Commentary

BK's and 3G's Hees To Take CEO Slot At Heinz

Warren Buffet didn’t get that cat-ate-the-canary smile by sitting around and letting the companies he owns just plod along, doing what they’ve done to burnish their brands. And so it is that anybody at H.J. Heinz Co. who thought that it was going to be business as usual under Berkshire Hathaway’s and 3G Capital’s corporate umbrella must have had his or her illusions dispelled yesterday.

Burger King CEO and 3G partner Bernardo Hees, 43, will become Heinz’ CEO when the deal is closed on July 1 or so. He will succeed William Johnson, 64, who has been chairman, president and CEO since 2000 and has himself been credited with turning the company around.

Hees is reticent with outsiders and a mystery to most franchisees, as the Wall Street Journal’s Julie Jargon reports, but is nonetheless an effective communicator on the one-to-one level. He has slashed costs and instituted a “down-to-business management style that has completely reshaped Burger King in the three years since he took over,” she writes.

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Burger King, meanwhile, announced that CFO Daniel Schwartz will immediately become BK’s COO and will take over as CEO when Hees leaves for Heinz (though he will remain as vice chairman of the board), as Nation’s Restaurant News’ Erin Dostal reports. Other executive changes are detailed in BK’s press release.

The company also said yesterday, in its outlook for the first quarter, that it expects first quarter adjusted earnings per share to total 17 cents, a 45% increase from the same quarter last year, despite same-store sales dropping 1.5% percent globally (and 3% in North America). It blames a “challenging macroeconomic environment and heightened competitive activity” for the lackluster results.

The same might be said about the environment and competition at BK’s Miami headquarters.

Shortly after 3G bought the chain in 2010, Jargon writes, Hees and his team fired about half of the 600 employees at HQ. “Layoffs continued for months after that,” she continues. “At headquarters, cubicles and offices were replaced with ‘pods,’ or tables seating four to six people, each of whom were allowed only one personal item on their desks, according to former employees.” 

But Jargon’s report is tempered with kind words about Hees’ one-on-one skills from at least one former executive, as well as the revelation he, too, sits out in the open.

“Hees sits at a desk outside the elevators on the seventh floor, appearing almost like a receptionist, flanked by executive lieutenants, the Associate Press elaborates. “A big board in front of their desks is updated daily with reports on sales and customer traffic globally and by region. Executives, including Hees, have color-coded boards by their desks displaying their annual goals. The idea is that everyone at the company can see each other's goals.”

The departing Johnson leaves Hees with an already transformed company, Malia Spencer writes in the Pittsburgh Business Times. “It’s a transformation that has created a solid brand portfolio,” as Morningstar senior equity analyst Erin Lash told her.

“The company refocused the brand and got rid of or stopped investing in areas that weren’t profitable…,” Lash said.

Indeed, “Heinz doesn't seem to be in need of a drastic overhaul like Burger King was,” observes Kevin Gale of the South Florida Business Journal.

For his part, Hees says in a statement released by Heinz that he “look[s] forward to joining the team and working in close partnership with the company's senior management, employees and customers to strengthen the business both domestically and internationally, while continuing to delight consumers with great tasting food products. On a personal level, my family and I are excited to be relocating to Pittsburgh and look forward to calling this great city home.”

Before his stints with 3G and BK, Hees spent 12 years at America Latina Logistica (ALL), Latin America's largest railroad and logistics company, where he began his career in 1998 as a logistics analyst and served as CEO and a member of the board of directors from 2005 to 2010. During his tenure as CEO, ALL’s overall business grew at a rate of 20% per year. 

Hees holds a degree in Economics from the Pontifícia Universidade Católica (Rio de Janeiro), an MBA from the University of Warwick, England, and, in 2005, he concluded an Owner/President Management course at Harvard Business School, according to a Forbesprofile.

For all of his financial savvy, Hees’ reluctance to talk off the cuff may be well advised.

“The job running Burger King also brought at least one high-profile stumble,” writes Teresa F. Lindeman in the Pittsburgh Post-Gazette. “Mr. Hees got numerous media mentions for a comment he made in 2011 while talking with an audience in Chicago about his time studying at the University of Warwick. ‘The food is terrible and the women are not very attractive,’ he was quoted as saying.”

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