Wendy's boots Burger King from No. 2 spot
McDonald's, however, is still far out of reach for any of its rivals.
The fast-food industry was significantly shaken on Monday by news that Wendy's (WEN) has knocked Burger King from the No. 2 spot.
According to the Associated Press, an upcoming report by food research company Technomic shows that Wendy's knocked Burger King aside in U.S. sales volume for the first time since Wendy's was founded in 1969. McDonald's (MCD) continues to reign supreme at the top of the pile.
To put things into perspective, that is much like a company knocking PepsiCo (PEP) from the No. 2 cola spot. We just expect some companies to be ranked in a certain position. Wendy's should be commended for finally disrupting that train of thought.
The advantage is a small one, but it is still significant. Wendy's 2011 sales reached $8.5 billion, while Burger King reported $8.4 billion. Even combined, the two rivals are far behind the $34.2 billion reported by McDonald's.
Both Wendy's and Burger King have struggled in recent years and don't seem to have any sort of impact on McDonald's. Sales have soared 26% in the past five years at McDonald's, but are flat at Burger King over the same period and up 9% at Wendy's.
It seems incredible still that McDonald's sales are four times those of Wendy's and Burger King, or twice the combined amount of those two chains. No matter how well Wendy's does, that clown will just keep laughing from his red-and-yellow pedestal.
McDonald's said that February sales rose 7.5% for restaurants open at least 13 months. It was the fourth consecutive month of gains above 6%, according to analysts at Deutsche Bank. Those sales still missed the 7.7% growth target of analysts, however.
McDonald's has taken "the rare step of 'talking down' earnings" for the current quarter, with limited explanation, the analysts wrote in a recent report. But the analysts said they still maintained a "buy" rating on the stock, and said the stock's recent performance already reflected some of the bad news.
Goldman Sachs was far less positive about Wendy's, particularly after the company reported adjusted fourth-quarter profit of 4 cents a share -- in line with the preliminary results it released ahead of its January analyst day.
Analysts recalled that CEO Emil Brolick said the coming years will be "the most intense period of change in the history of the Wendy's brand" and "the three most intense years of capital investment in Wendy's history." The analysts said that while they agree there will be change -- and it will be expensive -- they "do not see evidence that it will drive an improvement in results."
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Consumers are very status conscious in Asia, Africa and other emerging-market areas. This is especially true in China.
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