I can't tell you about the invention of the bacon cheese burger, but I can tell you about the current ubiquity of bacon cheese burgers and bacon everything else. Bloomberg has a fantastically researched article called "The Bacon Boom Was Not an Accident". Originally, demand for bacon was highly seasonal and predictable.
Bacon has been a staple of the American diet since the first European settlers, but until recently it was consumed in a predictable, seasonal pattern. The bulk of sales came from home consumers, diners, and pancake houses, which fried it up along with eggs for breakfast. “For a long time bacon was sold 80 percent at retail and only 20 percent in food service,” says Leathers, who worked selling and marketing pork to both supermarkets and restaurants over the decades. In summer, sales would spike along with the annual tomato crop—peak season for Cobb salads, BLTs, and club sandwiches. When the tomatoes ran out by October, bacon retreated to the breakfast table till the next summer. The pork belly futures contract was born at the Chicago Mercantile Exchange in 1961 as a result of this cycle: Farmers with an excess supply of pork bellies sold them to cold storage warehouses, thus locking in a price long before tomato season hit.
In the 1980's, however, health foods became a force within the food industry. Consumers started avoiding fats, started avoiding salts, started avoiding nitrates, all of which hurt pork producers. To combat this
the National Pork Board, a trade association in Des Moines, respond to this was "to try to latch onto the popularity of ultralean boneless-skinless chicken breasts, then the darling of the meat case". They started a very successful ad campaign based on the slogan "Pork: The Other White Meat", trying to associate pork in consumers minds with a being a "healthier option". This helped pork sales over all... but hurt bacon sales.
The Other White Meat campaign launched in 1987 and was so successful at selling lean pork cuts, it actually hurt the rest of the pig. “The parts of the pig that were not white, middle meat, suffered from that period of time,” Gerike says. “Bacon was the big victim.” Bacon was sacrificed for the good of the hog, as producers chased the lean diet trend by drawing a line from pork loin to chicken breasts. [...]
As warehouses accumulated unwanted piles of frozen pork bellies, prices dropped, dipping as low as 19¢ per pound. The U.S. government encouraged meatpackers to sell bellies as a cheap export to the Soviet Union and as food aid to impoverished African states. “I was on a trade mission to sell bellies to Poland,” Leathers says. “We just had freezers full of bellies. There was such little demand that the U.S. was literally giving them away.”
Pork bellies were sometimes thought of as a "drag on the carcass" during this period, meat that was hard to sell. Pork producers began to try to market bacon as a "flavor enhancer". Coincidentally, at the same time, fast food burger restaurants were at a low point for flavor. They too were trying to seem "healthier" and pursuing leaner meat, while at the same time overcooking their burgers to avoid E. coli scares as happened several times in the early 90's (most famously to Jack in the Box in 1993). The article helpfully explains that "Lean hamburgers tended to taste like dry cardboard." Burger chains, not seeing the success of pretending to be healthier, started looking around for a different approach.
The first chain to do this was Hardee’s, which at the time had a much larger share of the market than it does today. Larry Cizek, the retired head of food service marketing at the Pork Board, remembers sitting poolside in Orlando at an industry conference in the early ’90s, having a drink with Bob Autry, then president of Hardee’s. Cizek was complaining about trying to get restaurants interested in bacon, because everyone wanted lean products. “Well,” Cizek recalls Autry saying, “everyone says that you have to have the lean stuff on your menu, but by God, I only sell three, four lean sandwiches a day!” Cizek began telling Autry about the Sisyphean task of trying to move pork bellies, and Autry said, “I’m gonna come up with a sandwich with grease dropping down their chin and we’ll see what they say!”
The answer came in 1992, with the debut of the Hardee’s Frisco Burger, a line of sandwiches featuring bacon. It was to be a momentous event for fast food, and bacon’s fate, in America. “That’s the first time a chain ever put bacon on everything. It was tremendously successful,” says Cizek. “People would buy it, regardless of health cares. It just went.”
However, no one really followed Hardy's into the great Bacon Beyond:
The rest of the industry watched Hardee’s bacon-driven success with growing interest, but wasn’t ready to jump in. “Hardee’s bacon offerings didn’t kick off any groundswell in the industry,” says Paul Perfilio, the Pork Board’s national marketing manager. “It set them apart with customers and they had quite a following. Other chains tried it through the 1990s—[Burger King], Jack in the Box, Arby’s. But it was all limited time offers. It never really stuck.” The main reason was that Hardee’s prepared bacon by cooking it from raw in each location, something larger chains were hesitant to do. Bacon created smoke, and tons of grease that could burn, coat every surface, and take up space in cumbersome traps, which had to be cleaned and the grease disposed of daily. The restaurant chains wanted bacon; they just wanted it without the costly mess.
The Pork Board subsidized both chains' recipe development and R&D to solve the problem of cooking the bacon.
Though the money spent by the National Pork Board on this effort was relatively small—a few hundred thousand dollars, spread over a decade, by one estimate—the investment paid off better than anyone could have imagined. “McDonald’s had more positive influence for the turnaround of bacon when they started adding it to sandwiches” such as the Bacon Double Cheeseburger and Quarter Pounder BLT, says Leathers. “Man, if you put two, three strips of bacon on their sandwiches, that’s a ton of bacon.”
“There started to be more of an awakening of the marketing departments of a lot of restaurant chains to offer more indulgent products,” says Perfilio. “Portions got bigger in everything. Fast-food chains saw they could offer a number of different sandwiches with not only bacon as a topper, but all kinds of other things. Around 2000 is when bacon became the third condiment behind salt and pepper.”
Burger King unleashed a Whopper with bacon, Wendy’s shot back with the Baconator, and then the whole industry went all in. “It went from putting bacon on a cheeseburger to adding bacon as an a la carte item,” says Maiers, of the Illinois Pork Producers. Today, more than two-thirds of American restaurants offer at least one dish with bacon.
Pork belly prices began to pick up. They were under 30 cents a pound in 1989 to just under a dollar seventeen years later in 2006. The National Pork Board, no longer focusing on pork as a healthier option, began using the marketing slogan “Bacon Makes It Better.” Still, the trend was largely confined to hamburger chains at this point, which is likely why you see this as "traditional". Over the last ten years, bacon has gone from conquering burger kitchens to conquering the world, as I doubt I have to tell you.
With each bacon lovers festival and Bacon baby conceived with bacon-flavored lube, the price of pork belly futures rose. At one point in 2010, futures jumped from 90¢ per pound to a record $1.40 in just four months. Bacon prices rose from about $3 a pound in 2005 to around $5.40 today, according to government statistics.
This incessant demand drained the volatility out of the pork belly futures market, and trading on belly contracts slowed to a trickle. In 2012, the Chicago Mercantile Exchange ceased the trade in pork belly contracts, due to lack of volume.
Which is to say, bacon had become so popular that it ended pork bellows as a product because demand was so high year round that there was no longer a need to keep it in cold storage. This bacon obsession is so potent it has literally changed the economy. To put it simply, though, it seems like the current massive popularity of bacon on a cheeseburger is more related to economic trends in the '90's than ancient cooking techniques.