Forget Customers: Taco Bell, Burger King Are Keeping McDonald’s Busy
It’s tough at the top, especially when you’re on top of the fast food industry and everyone is gunning for your demise. That’s the position McDonald’s (NYSE:MCD) is in, and just ask CEO Don Thompson — the chain has a lot of rivals on its hands. Taco Bell (NYSE:YUM), Starbucks (NASDAQ:SBUX), and Dunkin’ Donuts (NASDAQ:DNKN) are gunning for its monopoly over breakfast food, while Burger King (NYSE:BKW) is adamant about beating the burger chain at its own game.
Meanwhile, McDonald’s earnings have disappointed lately thanks to health-conscious consumers and a saturation of the marketplace. Its U.S. same-store sales have been down since the fourth quarter of 2013, with analysts not expecting them to turn around anytime soon. Case in point: Ronald McDonald definitely needs a Happy Meal.
We’ll start first with Burger King, because although the chain is a longtime rival of McDonald’s, it recently has been stealing more of the Golden Arches’ customers, a reality evident in its earnings figures. As reported by Benzinga, Brian Sozzi of Belus Capital Advisors highlighted on Jim Cramer’s The Street on Tuesday that while McDonald’s same-restaurant sales have been down since the fourth quarter of 2013, Burger King actually showed improvement each quarter in 2013. Burger King shares were also up 15.3 percent this year to date, while McDonald’s only gained 0.86 percent over the same period.
McDonald’s and Burger King have different marketing strategies, and that’s what Sozzi says differentiated the two from each other in 2013. While Burger King used emotional marketing techniques to sell its Angry Whopper, fried onion petals, chipotle sauce, and Satisfries, McDonald’s rolled out a number of menu items that were out of its expertise, and the offerings didn’t go over as well as executives had hoped. In that way, McDonald’s over-complicated menu didn’t helped its cause, a reality that even Thompson admitted in January, while Burger King’s simple, no-fuss offerings proved to garner attention in 2013.