Burger Battles Heat Up As Fast Food Chains Fight For Consumers
15 September 2009 - 4:52AM
Dow Jones News
Burger battles are heating up, with chains heightening
competition on both the low and high ends of their menus.
Jack in the Box Inc. (JACK), a burger chain with more than 2,200
U.S. stores, said Monday it would sell its Big Cheeseburger, which
features a "jumbo" beef patty with cheese, mayonnaise and ketchup
on an oversized bun, for $1 in a limited-time offer.
Wendy's, the third-largest U.S. burger chain, also this weekend
launched a promotion tied to its 40th anniversary, selling four
items for 99 cents each, including its version of a double
cheeseburger called the Double Stack. Wendy's is owned by
Wendy's/Arby's Group Inc. (WEN).
At the high end, CKE Restaurants Inc. (CKR) said Monday it was
launching "round two" in its own premium burger battle with
McDonald’s Corp. (MCD), with Hardee's selling a Big Hardee, with
three beef patties and two slices of cheese on a seeded bun, as its
version of the Big Mac.
CKE, which owns Hardee's and Carl's Jr., accused McDonald's of
copying its premium burgers in developing its $4 Angus burger. In
turn, CKE has taken liberty in mimicking the Big Mac, and offering
it at cheaper prices. The Big Hardee is for sale for $2.29 a
participating restaurant, which it says is 70 cents less than the
average price of the signature burger at McDonald's.
The moves are all putting cheaper food in front of their
customers, as fast-food chains look to rebound from a summer of
disappointing sales where high unemployment among teenagers failed
to give the chains a once-reliable summer lift. Breakfast sales are
also taking a blow with fewer workers stopping in during their
commutes.
Rampant discounting has been a concern for investors in the
space, as lower prices put pressure on sales.
Fast-food chains may also be trying to hold onto customers who
may be feeling better about spending more for a meal out. RBC
Capital noted in a recent research report that consumers seem to be
trading up more to casual dining restaurants.
With costs for ingredients like beef lower, many chains have
been emboldened to cut prices to lure customers.
McDonald's, after last week reporting same-store sales rising
2.2% worldwide and 1.7% in the U.S., said it would give out 75,000
coupons for free Angus burgers in select cities.
Burger King Holdings Inc. (BKC) has also recently been mailing
out coupons that include a $1 double cheeseburger and is planning
an ad campaign focused on $1 items next month.
Jack in the Box, Wendy's/Arby's and CKE shares were trading
higher Monday, with McDonald's down slightly and Burger King
flat.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;
paul.ziobro@dowjones.com