On Tuesday, Restaurant Brands International filed a short federal securities filing saying that its top Burger King executive, Chris Finazzo, had left the company, to be replaced on an interim basis by his top two lieutenants—both of whom had been appointed within the past year.
The burger chain needs some energy. Burger King last year lost its status as the country’s No. 2 burger concept to Wendy’s, which introduced breakfast despite a pandemic and somehow didn’t lose lunch business. Meanwhile, McDonald’s has been winning over customers with high-profile deals with Travis Scott and a highly anticipated chicken sandwich introduction.
Recent data demonstrate the challenges Burger King suddenly faces. Check out this graphic of average quarterly same-store sales at the three biggest burger concepts both pre- and post-pandemic:
Average quarterly SSS
Source: Technomic, Restaurant Business
Since 2019, in other words, it has performed almost 500 basis points worse on average than either of its biggest competitors.
Generally, direct rivals like the three burger chains tend to follow the same sales trajectory. They benefit or are hurt in similar fashions by social or economic conditions. Thus, fights for consumers tend to take place on the margins.
Look at the following graphic. McDonald’s, Burger King and Wendy’s have followed relatively closely for the past five years, with the three falling last year at this time before recovering strongly so far in 2021.
Burger chain same-store sales
Source: Technomic, Restaurant Business
Generally, the market has been favorable for fast-food chains with drive-thrus since the third quarter of last year and both McDonald’s and Wendy’s numbers reflect that reality. Yet Burger King’s gap with its primary competitors that has opened in the past few quarters is a clear point of concern.
While Wendy’s could be expected to perform more strongly given the addition of an entirely new daypart, McDonald’s strength over that time is a real problem. And considering that McDonald’s generates double the sales per unit as Burger King and has nearly twice as many locations, that 500-basis-point gap is more like a canyon.
Burger King did release a high-quality chicken sandwich this year in its Ch’King. It was among the most highly regarded of the new generation of chicken sandwiches, yet it also came late. Some 40-plus chains upgraded their versions, including both Wendy’s and McDonald’s. That made it a bigger risk—consumers already have a choice of premium chicken sandwiches from just about every major fast-food chain in the U.S.
The company has also been promising an upgraded breakfast for some time, but largely put that on the backburner last year. That might have opened the door for Wendy’s.
“We’ve mentioned the breakfast opportunity at Burger King to you several times over the last 12 months but frankly haven’t made much progress,” RBI CEO Jose Cil told investors in April. “That’s because we prioritized more immediate initiatives.”
Whomever takes over as head of Burger King in the U.S. and Canada can certainly turn things around. But finding the right combination to compete against both the industry’s 500-pound gorilla and another rival with all sorts of momentum will be difficult.