Established fast-food companies face serious headwinds in the form of intense competition from fast-casual chains, bad publicity stemming from China's bird flu scare, and changing consumer tastes and patterns of consumption. Recently, fast-food chains Burger King (NYSE:BKW), Wendy's (NASDAQ:WEN), McDonald's (NYSE:MCD), and Yum! Brands (NYSE:YUM) made some announcements that shed light on their future.
In a dual attempt to cater to a consumer base increasingly comfortable with making purchases on their mobile phones and to increase traffic efficiency, Burger King and Wendy's made successive announcements that they will begin taking mobile payments, according to Nation's Restaurant News. Wendy's reported a greater number of visits during tests, according to the Associated Press. The format for both Wendy's and Burger King will generate a number to be given by the customer to the cashier, which means customers will not need to hold up a device to a scanner.
The conversation in the media emphasized the lack of an app from industry leader McDonald's, which claims that it wants to get things perfected before release. McDonald's executives gave indication that it may need to release "some things" sooner rather than later and work out the bugs as they go, serving as indication that McDonald's is running way behind in this race.
Tim Fenton, the chief operating officer of McDonald's, will retire effective October 1.. McDonald's will eliminate the COO role, with duties being divided between the CFO and its chief brand officer. The regional executives in charge of the United States, Europe, and APMEA (Asia-Pacific, Middle East, and Africa) areas will report directly to CEO Don Thompson, eliminating a layer of red tape and a high-salaried position.
Management turnover such as this generally means that investors should stay alert and pay attention to changes good or bad in the near future.
In other McDonald's news, in order to lure customers away from competing chains specializing in coffee, McDonald's has decided to offer customers a small McCafe coffee from March 31 to April 13 free of charge.
Yum! Brands in the spotlight
Yum! Brands garnered a great deal of attention last week when its Taco Bell subsidiary released its much-anticipated breakfast menu. Taco Bell will now open at 7 a.m. to offer things such as waffle tacos, breakfast burritos, Crunchwraps, and orange juice, according to the press release. Everything on the menu comes with a price tag of less than $5. Taco Bell launched a sort of in-your-face marketing campaign featuring people named Ronald McDonald endorsing the new Taco Bell breakfast.
Yum! Brands also decided to introduce a revamped KFC menu in China in an effort to reengage customers after the bird flu scare in that country last year. The company press release says that KFC China will update its menu at least once a year. This year, KFC China will introduce 15 new products, including chicken sandwiches, rice dishes, and desserts.
Wendy's and Burger King's acceptance of mobile payments will most likely boost traffic efficiency, resulting in higher volume and increased customer satisfaction -- in turn resulting in top- and bottom-line growth serving as catalysts for capital gains and dividend increases for its shareholders. When it comes to McDonald's, a lack of a mobile payment platform, management restructuring, and promotions only mean that it's grasping at straws for a new strategy to stay relevant. Yum! Brands indicates it wants to move forward from past issues with product and menu innovations. The restaurant industry is competitive, and companies must innovate in order to stay relevant.
William Bias owns a share of Burger King Worldwide and shares of McDonald's. 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.
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