Fast-Food Franchises Spice Things Up to Win Over Fans

McDonald’s, Burger King, and Wendy’s are constantly battling for the same type of customer, which leads to relentless innovations. Who’s winning right now?

Jan 25, 2014 at 10:00AM

McDonald's (NYSE:MCD), Burger King Worldwide (NYSE:BKW), and Wendy's (NASDAQ:WEN) have all announced new initiatives recently. While Burger King and Wendy's have gone the limited-time-offer route in regard to menu items, McDonald's has just launched its #CheersToSochi social media campaign.

McDonald's is a much larger company than Burger King and Wendy's, all of which operate primarily on a franchise model. McDonald's has 35,000 locations across more than 100 countries, serving an average of 69 million customers per day. Burger King has 13,000 locations across 91 countries, serving an average of 11 million customers per day. Wendy's has 6,500 locations across 28 countries. There is no recent estimate for how many customers Wendy's serves per day.

Due to McDonald's massive geographical exposure and brand strength, Burger King and Wendy's must come up with creative ways to drive new and repeat business. Both of these companies have added to their menus. These items are likely to drive more customers through their doors, but one of them has a likely edge. 

In this corner: Spicy Chicken Sandwich
Burger King's Original Chicken Sandwich has been a big hit for 30 years. According to NPD Group, it's the best-selling chicken sandwich in the United States in the fast-food space. Therefore, Burger King is sticking with it. However, BK is now offering a new twist, the Spicy Chicken Sandwich. It's the same as the Original, but with cayenne pepper and other spices added to the breading, with the usual shredded lettuce and mayonnaise -- all on a sesame seed bun.

The Spicy Chicken Sandwich is available on Burger King's "2 for $5 Menu," along with the Original Chicken Sandwich, BIG KING, and Alaskan Fish Sandwich. The menu is available through March 2. The Spicy Chicken Sandwich alone costs $3.79.

First, ask yourself if you would take advantage of any of these offers. This is a good indication of what the average consumer thinks. Next, ask yourself if anyone you know would. If the answer is no, then Burger King hasn't done enough to drive consumers to its restaurants. If you're not a fan of Burger King, but you're well aware that millions of people enjoy fast food, then think about which restaurant an on-the-fence consumer would choose between Burger King and Wendy's based on recent offerings.

And in this corner: Spicy Chipotle Crispy Chicken Sandwich
The Spicy Chipotle Crispy Chicken Sandwich at Wendy's, as well as the Spicy Chipotle Jr. Cheeseburger, costs just $0.99. If today's economic environment features a value-conscious consumer, then they're more likely to opt for this spicy chicken sandwich versus the one Burger King offers. Based on the price differential, it's also possible for Wendy's to steal customers from Burger King.

Both of Wendy's limited-time-offer sandwiches (no end date determined yet) come with melted pepper jack cheese and jalapenos. According to its press release, Wendy's went this route partially because of Technomic's 2013 Flavor Consumer Trend Report, which indicated that 54% of U.S. consumers prefer spicy food over mild food.

The Spicy Chipotle Crispy Chicken Sandwich is on the "Right Price Right Size Menu." The low prices for these menu items might make you think that this initiative isn't good for the bottom line -- and you would be somewhat correct. But take into account that Wendy's uses this approach to get people into its restaurants. Then, its menu also offers several higher-priced options, which some customers take advantage of.

Burger King and Wendy's both seem to present good potential with their limited-time spicy chicken offerings, especially Wendy's based on its upselling strategy. But these initiatives are still small in comparison to McDonald's most recent initiative. 

McDonald's CheersToSochi campaign allows fans to send tweets to their favorite Olympic athletes or teams using the #CheersToSochi hashtag on Twitter. These tweets show up in the Athletes' Village in Sochi on a display. The athletes will then have an opportunity to print their favorite, or most motivational, tweet on a ribbon for their wrist. They might also tweet back. 

This is McDonald's most recent initiative in its 38-year relationship with the Olympic Games. The following athletes are encouraging people to take advantage of this program because it will lead to motivation and support from back home: Patrick Kane (U.S. hockey), Drew Doughty (Canada hockey), Shani Davis (U.S. speed skating), and Patrick Chan (Canada figure skating). 

This is a unique approach by McDonald's, and it could pay off in a big way. It might act as a way for McDonald's to connect better with some millennials, which is a generation it's highly focused on. Also keep in mind that despite McDonald's having been associated with the Olympics for 38 years, every time the Olympics is held in a new location, it improves brand recognition there. McDonald's might be a massive company and very mature, but there are still many new customers to win over.

The Foolish takeaway
If you're looking to invest in a stable fast-food restaurant that continues to grow at a methodical pace while finding ways to increase its brand's global exposure, then you might want to consider McDonald's. If you would prefer to invest in a restaurant that is outmaneuvering its peers in the form of menu innovation and upsells, then you should consider Wendy's. Please do your own research prior to investing. 

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Fool contributor Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide, McDonald's, and Twitter. The Motley Fool owns shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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