McDonald’s might be able to take a lesson from another brand that seems to be turning things around: Burger King. Yes, Burger King—the fast-food industry’s longtime No. 2 player now has McDonald’s in its sights.
The North American quick-serve-restaurant category remains beleaguered by consumers’ money woes and by competition from the likes of Chipotle and Panera.
But it’s McDonald’s that’s facing the greatest pressure right now, with sluggish sales, a fading brand reputation and struggles with everything from low-wage workers to speed of service. The chain continues to fight, though, recently launching a food transparency campaign and continuing to reshuffle top management, especially in its U.S. operations.[more]
The return of its limited-time McRib sandwich—which now is available at about 75 percent of US McDonald’s—has also been a reliable short-term lift for the brand. McDonald’s has supported it this year with three “viral” videos on its YouTube channel that purport to answer key consumer questions about McRib, such as whether it’s 100 percent pork (it is).
Still, maybe McDonald’s should take a closer look at what Burger King is doing. While McDonald’s North America same-store sales plummeted by 3.3% in the third quarter, Burger King actually posted a same-store sales uptick of 3.6 percent for the period.
The results indicate that Burger King is “making headway in competing with McDonald’s and other fast food competitors,” Darren Tristano, EVP at food industry researcher Technomic, told Bloomberg Businessweek. “It’s the result of “aggressive promotion, discounting”—such as the two-for-$5 sandwich deal—”and some price increase.”
Burger King is also overcoming some other challenges that McDonald’s has been struggling with lately. For one thing, it has been simplifying its menu and streamlining service so that customers aren’t frustrated. The Rodeo Burger at Burger King, for example, is basically a standard burger with onion rings and barbecue sauce.
The No. 2 chain also has a verified comeback product hit in Chicken Fries, after it was nearly compelled by social media chatter to bring back the fry-shaped chicken strips that it originally introduced in 2005 and removed from the menu in 2012. Chicken Fries returned on a limited basis last summer.
“I think our innovation pipeline, so far, has jumped from resilient to successful,” Burger King President of North America Alex Macedo said during this week’s earnings call. Meanwhile, McDonald’s CEO Don Thompson keeps seeking the next major hit product for McDonald’s after Mighty Wings flopped.
Like McDonald’s, for example, third-place Wendy’s has been hindered by slowing sales of its value menu and rising beef and labor costs. Special menu items such as its highly promoted recent BBQ Pulled Pork line haven’t moved the needle enough, and Wendy’s has gone into a cost-cutting mode and newfound zeal to use technology to spur self-service in its restaurants.
Popeyes—a brand that has long been obscured by KFC and then Chick-fil-A in the fast-chicken segment—has engineered five straight years of same-store sales growth in the US, according to Forbes.
CEO Cheryl Bachelder has righted the ship in the last seven years by straightening out relationships with franchisees while giving the brand a new name—”Popeyes Louisiana Kitchen”—and a feisty new spokeswoman (watch below).
And there has been a decided repositioning around a new look highlighting Cajun spices and classic Southern fare. Not pressured by health concerns, clearly, the chain refuses to put salads on the menu. “I’m not trying to solve the world’s problems,” Bachelder told Forbes of her commitment to exclusively serving comfort food.
Are you listening, Don Thompson?