How Burger King’s Youngest-Ever CEO Solved More Than One Whopper of a Problem

When Daniel Schwartz orchestrated Burger King’s multibillion-dollar sale to a private equity firm, there wasn’t a hint that it would kick-start his ascent to that firm’s chief executive officer seat by age 32. But, as he often says, people create their own luck.

“You have to work really hard to put yourself in a position to get lucky,” says Schwartz, who is Burger King’s youngest-ever CEO.

The first significant step in the Cornell grad’s road to CEO was in 2005 when he became an analyst in the New York City office of 3G Capital. During the next five years, Schwartz became a natural at the Brazilian-based investment firm, poring over spreadsheets and annual reports.

“I always worked hard,” he says. “I always really cared about the results or the projects I was working on.”

Daniel Schwartz’s next major break came in 2010 when he arranged 3G Capital’s purchase of Burger King for $4 billion. It was the largest leveraged buyout of a fast-food chain, according to market researcher Capital IQ.

After finalizing the acquisition, Schwartz became the chief financial officer of the fast-food chain. He worked hard and remained humble while leaping from the role of an investor to that of an operator.

Investigating Burger King’s Inner Workings

Daniel Schwartz was already an accomplished investor when he proved himself as CFO by making a slew of savvy financial moves. Along the way, his leadership skills became apparent.

In 2013, 3G Capital tapped Schwartz as Burger King’s chief executive officer at age 32. Even though he stood out in the field of middle-aged CEOs, the decision made sense. Schwartz possessed an unusual trifecta of financial, operational, and leadership chops.

Schwartz made a pilgrimage to Miami, where Burger King began in 1954. For months, he worked in his company’s kitchens throughout the area. He also tried to figure out why Burger King, the second-biggest burger company in the world, was experiencing flat sales when other chains were seeing double-digit growth. It was a mystery he would soon unravel.

The Steps Schwartz Took to Reinvigorate Burger King

After his forays in the field, Schwartz addressed more than one whopper of a problem. He began with key priorities: Tweak the franchise percentage, increase the pace of innovation, and adopt new technologies.

He says his two most important skills are spotting talent and assigning employees to roles that fit them. Jumping into action, Schwartz and his team relied heavily on the 3G playbook to hire the best people.

He subscribed wholeheartedly to one 3G adage: “Don’t manage the company. Manage the people, and they will manage the company.” This wisdom has been attributed to Brazilian businessman Alexandre Behring, a co-founder and managing partner at 3G.

Behring authored a “cheat sheet” for 3G that included the advice and experiences of 3G’s founders, who had decades of management under their collective belts. Other tenets were “Set clear, aggressive goals with enthusiastic and aligned teams,” “Don’t overcentralize the how,” and “Maintain focus and ask the right but tough questions.”

A substantial amount of Daniel Schwartz’s time as CEO was spent recruiting top undergraduates and MBAs. He wore out his shoe leather while traveling to meet job candidates for coffee.

“If I liked them, I would offer them a job on the spot,” he says.

Daniel Schwartz Puts Burger King on a Spending Diet

As CEO, Schwartz sought operational efficiencies. He sold Burger King’s corporate jet, slashed executive perks, moved international calls to Skype, favored email over FedEx, and quashed a $1 million company party held annually in an Italian chateau. Yes, he tightened belts, but that was secondary.

“Reducing costs is an outcome, versus our primary objective of having a lean and agile organization,” he says. “You can move quickly. Innovation tends to come when you’re constrained. It forces you to think differently.”

He restructured the Miami headquarters’ design to move the company culture in an optimal direction, resulting in an open floor plan that created a more democratic work space. The C-suite types no longer held court on “Mahogany Row” (what employees called the lavish offices of higher-ups).

“It’s less about cost-cuts; it’s much more about applying an ownership mentality to costs,” he confided during a sit-down for “Talks at GS,” a series held by Goldman Sachs. “Having people treat the place like its their own.”

Everyone from entry-level employees to Schwartz sat in an open workstation for all eyes to see. Office attire went from business casual to jeans. The new economics and headquarter reflected the three H’s of 3G: Humble, hardworking, and hungry.

Results soon appeared. Burger King’s selling, general, and administrative expenses declined from $619 million in 2010 to $348 million in 2012 and $242 million in 2013. Adjusted EBITDA increased to $652 million in 2012 and $666 million in 2013.

Daniel Schwartz Kick-Started Expansion by Supporting Franchisees

Daniel Schwartz and his team felt “a deep appreciation for the potential strength and efficiency of the franchised business model” when considering the Burger King acquisition. Still, Schwartz felt the broader market didn’t fully appreciate the franchises’ potential. This perception was partly due to these businesses’ somewhat confusing financial reporting.

Schwartz led the team as it improved relations with the franchisees, starting by creating new pricing structures that were more beneficial to them. In a move seen as unconventional at the time, the leadership team significantly increased the percentage of franchised restaurants. By 2013, the company owned only 52 restaurants; none were outside the Miami area.

“Our conclusion was to put the physical restaurants in the hands of the best local operators who can run them better, renovate them, and that’ll also allow us to expand our business aggressively,” Schwartz says.

The headquarters restructuring cut costs, and capital expenses declined due to the franchising changes. (Other fast-food companies later followed Burger King’s lead — including McDonald’s, which moved from 80% to 93% franchised.) Ahead of his time, Daniel Schwartz became a media darling, tapped as one of Fortune’s 40 Under 40 and receiving accolades. He became the executive chairman of Restaurant Brands International Inc. in 2019, where he continues to dream up the next big thing in fast food.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.