On the Margin
People still like fast food

People still like fast food

This post is part of the On the Margin blog.

As sales at McDonald’s Corp. waned over the past three years, speculation often fell upon the idea that consumers were tired of fast food.

We’ve long disagreed. Despite McDonald’s woes, the overall quick-service burger market has been growing, largely due to higher sales at chains like Sonic, Culver’s, Whataburger and Hardee’s.

And there are indications that a McDonald’s comeback wouldn’t hurt those other guys, either.

McDonald’s appears to be on its way toward reversing its same-store sales decline in the U.S. thanks largely to all-day breakfast as well as a simplified menu and, perhaps, a few store closures.

And yet other executives suggest there are no signs that McDonald’s improvement is having any impact on their own sales.

Emil Brolick, CEO of The Wendy’s Co., said this week that his chain doesn’t have to struggle for McDonald’s to generate sales and vice versa. “If you look back at history, when Wendy’s had 13 to 14 years of positive same-store sales and traffic, we had several of those large players perform well during that period of time,” he said.

Wendy’s said that its same-store sales would be on the high end of the company’s expectations for the year — a clear suggestion it isn’t losing ground.

Burger King isn’t losing ground, either. Mark Kalinowski, analyst with Nomura, said in a note late last night that the chain’s largest franchisee, Carrols Restaurant Group, said its sales would be up in the low to mid single digits in the fourth quarter.

And Sonic Corp. said that McDonald’s foray into all-day breakfast was “not material to our business at all.”

The quick-serve burger segment remains the largest segment of the chain restaurant world and, though consumers have demonstrated an increased appetite for Mexican and chicken and Asian cuisine, it remains king.

And it’s important to note that these concepts have been able to sell this food at reasonable prices while flooding the airwaves with advertising and marketing messages. They are also innovating on the product front, finding ways to get customers to come in with unique and attention getting items that resonate with consumers, such as Chicken Fries or the Buttery Jack Burger.

“I think you’re going to continue to see quick-serve restaurants continue to build share over time,” said Brolick, who was speaking about all QSRs in general. But his comments could easily refer to the quick-serve burger sector. “They do the best job of providing value and in providing consumers convenience. They’re the biggest things driving the business.”

Contact Jonathan Maze at [email protected]
Follow him on Twitter at @jonathanmaze

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