Wendy's Is Winning The Burger Battle


Burger King reported its fourth-quarter numbers this morning, which has given us a chance to analyze the market share battle between the big three nationwide QSR chains. And, at the moment, it appears that the winner is Wendy's. 

There's no question that Burger King and Wendy's are taking market share from McDonald's right now, but Wendy's is taking more of it. McDonald's U.S. comps fell 1.4 percent in the fourth quarter. Burger King's domestic same-store sales rose 0.2 percent. Wendy's, meanwhile, boasted a nice 3.1-percent growth number in the period.

But full-year comp numbers are a better measure of overall restaurant sales performance than are single-quarter figures—which can be influenced by bad storms or the number of weekends or the day of the week that an important holiday happens to land upon.

On a full-year basis, Wendy's same-store sales rose 1.9 percent in its domestic locations. Burger King's full-year comp sales fell 0.9 percent in the U.S.—meaning it actually lost market share last year compared to McDonald's, whose domestic comps fell 0.2 percent. Indeed, last year wasn't that great for the big three QSR chains, making Wendy's fourth-quarter surge all the more impressive.

But even on a full-year basis, this is still a small sample size. Yes, Wendy's had a good 2013, but Burger King's 2012 was better. And McDonald's did pretty well the previous year, too. Momentum can shift quickly from one chain to the next, and from one brand to the next. That makes a two-year comp number an even better measure.

And still, Wendy's came out ahead, though all three chains competed more evenly over that period. Burger King's comps over the past two full years have risen 2.6 percent in the U.S. For McDonald's, those comps rose 3.1 percent. Wendy's was the only one to enjoy consistent growth each of the past two years, and its same-store sales rose 3.53 percent in that timeframe.

Of course, McDonald's numbers represent much larger market share movement than its competitors, because its unit volumes are so much bigger—$2.7 million, compared with $1.5 million at Wendy's and about $1.2 million at Burger King. So for all the hand-wringing at Hamburger U, it actually gained market share in the past two years.

Still, current trends favor Wendy's, whose unit volumes are much better than they look because the chain doesn't have breakfast and has abandoned that plan, which was probably a good idea.

The chain has a lot of momentum. Its decision to return to premium messaging has brought in consumers, perhaps some of them from fast-casual burger chains. The company has released several unique, premium burgers that are more profitable for franchisees, which makes them happier.

And then consider this: Wendy's performance recently has come even though its remodel program is only now getting off the ground, while Burger King's superfast remodel program is well under way, and McDonald's is at an advanced stage. Remodels could boost sales further, because newly spruced up units bring in traffic.

The company's refranchising plan could also boost sales further, because it's well documented that franchisees do a better job running restaurants than their franchisors.

Of course, things can change surprisingly fast in the restaurant business. But for now, at least, things are looking pretty good for Wendy's.

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