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Is Burger King Taking Back Its Crown?

By Nickey Friedman - Feb 16, 2014 at 6:00AM

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At a time when rival McDonald's is floundering in a wake of new product flops, Burger King’s innovation may spark growth again leaving investors and burger connoisseurs alike wondering which burger joint will be crowned.


Source:  theburgernerd.com

In a move that says, "King me," Burger King Worldwide (BKW.DL) added the Big King sandwich as a direct attack on the Big Mac from McDonald's (MCD 2.90%). But it didn't stop there. Now, according to an article in USA Today, Burger King has taken this move a step further and is prepared to start bragging about it.

Size matters
It sounds like the launch of the Big King is going well. Speaking from experience, after skeptically sampling the new sandwich, I did find myself impulsively stopping by two more times since. I wouldn't have done so if not for the Big King sandwich. Much to my delight, Burger King is increasing the beef in its sandwich to 25% bigger than the Big Mac and not charging an extra dime for it.

McDonald's must be furious. At the time of this writing, its just-released January same-store sales tumbled by 3.3%. The larger rival has been complaining of "competitive challenges" for months, so this must be the last thing it needs. And Burger King hints at more surprises aimed at it.

Burger King has been test marketing the beefier sandwich at 200 locations in South Florida. The result? A 10% jump in guest satisfaction scores. Now the company plans to launch the beefier Big King across the nation.

To add insult to McDonald's injury, Burger King is now playing commercials rubbing it into McDonald's wounds. The commercial says, "At Burger King, we know that size matters. That's why the Big King just got bigger. Now with a quarter pound of beef, freshly fire grilled; pick any two sandwiches for just $5 including the new spicy chicken and the new Big King sandwich."

The spicy chicken sandwich is of course a jab on McDonald's Spicy McChicken sandwich.

More BK surprises
Bigger beef appears to be just the start. Alex Macedo, president of Burger King North America, said that the company plans to expand the Big King platform. This implies additional variations of the royal sandwich may be on the way. He wouldn't reveal what other then to say that the company is doing extensive testing. Apparently the sales must be going well. Companies don't normally plan food extensions unless the original is doing well. You don't see McDonald's talking about new flavors of its Mighty Wings, do you?

So far McDonald's hasn't had much of a response to the assault on its Big Mac, and it appears to just be taking it. It seems like it hasn't changed anything about its Big Mac in ages...if ever. USA Today does mention a promotion that allows guests to buy one Big Mac and get a second one for $0.01 as the one thing it has done.

Foolish final thoughts
The Big Mac is considered the most successful burger in history, and it will be tough if not downright impossible to topple. However, with McDonald's having more than 10 times the market cap as Burger King, the smaller burger chain doesn't need to be No. 1 in order to see material gains for itself at the expense of McDonald's.

If Burger King can convert just a relatively few number of Big Mac fans over to its side, it could have a materially positive effect for Burger King's top and bottom line while causing an already weakening U.S. McDonald's to slip backwards a bit further. Foolish investors of either stock should pay close attention to the Big King story.

 

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Stocks Mentioned

Restaurant Brands International Inc. Stock Quote
Restaurant Brands International Inc.
BKW.DL
McDonald's Corporation Stock Quote
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MCD
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