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.

By Jonathan Berr Jul 31, 2013 11:49AM
A Burger King Whopper hamburger and French fries (© Daniel Acker/Bloomberg via Getty Images)After its recent disappointing earnings report, McDonald's (MCD) CEO Don Thompson warned that earnings for the rest of the year would be "challenged." Rival Burger King (BKW), though, seems to be handling the same economic issues better.

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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325Comments
Jul 31, 2013 1:34PM
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Ever stop to think it's the customer service folks are getting. I know the McDonald's where I live has horrible customer service. The order takers are rude and sometimes ignore you. Even some of the management sucks. Maybe start there and you could have an increase in sales.
Jul 31, 2013 1:39PM
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Customers want tasty food? Imagine that.

Jul 31, 2013 1:35PM
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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.

 

Jul 31, 2013 1:41PM
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I like Whataburger...

Good food and they employ more adults, rather than a bunch of kids..

Jul 31, 2013 1:34PM
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If they are "capitalizing on the notion that people want tasty food" why did they introduce those nasty new French fries?? I thought I picked a good one out of the bag once while I was driving but then I realized it was the actual bag that I was eating.
Jul 31, 2013 2:07PM
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IF they would stop paying LeBron and others millions to "promote" their products maybe they could pay their workers an actual living wage, which would boost sales because the employees wouldnt hate the customers.  Then the satisfied customers would go on facebook and twitter and tell all their "friends" about how great their latest trip to McDonalds was.  In todays world advertising is pointless, if your product/service is of high quality people will spread the word themselves.
Jul 31, 2013 1:40PM
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Really... The only thing at BK that I like better is a whopper w/cheese.  Although, McDonald's has forgotten about kids.  When I was a kid it was all, Ronald McDonald and Happy Meals, and the lastest toys from the movies, and collectible glasses.  Now McDonald's is about old people drinking coffee for hours, because it is free...  McDonald's need to remember it was kids that made them famous...
Jul 31, 2013 1:53PM
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really, they only need to get it thru the employees head to treat customers with respect!!!!!!
there are some I won't go back to because of rude employees

Jul 31, 2013 1:39PM
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Well this was an interesting article until they came up with people like Wendy's better than Burger King or McDonald's. When that came out I knew this was a personal article and not research done by a reputable firm. Wendy's was great until they changed their bun's, onlons and just about everything on their burgers. Now they are just bland. McDonald's food has gone down in quality and taste so I would personally give higher marks to Burger King if I were voting but I'm sure other people have their preference as well.
Jul 31, 2013 2:20PM
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IN-n-OUT, wish they had them here in the PNW.
Jul 31, 2013 2:46PM
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I'm not a huge eater of either fast food chain but I do think the burgers have more taste, flavor, and freshness at Burger King. It's pretty apparent McDonalds food spends more time in the freezer. But again, we're talking about fast food, not a gourmet burger joint.
Jul 31, 2013 1:49PM
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Whoppers used to be really, really good about 19 years ago. Man I'm getting old. I worked at BK for 2 years in high school.  $0.99 cent whopper sunday was a huge day for us. Even the Amish would come into town and get some. But sometime after I stopped working there they changed their meat and buns. I can tell, and they aren't better.
Jul 31, 2013 1:42PM
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For me Wendy's or better yet Subway where I can really have it the way I like it. 
Jul 31, 2013 1:42PM
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McDonald's has had bland, tasteless food for a number of years now.  I do like their mcdouble and pineapple-mango smoothies though.  My wife likes the wraps.  The French fries are barely edible.  You cannot get a breakfast item after 10:30.  How hard is it to do a sausage biscuit a few minutes after 10:30?  BK is far tastier in its burgers.  I came to McDonald's in  Boiling Springs, NC drive up window, ordered and paid and asked if they would throw an old McDonalds cup in the trash for me.  I am disabled and walking is painful at times.  The garbage can was set back from the drive thru thus making me have to get out of the car.  The cashier said it was against their policy to take trash.  I said "Oh, what is your policy on picking up trash in your driveway"?  All I got in response was a confused blank expression.  I got my order and as I drove away, out the window the cup went. 
Jul 31, 2013 2:16PM
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All these fast food places are garbage.  Wendy's at least makes good chicken salads with fresh ingredients.  Five Guys is the place to go for a good burger at a decent price and free peanuts!!  Culvers is yummy also!!
It's no coincidence that I feel like crap after eating at any of the fast food chains and Hardees is the absolute worst!!
Jul 31, 2013 1:38PM
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  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.

Jul 31, 2013 1:51PM
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It's hard to beat McDonalds for fast, cheap food.  Two McDoubles and a large Diet Coke for $3.00 plus tax can't be beat.

If you want a GOOD burger, I suggest Smashburger!

Jul 31, 2013 2:14PM
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Both of them helped define junk food in this country.  I stay was from both of them because one is as bad as the other.
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