Earlier this year, Wendy's dethroned Burger King to become America's second-largest burger chain, based on the chains' 2011 U.S. sales figures, for the first time. But the pinnacle (well, sub-pinnacle, as both are way beneath McDonald's) must be slippery, because Wendy's foothold at the top already appears to be weakening.
For Wendy's, the first quarter was a big disappointment and produced only a 2-percent revenue increase compared with a year ago, to $593 million, forcing the chain to lower its 2012 outlook. But for the ever-hungry Burger King, first-quarter sales rose by more than 3 percent, to $570 million.
Both burger icons tried some tweaks that were new and different during the period. Burger King's innovations seem to be working out better for now.
For example, Burger King said that its same-store sales growth in North America was the strongest in more than two years. Maybe consumers were still just grateful for the absence of The King, Burger King's recently retired advertising mascot.
In any events, those results were cast even before the company launched its new menu, featuring 13 items such as snack wrap sandwiches and fruit smoothies, in April. Burger King also started a celebrity-studded TV campaign starring David Beckham, Jay Leno, Steven Tyler, and (in a bow to US Hispanics) Salma Hayek and Sofia Vergara.
Will all of that boost Miami-based Burger King's second-quarter results even more? That's the presumption.
All of which is bad news for Wendy's. The Ohio-based chain has barely had time to enjoy being Avis to McDonald's Hertz because its own business-boosting plans haven't worked out too well so far.
Wendy's attempt to entice customers from its value menu up to the new mid-priced W cheeseburger line has backfired. Rather than enourage value-menu customers to trade up from 99-cent meals to a W at $2.99, the sandwich cannibalized sales of its premiuim counterpart, Dave's Hot 'N Juicey cheeseburger, which starts at a recommended price of $3.69.
"The positioning of the product was just not the right positioning," Wendy's CEO Emil Brolick said on an earnings call with analysts.
So it's back to the menu board for Wendy's. The King is breathing down their necks.