I'm beginning to think the "Have it your way" campaign should be brought back by Burger King, because their way isn't working at all!
Since being purchased by Brazilian private-equity firm 3G Partners in late 2010, Burger King's domestic sales have declined as the firm has focused on expanding the company internationally at the expense of domestic growth -- particularly in Latin America and Asia. New data from industry research firm Technomic show that international focus has left the King moping on his throne.
Despite deriving nearly 70% of its revenue from North America in 2010, according to Technomic, Wendy's (NAS: WEN) has surpassed Burger King in U.S. sales to become the No. 2 burger chain by volume. This marks the first time since 1972 (when Technomic began its research) that Burger King has been bumped from the No. 2 spot.
What makes this move particularly hard to swallow for Burger King is that Wendy's bumped them out of the No. 2 spot with roughly 1,300 fewer stores, amassing U.S. sales of $8.5 billion compared to Burger King's $8.4 billion in 2011. Wendy's new ad campaign that goes back its roots is clearly driving business, while Burger King's lack of new product and the absence of the King in commercials appear to be hurting its sales.
Neither of these two can shake a stick at McDonald's (NYS: MCD) , which more than doubled the combined output of both chains at just over $34 billion in sales. McDonald's also doubled its peers when it came to average revenue per store (with just 14,098 locations). While I may not agree with its valuation, CEO James Skinner has done a fantastic job of introducing new product and steering toward healthier menu options.
Even Jack in the Box (NAS: JACK) is beginning to see the fruits of its in-store makeover. Since remodeling many of its locations over the past few years, the chain has becoming a more appealing stop for consumers who are growing in number and spending more per ticket. Same-store sales for Jack in the Box were up 5.3% in the first quarter.
The only real loser here appears to be Burger King and its investors, who, at least for now, seem more than content to let the King be deposed. While you or I can't make a monetary bet on Burger King now that it has been taken private, this could mean continued good news for McDonald's, Wendy's, and Jack in the Box as they pick up customers and market share from Burger King.
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At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Motley Fool newsletter services have recommended buying shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 that's always on the lookout for a good deal.
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