Is Ronald McDonald the Real Burger King?
Fast food joints are facing tough times. And while McDonald’s (NYSE:MCD) sales still aren’t what the company would like (sales at U.S. restaurants fell 1.4 percent in February), it’s still doing more business than its rival burger chains, including its biggest competitor, Burger King (NYSE:BKW), according to a recent BusinessWeek report.
To put the McDonald’s lead into perspective, the company took in $89.13 billion in sales in 2013, according to BurgerBusiness.com, which collected the information via companies’ annual 10-K filings. In addition, the average McDonald’s in the U.S. drew about $2.6 million in revenue last year.
Burger King, on the other hand, drew in less than half that in 2013, with the average restaurant garnering about $1.2 million in 2013; Burger King’s annual global sales put it well behind McDonald’s as well: The company brought in just over $16 billion.
Nick Setyan, senior vice president in charge of equity research at WedBush, told BusinessWeek that there are a number of reasons why McDonald’s seems to consistently trounce rival Burger King: “Everything from marketing to site selection to product initiatives and franchise selection have been historical factors,” he said.
And while it’s important to note that the fast food industry as a whole is largely struggling, and rapidly transforming; Burger King is unveiling mobile payment options next month in an effort to boost sales, and McDonald’s has experienced a four-month run of sales declines, and the restaurant’s guest count declined by 1.6 percent in 2013.
Still there are a number of factors behind McDonald’s continued dominance over Burger King, a company Mickey D’s seems to trounce at every turn, according to a recent BusinessWeek report.
For one, the report explains, McDonald’s does a better job of appealing to customers at off-peak hours; that is, the company doesn’t solely rely on the lunch and dinnertime crowd. A great example of this is the Egg McMuffin. It needs no introduction or explanation: McDonald’s has made their signature breakfast sandwich a household name. Burger King, on the other hand, has no equivalent, trademarked breakfast option, although perhaps the closest competitor is what the company is calling a “Croissan’wich.”
McDonald’s also consistently boosts the largest number of kids’ meal sales of the three main burger chains (the other two being Burger King and Wendy’s, respectively); kids’ meals comprise a full 10 percent of the company’s sales, BusinessWeek reports. McDonald’s Happy Meals also have the distinction of being the most commonly advertised kids-oriented fast food item on television. Burger King, on the other hand, is still in the process of recovering from a bad advertising campaign (do you remember “the King?”) which largely scared away women and children. Understandably.
Advertising is a big part of Burger King’s failures, as well: The company has a history of bad campaigns which have either offended or alienated almost every demographic you can think of. In addition, McDonald’s just spends more on marketing than its largest rival; in 2012, McDonald’s advertising costs were $787.5 million, while Burger King spent just $48.5 million.
Lastly, it seems McDonald’s is the fastest of the fast food titans: BusinessWeek reports that McDonald’s can handle more cars more efficiently at peak hours, and the company is even thinking of adding a third service window to get customers through even faster. The average service time at a McDonald’s, according to the report, is approximately 189.49 seconds, whereas at Burger King that number is closer to 200. And while it may seem silly (I mean, you’re looking at an extra ten seconds at Burger King versus McDonald’s), drive-through sales are crucial to the fast food business: one Burger King franchisee, Carrol’s, reported that 65 percent of its sales came from the drive-through, according to BusinessWeek.
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