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Frankly Speaking: Sonic Discounts Burger King's New Menu Item

By Rick Munarriz - Feb 16, 2016 at 10:12AM

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BK will introduce frankfurters next week, but a smaller rival was marking them down yesterday.

Image source: Burger King.  

Burger King is now a week away from adding grilled hot dogs to its menu, and drive-in specialist Sonic (NASDAQ: SONC) wants you to know that frankfurters are already a fast-food staple. Sonic offered any of its signature hot dogs for a dollar yesterday, trying to slap a theme on the promotion by letting folks go online to vote for their favorite Sonic dog. That's a stretch for a Presidents Day tie-in, but you probably didn't see too many people pull up to your local Sonic Drive-In and complain about garnished hot dogs for a buck. 

It could be a coincidence that Sonic decided to offer marked-down hot dogs eight days before Burger King parent Restaurants Brands International (NYSE: QSR) goes national with its Burger King Grilled Dog menu addition. Then again, it probably isn't a coincidence. 

Restaurant Brands International is likely going to exert a fair amount of marketing muscle to launch its new item. It will be the only one of the three major burger chains to offer hot dogs. However, with places like Five Guys and Sonic Drive-In already offering wieners, it's not breaking through a ceiling with this move.

Burger King's new franks will retail for at least $1.99. It's not mere chance that Sonic's one-day promo yesterday was offering its hot dogs at half the price. It blurs the value proposition that Burger King is hoping to provide.

Restaurants Brands International is holding up well these days. The stock opened higher this morning after posting strong financial results. Comps rose 3.9% at Burger King during the holiday quarter, up 5.4% for all of 2015. Its global restaurant count now tops 15,000, with roughly half of those in its home market. 

Burger King will become the largest restaurant chain -- by unit count -- to offer hot dogs next Tuesday, but let's not dismiss the players that are already going vertical in this game of horizontal foodstuffs. Sonic is no small fry here. There are now more than 3,500 Sonic Drive-In locations across the country. 

Sonic's rolling like the growing number of cars pulling up to its small-box eateries. It's coming off of five straight years of positive comps and double-digit adjusted earnings-per-share growth. Its throwback concept is resonating with hungry diners, scoring some serious points on the scale of retro cheap chic.

Sonic has been served well by offering hot dogs. In a few days we'll find out if Burger King -- with more than twice as many stateside locations -- can follow suit. Sonic's Presidents Day promotion may be drawing attention to hot dogs as cheap food, but unlike the elections later this year, there doesn't have to be a single winner.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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