To little surprise, Wendy's has officially passed Burger King to become the No. 2 American hamburger chain in the U.S., behind McDonald's. Speculations about the shift have been circling since late November.
The official announcement came Monday when market research firm Technomic released its annual report on the top 500 restaurant chains' unit count and system-wide sales. Dublin, Ohio-based Wendy's turned in $8.5 billion in sales in 2011, compared to $8.4 billion for Miami-based Burger King.
McDonald's No. 1 spot is plenty secure at the moment, as the Golden Arches turned in sales of $34.2 billion last year.
There isn't a huge line separating Nos. 2 and 3, but it's notable that Burger King has more than 7,200 U.S. units, while Wendy's has about 6,500 worldwide. Socially, Wendy's has about 2.1 million Facebook fans, versus Burger King's 4.7 million.
The jockeyed position comes just over a year after Burger King was sold to 3G Capital after experiencing struggling sales throughout the recession.
QSRweb.com has theories as to why Wendy's overtook Burger King for the first time in the 40-plus-year-long quick-service burger wars (Burger King and McDonald's are both about 15 years older than Wendy's). They include Burger King's too narrow a focus on the young male demographic that was hit particularly hard by the recession; a confusing marketing campaign dependent on a polarizing character in The King; relative stagnancy in menu innovation; and a disconnect between (pre 3G Capital) headquarters and franchisees.
While all of this was happening at Burger King, Wendy's was enjoying its highly successful "You Know When It's Real" campaign, and rolling out new items, including variations of its signature Frosty and perceived healthier salads.
Perception is everything
Missed marketing and mismanagement aside, perception is everything when it comes to competition in a ubiquitous industry where fast, cheap and convenient options abound.
While Burger King has long since abandoned its King mascot for a general, food-focused ad campaign that appeals to a wider audience, Wendy's has gone a step further in carving out a unique value position in the QSR segment, said Ted Marzilli, global managing director of BrandIndex, a service of YouGov.
"That better, higher quality positioning has penetrated the mind of the consumer, and I think Wendy's has built on to its positive perception over the years and continues to do so. And for the most part, consumers seem to be buying into it," Marzilli said.
Although Burger King has made substantial improvements since 3G Capital began implementing numerous changes – including new product launches, a shifted marketing focus and accelerated restaurant redesigns – it still has a long way to go.
"Burger King has made progress, particularly among parents, and has had momentum that started around the end of October. The difference is that Wendy's has made faster progress," Marzilli said.
In every industry, consumer perception will always provide the best insights as to why shifts are happening. When the Wendy's/Burger King story broke Monday, plenty of consumers had an opinion as to why there was a new American burger runner up. For example:
Al, a BusinessWeek.com reader, said Burger King combo prices were too high compared to its QSR counterparts.
Via Twitter, Keith Newman believes the "creepy" King mascot should never have been retired when Burger King switched its marketing focus.
Another Washington Post reader disagrees and thinks the "creepy stalker" King was the problem in the first place.
Stan Klein commented on the Washington Post's story that he prefers Wendy's because it offers a baked potato alternative to french fries.
A reader nicknamed "eor11" thinks Burger King will ultimately come back to the No. 2 spot: "Flame broiling will triumph in the end."
A Consumerist reader believes Wendy's No. 2 spot will be short-lived because the company is trying to be a high-end fast food burger, and "the quality is not nearly as good as Five Guy's, but they are quickly approaching the price."
Kevin, a Slate.com reader, has a different take on the chain's approach: "Wendy's got to second because it chose not to play into the value market, and they are increasing prices in order to attempt to increase product perception."
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