Burger King parent Restaurant Brands International (NYSE:QSR) is going to leave you with orange-dusted fingers if it has things its way. The burger chain is rolling out Mac 'n Cheetos nationwide next week, and it's going to be a summer sensation.
The fast food nation's latest stab at Frankenfood is essentially the outer shell of a Cheetos puff stuffed with macaroni and cheese. It's along the lines of risotto-stuffed arancini, croquettes, or fried mac and cheese balls you find in ethnic or casual dining eateries. However, this offering will only set you back $2.49 for a five-piece serving. It's also the first time that Burger King has teamed up with PepsiCo's (NASDAQ:PEP) Frito-Lay, an interesting distinction since Burger King's fountain rights belong to PepsiCo's larger soft drink rival.
Mac n' Cheetos was being recently tested in select Southern California restaurants, but the cat's out of the Cheetos bag now. Burger King tweeted last night that it will go national with the product on June 27.
You may be shaking your head, but deep down inside you either want a 5-piece order or reluctantly know someone that will. Restaurant Brands International is counting on it, and let's go over a few of the reasons why it will be shareholders that will get the last laugh.
1. It's a differentiator
Burger King has made it a habit over the years to copy McDonald's (NYSE:MCD). It hasn't been afraid to offer direct knockoffs to the Big Mac, McRib, and even Egg McMuffin in the past. However, this year it's been trying to aim at niches where its biggest rivals aren't playing.
It succeeded in February when it added grilled hot dogs to its menu. That's an item that the leading burger chains have steered clear from, but a few of the "better burger" joints have embraced. It then dolled up its frankfurters by offering a Whopper Dog with the toppings that typically accompany the chain's signature burger. It's also testing a Whopper-themed burrito.
Fast food is a cutthroat niche, and you have to like it when Restaurant Brands International is carving a new path instead of following in the leader's footsteps.
2. Mac n' Cheetos is made for drive-thru convenience
This isn't the first time that Burger King sells macaroni and cheese. In 2008 it introduced Kraft-branded mac and cheese. It was added mostly for kids, and it was eventually discontinued.
It's easy to see why it didn't work the first time around. The moment you hand over a bowl of mac and cheese to a jittery kid in the backseat it's on the upholstery. This is different. It's the same items in finger food form. It also only helps that it's teaming up with PepsiCo's Cheetos, a salty snack with a cult audience of its own.
Mac n' Cheetos is an item you eat as you drive. That's important in this car-happy country.
3. Burger King itself is already on a roll
Restaurant Brands International is in a good place. Comps rose 4.6% in constant currency for Burger King in its latest quarter. McDonald's may have grown at a faster rate, but that was coming off of negative results a year earlier. Burger King's uptick is stacked on top of a similar 4.6% gain a year earlier.
The mere novelty of Mac n' Cheetos will be enough to drive new traffic to Burger King, something that will only push comps even higher. That's important. Restaurant Brands International leans on franchisees for most of its Burger King locations. Keeping existing franchisees happy and attracting new operators with head-turning food offerings can only help the top and bottom lines at Restaurant Brands International.
You may or may not make it a point to hit your local Burger King next week, but a lot of people will -- and that's good news for investors in the concept's parent company.