Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Yum! Brands, Inc. (YUM), McDonald’s Corporation (MCD), Burger King Worldwide Inc (BKW): French Fry Burger or Locos Taco?

Burger King Worldwide Inc (NYSE:BKW) is hoping to turn spud heads this holiday weekend.

The fast-food giant is introducing its French Fry Burger on Sunday. As you can probably imagine, it’s just a regular hamburger patty topped with fries.

In and of itself, this isn’t outrageous. It has offered sandwiches topped with onion rings before. You’ve probably seen some enterprising BK diners make their own over the years, so why shouldn’t the chain combine two of its most popular menu items into a single offering?

It’s going to be popular — especially at the $1 price point — but it won’t equal the success that Yum! Brands, Inc. (NYSE:YUM) had at Taco Bell last year with Doritos Locos Tacos.

It will be a long time before we see something have a positive impact on sales the way that Taco Bell had with its Doritos-flavored taco shells last year. Taco Bell’s comps rose a hearty 12% during the first full quarter on the market, and the chain has gone on to sell more than 600 million of them.

Burger King Worldwide Inc (NYSE:BKW) could use the boost. Comps declined 0.5% in the U.S. and Canada in its latest quarter, and that was after a 3% slide during the first three months of the year. McDonald’s Corporation (NYSE:MCD) has responded to its own sluggish comps since last last year by beefing up its Dollar Menu items, and that is probably why BK is aggressively pricing these burgers at a buck.

Source: Burger King Worldwide Inc (NYSE:BKW) media relations.

There are a lot of cheap burgers out there these days, and that’s why the French Fry Burger isn’t going to have the same kind of sizzle that Taco Bell experienced with its flavored shells.

This may be just as well for BK. This sandwich appears to be a margin killer for franchisees. The reason fast-food franchisees have embraced dollar menus is because folks will still load up on fries and drinks. Even if they go for the value-priced options, we’re still looking at $3 for a meal. BK and Mickey D’s have been pushing into premium coffees, smoothies, and other beverages to push those checks higher.

Well, how often do you think someone is going to add a side of fries — a higher-margin item — to a French Fry Burger order? Of course, it’s going to happen. You don’t order the French Fry Burger unless you like fried potatoes. The four or so fries sprinkled under a bun may not satisfy that fry craving. However, folks ordering off the value menu to save money will think twice about it, and that’s where this sandwich is unlikely to stick around once it’s time to swap out the fall menu.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.