Burger King is eating McDonald's lunch
They're both dealing with the same tough economy, but the perennial also-ran is capitalizing on the notion that people want tasty food.
The Miami-based chain Wednesday reported better-than-expected quarterly earnings, with expenses plunging about 65% as it converted its operations to a franchised model. Consumers appear to be reacting positively to new offerings such as lattes, the Rib Sandwich and Barbecued Chicken Salad.
The company's same-store sales figures, a key metric measuring the performance of stores open at least a year, were impressive, gaining 0.6% globally. That surpassed analysts' expectations that called for a decline of 0.1%. In North America, though, that measure fell 0.5% as competition from McDonald's and Wendy's (WEN) intensified.
Burger King, which expects to have 40% of its U.S. and Canada locations remodeled by 2015, has an edge over McDonald's in one key area: Taste. Research from Technomic, a food industry market researcher and consultant, shows that consumers prefer Burger King over McDonald's. Unfortunately for both chains, consumers like Wendy's better than either of them.
Investors are finding shares of Wendy's more tasty as well. They've surged more than 50% this year, while shares of Burger King have risen nearly 19% year-to-date. McDonald's has posted a 11.5% gain.
But things at Burger King are headed in the right direction. The Home of the Whopper is planning to expand further overseas, adding 125 net new stores in several countries, including China, Turkey, Russia and Brazil.
Traffic in the U.S. during the latest quarter was bolstered by promotions for limited premium offerings such as the Summer BBQ menu, the $1.29 Whopper Jr. and 50-cent ice cream cones.
Burger King's success will ratchet up Wall Street's pressure of McDonald's to improve its performance.
Jonathan Berr owns a small position in McDonald's. Follow him on Twitter @ jdberr.
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I can't stand either of them, I'd rather go to Wendy's. McD's always gets my order wrong, and BK is slower than molasses and their prices are too high.
I like Whataburger...
Good food and they employ more adults, rather than a bunch of kids..
No surprise actually .... been eating at Burger King when it was still Carrols in 1961 at one of its Rochester NY locations.
I haven't eaten at a McDonalds in more than 30 yrs. because of the different cooking styles (always liked flame broiled flavor), larger sandwiches (Whopper w/cheese) and always hated the décor and theme pointed completely at kids ... and out of touch with the adult customer.
Never cared for Wendy's, got food poisoned once at a Calif location and never went back ... would rather go to Arby's for a change in menu.
If you want a GOOD burger, I suggest Smashburger!
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The solid report comes a month after the retailer closed all of its Canadian operations.
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