5/14/2013 8:26 PM ET|
Waffle tacos and ribs: Rivals go after McDonald's
The new offerings are about to make the fast-food landscape even more hostile for Ronald and company.
Just as McDonald's started plying China with Egg McMuffins and teasing Americans with the prospect of all-day breakfast, Yum Brands (YUM) strikes back through its Taco Bell restaurants by testing a fried, scrambled-egg-and-sausage-stuffedwaffle taco on the breakfast menu in select California markets. At 89 cents, it's even cheaper than the items on Taco Bell's prototype value menu that's being prepped to go head-to-head with McDonald's Dollar Menu.
This might tempt McDonald's to go nuclear and relaunch the McRib sandwich (pictured) yet again to shore up numbers. Even that sandwich has prompted a fast-food arms race, however, as Burger Business notes that Burger King (BKW) is including a boneless rib sandwich of its own in a limited-time summer menu that also includes a Carolina BBQ sandwich, a pulled pork sandwich and sweet potato fries.
This is the corner McDonald's has been backed into. McDonald's first-quarter same-store sales, a key restaurant metric of sales at locations open for at least one year, were off 1% worldwide. While the chain cites the loss of an extra sales day from 2012's leap year, the spit-take reaction to its new Fish McBites here in the States and competition from fast-casual chains like Panera Bread (PNRA) and Chipotle Mexican Grill (CMG) certainly haven't helped.
Instead of turning competitors' strengths against them, as it did with Starbucks (SBUX) and Jamba Juice (JMBA) by launching McCafe coffee drinks and smoothies a few years back, McDonald's is now forced to react to its foes' slightest tweaks as costs rise. Angus burgers get replaced with cheaper Quarter Pounder styles. Its CEO starts pondering delivery at shops in some U.S. cities after Burger King launched delivery service last year.
With Panera, Chipotle, Five Guys and In-N-Out Burger battling McDonald's for the high end of the fast-food market as Taco Bell keeps filling the basement with Doritos Locos taco shells, McDonald's is feeling the pinch. Now that it has to battle for breakfast and battle a McRib competitor, it has to make a choice: deep reinventing away from its original model or going back to its burgers-and-fries roots. Its roads in both directions are looking pretty clogged.
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