This week, Wendy’s reported that its fourth-quarter same-store sales rose 4.1%, beating its two big rivals McDonald’s (-1.4%) and Burger King (1.5%).
This prompted multiple questions on the social media platform X, which led me down a rabbit hole of recent sales results.
One of the questions, from the McDonald’s-focused X user McFranchisee, asked when the last time both Wendy’s and Burger King reported positive same-store sales during a quarter in which McDonald’s reported a negative number.
The answer? 2016.
This last happened in the fourth quarter of 2016. https://t.co/F5dIyI5LWxpic.twitter.com/KqmRiCoGV9
— Jonathan Maze (@jonathanmaze) February 14, 2025
To be sure, the biggest reason that it hasn’t happened in nine years is because McDonald’s has only reported two negative quarterly same-store sales figures over that period. It’s a little difficult to report positive when your rival reports a negative if your rival never reports a negative.
Indeed, there was only one time during that period in which both chains outperformed McDonald’s at the same time, the second quarter of last year.
And, in fact, last quarter was only the fifth time that either Burger King or Wendy’s reported a better quarter than did McDonald’s.
All of which means that the combination of negative consumer reaction to McDonald’s prices, and then an E. coli outbreak, effectively ended a decade-long cycle of success for the Chicago-based fast-food giant.
All restaurant chains go through cycles. It’s difficult, at best, to sustain organic sales growth forever. Something eventually happens to change that, whether it’s the operating environment, corporate mistakes or something unique. All brands eventually hit a rut in the road that shakes a few things up.
McDonald’s has a down cycle every decade or so, and this one was brought about by the combination of consumer frustration over high menu prices and E. coli.
Its decade-long up cycle—interrupted only by a one-quarter pandemic problem—was kicked off by … All-Day Breakfast.
Recall that McDonald’s was a mess from 2013 to 2015. The company’s Mighty Wings promotion was a flop. The chain was struggling to emerge from its value-focused Dollar Menu days.
There were seven straight quarters in 2014 and 2015 in which McDonald’s underperformed its two biggest competitors.
Six of those seven quarters fit McFranchisee’s definition above: McDonald’s generating negative same-store sales while its two competitors reported positive results.
McDonald’s in early 2015 ousted CEO Don Thompson and replaced him with Steve Easterbrook. The company quickly started selling Egg McMuffins in the afternoon to generate at least some same-store sales growth, which quieted down the noise as the company found its groove on marketing, operations and remodels.
Which brings us to the other question we were asked, whether Wendy’s was the beneficiary of McDonald’s E. coli problem.
Some. But not as much as you’d think.
How much one chain benefits from the weakness of its rival depends on why its rival is weak. If it’s due to factors unique to the chain, such as poor marketing or bad management, then rivals can benefit. But if there are environmental factors at play, then it’s difficult for chains to realize that benefit.
McDonald’s E. coli issue should have been a boon to both Wendy’s and Burger King. But both those chains generated much of their same-store sales growth last quarter when they introduced marketing promotions in early October. Wendy’s in particular generated 10% same-store sales growth in October, with most of that coming in the first two weeks following the introduction of the Krabby Patty Kollab promotion.
McDonald’s, too, generated strong sales growth. E. coli hit in mid-October and its sales cratered. But Wendy’s sales slowed, shifting to a more normalized period.
But E. coli wasn’t McDonald’s only challenge last year. Lower-income diners are cutting back, so its baseline sales results when they’re not boosted by extraordinary marketing promotions are lower than they would be otherwise.
That lower-income problem is just as much a Wendy’s and a Burger King issue as it is a McDonald’s issue, so they’re not getting quite the benefit they would otherwise.
Contrast that to 2014 and 2015 when Wendy’s and Burger King were thriving and McDonald’s was not. At the time, McDonald’s sales challenges were related by marketing and pricing failures unique to the chain, while Wendy’s and Burger King were finding their groove. Thus, they got sales that McDonald’s did not.
All of which means that the “challenging operating environment” restaurants are in right now probably kept Wendy’s and Burger King from fully realizing the benefit of their rival’s weakness.