Competition
Now, let’s take a look at the competition. The main competitors of McDonald’s in the US market are Burger King Worldwide Inc (NYSE:BKW) and The Wendy’s Co (NASDAQ:WEN).
Following McDonald’s Corporation (NYSE:MCD) footsteps, Burger King Worldwide Inc (NYSE:BKW) started offering Whopper Junior sandwiches for only $1.29, which is almost $0.40 less than the normal retail price, for a limited period. The company has used this pricing strategy to attract more budget-minded customers toward Burger King, some of whom might also end up ordering high-priced items once they are in the restaurant.
Though the above strategy showed a good result via a 2.7% increase in same-store sales in the last quarter of 2012, the good times didn’t last. Burger King Worldwide Inc (NYSE:BKW) reported a decline of 1.4% in the comparable-store sales in the first quarter of 2013. Despite a decline in comp sales, the burger giant delivered growth of 49% in earnings per share due to the trimming of several restaurant-related expenses.
Also, Burger King Worldwide Inc (NYSE:BKW) has announced its summer menu. It includes the return of the old items, like Carolina BBQ Whopper/Chicken, Memphis Pulled Pork sandwiches, and sweet-potato fries. Also there is another surprise; the BK rib sandwich, which can be a tough competitor for the McRib.
Meanwhile, The Wendy’s Co (NASDAQ:WEN) had a “99 cents” menu. But now it has decided to replace the same with “Right Price Right Size” menu options, which are items with prices ranging from $0.99 cents to $1.99. Their new menu offers four different cheeseburgers, three types of chicken wraps, two side salad options, chili, and a chicken sandwich.
The idea behind this is to give budget-minded diners more options without harming the company’s flexibility on pricing. The Wendy’s Co (NASDAQ:WEN) reported a 1% increase in same-stores sales in the first quarter of 2013. The “Right Price Right Size” menu not only boosted customer traffic, but also increased the average check size.
Concluding words
Despite challenges, the Golden Arches are still shining bright. The company has more than an ace up its sleeve. Through its value menu, new offerings, premium products and other new strategies, the company is out there to beat the odds. It is true that with Burger King Worldwide Inc (NYSE:BKW) and The Wendy’s Co (NASDAQ:WEN) are stepping up their games in the value scene and thus competition will be tough. But McDonald’s has always found a way to stay on top, and the same is expected from the fast food maker in the future also.
The article This Fast Food Retailer Is Born to Beat the Odds originally appeared on Fool.com.
Rahul is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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