On the Margin
Burger King is one of the three big burger chains retaking business.

In battle for burger share, the Big Three make a comeback

Blog: McDonald’s, Burger King and Wendy’s are all taking share back from smaller players

This post is part of the On the Margin blog. 

When McDonald’s Corp. reported surprisingly high, 3.9-percent same-store sales growth in the second quarter, it was widely believed to be bad news for its biggest competitors — The Wendy’s Co. and Burger King. 

The company even said so, with CEO Steve Easterbrook noting that the company “had begun to open up a gap with QSR sandwich competitors.”

But that didn’t happen. Burger King reported 3 percent growth, and Wendy’s growth was 3.2 percent.

Instead, the pain had been felt elsewhere. Jack in the Box Inc. same-store sales fell 0.2 percent. Sonic Corp.’s same-store sales fell 1.2 percent through the end of May. And Steak ‘n Shake’s same-store sales declined by 3.1 percent.

As I said earlier, consumers still love fast food. But the group largely leading the charge this year has been the three chains arguably most associated with the sector — McDonald’s, Burger King and Wendy’s.

And their success is bad news for the numerous small chains that dominate the burger business.

Over the past two years, the trio has lost market share among the largest burger chains, based on NRN Top 200 data. 

McDonald’s has the lion’s share of those sales, but it also lost the most, by far, over the past two years.

The Oak Brook, Ill.-based giant’s share of the limited-service burger market fell to 44.9 percent in the latest year, down from 46.8 percent two years earlier — a drop of almost two full percentage points. 

McDonald's market share loss wasn’t quite as good news for the other two of the big three as you’d think.

Burger King’s share of the market fell slightly to 11.5 percent in the latest year, from 11.6 percent the year before — though that was up from the prior year, when it held 11.4 percent of the market.

Wendy’s, however, saw its share of the market fall to 11.2 percent from 11.3 percent over the past two years.

The companies gaining market share included the aforementioned Sonic, Jack in the Box and Steak ‘n Shake, as well as privately held chains like Whataburger, Culver’s and In-N-Out as well as fast-casual chains like Five Guys, Smashburger, Shake Shack and Freddy’s Frozen Custard.

The performance by the big three burger chains suggests they are retaking some of that share. 

Why, of course, is anybody’s guess. All three chains have worked heavily to solidify their businesses. They’ve unleashed discounts, improved the looks of their stores and found more innovative advertising strategies. They’ve also spent the most on things like delivery and kiosks and mobile app development.

At least this year, those efforts appear to be working — proving the three chains can all grow at the same time.

Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.

Contact Jonathan Maze at [email protected]

Follow him on Twitter at @jonathanmaze

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