for high-ranking personnel.
Brenneman, 44, is a veteran of fixing troubled companies, including Continental Airlines Inc. in the 1990s. He joined Burger King in August 2004 after nearly two years of slumping sales, but the chain says that it has now had eight consecutive quarters of sales growth at stores open at least a year, and that profit is small but growing.
John Chidsey, 43, was promoted from president and chief financial officer to CEO, effective immediately. He is the 11th CEO since 1989 at the Miami-based company, whose board also announced that independent director Brian Swette would serve as nonexecutive chairman.
The shake-up comes as the chain’s parent, Burger King Holdings Inc., is preparing for its IPO, announced in February. The company hopes to raise as much as $400 million but has released few details, such as the share price or what proportion of the company would be offered. A company lawyer said Friday that the sale was expected to take place by June 30, if securities regulators approved.
Burger King has for several years been trying to regain ground lost to market leader McDonald’s Corp. and Wendy’s International Inc. It has also tried to repair icy relations with some of its franchisees, a key goal because about 90% of its restaurants are independently owned.
The change at the top “portends no bad news,” Chidsey said during a conference call. “Everything is fine with the company.”
He and Brenneman declined to go into specifics because of Securities and Exchange Commission regulations limiting what a company can say before an IPO.
But they said the transition would be natural and smooth because the rest of the veteran management team key to the turnaround would stay in place.
Brenneman said he and the board thought it would be good for him to leave now so there would be a stable long-term management team once the company sells stock to investors. He added that he had discussed his eventual departure with the chain’s owners when he was hired 20 months ago.
However, Brenneman told the Associated Press the day he was hired that he intended to stay with Burger King several years. He repeated that several times since.
Although Chidsey is a “very capable executive” who can handle the task of running Burger King, the move still raises questions, industry analyst Allan Hickok said.
“It is not good timing. That is not the type of development in normal cases that would inflate investors’ enthusiasm for this transaction. Because it just begs the question of why,” he said.
In a statement, Burger King’s board said: “We are confident that now is the right time to set in motion the next phase of the company’s development. John is a highly qualified leader who has served as an integral member of the management team.”
But the company has warned potential investors that the loss of Brenneman, Chidsey, longtime Chief Marketing Officer Russ Klein and other key personnel is a risk.
“If we lost the services of any of these key personnel and fail to manage a smooth transition to new personnel, our business would suffer,” the Feb. 16 IPO filing said.
