With the recent stagnation in the fast food industry and the increasing popularity of fast casual dining chains such as Chipotle Mexican Grill, fast food companies are changing up their menus in an effort to bring you back in. Let's look at three trends to increase consumer interest: pretzel mania, healthier foods, and new combinations..
In its most recent quarter, fast food restaurant chain Wendy's (NASDAQ:WEN) increased company owned North American same stores sales a minuscule 0.4% . Realizing it needs pizazz on its menu the chain decided to release the Pretzel Bacon Cheeseburger . Some pundits argue that this represented the start of a trend spreading throughout the fast food industry. According to an online article from USA Today other restaurants such as Dunkin' Donuts, Sonic, and Ruby Tuesday are following suit with pretzel sandwiches of their own. In addition, Wendy's plans to introduce "a chicken sandwich served on a pretzel bun" adding fuel to this trend . The USA Today article points out that customers like the Pretzel bun's taste combined with lower fat appealing to increased health awareness.
Realizing that people want to eat healthier, fast food chain Burger King (UNKNOWN:BKW.DL), which only increased same store sales 0.6% last quarter, introduced lower calorie, fat, and carb fries known as "Satisfries". This product commands a higher price than normal fries which means consumers need to pay up for the healthier option. According to Restaurant News the cooking methodology shouldn't compromise the taste.
In August McDonald's (NYSE:MCD) increased same store sales 1.9% lower than the 3.7% logged in the same time last year. McDonald's also announced plans to offer healthier side options such as salads and fruits to eat along with your burgers at no additional cost.
New and different
Yum! Brands (NYSE:YUM) experienced an increase in same store sales of 1% in its U.S. and international restaurants and a 20% decrease in same store sales in China in its most recent quarte r. It understands the need for a top and bottom line boost from product innovation. Executives at Yum! Brands' Taco Bell division wants to double domestic sales over the next decade with its breakfast program . Taco Bell is testing the "Waffle Taco" as part of its new morning menu. According to Restaurant News, it's described "as sausage and scrambled eggs in a waffle folded over like a taco and served with a packet of syrup". Other items include a "sausage and egg wrap", "mini donuts", and "Seattle's Best Coffee". In August Taco Bell introduced the Fiery flavored Doritos Locos Tacos as a way to add further differentiation to its main menu . The plethora of Doritos flavors provides ample opportunity for the company to expand upon this line.
McDonald's and its franchisees plans to boost same store sales includes adding mobile payment technologies to its customer experience and testing odd new additions such as chicken and waffles . The company recently hired a new "Chief Digital Officer" as an affirmation of the company's desire to utilize digital strategies in its future growth.
Over the past few months Pretzel buns gave Wendy's a decided edge. However, with new competitors jumping on the bandwagon, Wendy's may find itself competing even harder for the pretzel consumer. New products such as the pretzel chicken sandwich may help in this regard. Burger King will probably need to do more than introduce a low calorie french fry to appeal to the health conscious consumer. Breakfast initiatives at Taco Bell may breathe new life into an international fast food conglomerate that ails from the bad bird flu publicity in China and domestic market saturation overall. McDonald's new digital and menu options combined with its ubiquity will give McDonald's a sustained edge. These product innovations should provide fuel for future shareholder gains.
William Bias owns shares of McDonald's and Burger King Worldwide. The Motley Fool recommends Burger King Worldwide and McDonald's. 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.