If anyone tells you this year’s basketball tournament has been amazing, tell them they should check out the 2014 A.1. Burger Brackets! Another No. 1 seed has fallen as the field narrowed to 16 from 32 after the tough weekend test. The remaining competitors have until 7 p.m. CT on Friday, March 28 to get the vote out. That’s a whole week of voting, but the competition keeps getting tougher. The 16 burger brands remaining have shown that their fans will support them all day every day.
The Round of 16 Matchups are shown below. Click to see the updated brackets spreadsheet. To VOTE, go to the A.1. Burger Brackets page. Good luck!
Mobile ordering/payment apps are the current hot buttons, but will they provide the meaningful sales boost that quick-service burger-chain sales need so badly?
Burger King has been testing its app in Salt Lake City.
After lengthy field testing, Burger King says it will introduce its mobile payment platform for smartphones next month and will have it available systemwide by year-end. This push is in line with comments made during last year’s Morgan Stanley Global Consumer Conference by Burger King CFO Josh Kobza: “Consumers are going to expect ordering online, and coupons on mobile. It’s something we all have to do. There are still open questions, but I expect to see it in the industry sooner than later.”
Wendy’s, too, has been testing mobile payment and now says it also will have the capability rolled out this year. McDonald’s continues to test its MCD app that provides discounts and news but doesn’t allow for online ordering or payment.
Quick-service restaurants are leaking customers. McDonald’s U.S. guest count was down 1.6% in 2013. I assume most of those departures are by higher-income and suburban consumers since lower-income and center-city diners have fewer options from which to choose. Will mobile payment bring back high-end defectors? And how likely are current QSR heavy users to use mobile payment?
Technomic data finds that 11% of consumers have paid for a restaurant meal using mobile technology and 46% of those users say the ordered through a restaurant’s app. That’s all restaurants, including pizza restaurants where most orders are made by phone.
Starbucks says that 14% of its U.S. in-store transactions now involve mobile payment. But that’s Starbucks, which draws the kind of consumer who has moved away from fast food. McDonald’s average drive-thru time of 189.49 seconds in last year’s QSR magazine study was its slowest ever, but will mobile platforms really speed that up?
Recall McDonald’s CEO Don Thompson’s remarks last October: “In the U.S., we continue to experience a bifurcation of the consumer base. McDonald’s core customers skew towards those customers whose disposable income is not rising as much and are spending a little bit less in QSR.”
Certainly some customers will use mobile ordering/payment apps from the burger chains, but I still believe the introduction of a popular new burger like the Big King, Ciabatta Bacon Cheeseburger or Bacon Clubhouse will do more to help sales than will anything digital.
Round 1 is complete. The field has been reduced from 64 to 32. But there really aren’t any losers. Every burger brand that came up short put up a crazy good fight. Burgers rule because Americans love their burgers and their favorite places to eat them. That’s what the Burger Brackets show! A crazy total of 68,817 votes were cast just during the first round. You folks had your brand’s back!
But Round 2 is tougher because it lasts just two days. Voting closes at 7 p.m. CT on Sunday, March 23. So get the troops re-energized and get them voting. The Round 2 matchups are below. CLICK HERE to go to the A.1. Burger Brackets Voting Page. Good luck to all!
The 10-Ks have been filed with the SEC allowing the annual comparative look at the balance of power among the largest burger chains. There’s one significant change this year.
A few years back, it was widely reported that Wendy’s had passed Burger King and become the No. 2 burger chain. News outlets repeated it again and again. But it wasn’t correct because it was based on an estimate of Burger King’s sales that proved to be well below the actual sales number that Burger King provided when it became publicly held again.
But now it actually may be true that Wendy’s ranks No. 2 in U.S./Canada sales (it and BK report North American sales). The two chains were fairly close before but Wendy’s saw a 1.8% gain in same-store sales in 2013 while Burger King’s total domestic sales declined slightly due to a 0.9% drop in same-store sales. By my estimate, Wendy’s has inched ahead of Burger King in North American sales.
That said, the difference between being Nos. 2 or 3 in North America is fairly unimportant. Increasingly, the quick-service burger business at the top is a global industry. That’s confirmed by an interesting passage in McDonald’s 10-K where the world’s largest restaurant chain defines its competition, which includes everyone down to the taco truck on the corner:
- “The Company’s primary competition, which management refers to as the informal eating out (“IEO”) segment, includes the following restaurant categories defined by Euromonitor International: quick-service eating establishments, casual dining full-service restaurants, street stalls or kiosks, cafés, 100% home delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie bars. Market data related to cafés is separately available and now included in the IEO segment. The IEO segment excludes establishments that primarily serve alcohol and full-service restaurants other than casual dining.
- “Based on data from Euromonitor International, the global IEO segment was composed of approximately 8 million outlets and generated $1.2 trillion in annual sales in 2012, the most recent year for which data is available. McDonald’s Systemwide 2012 restaurant business accounted for 0.4% of those outlets and about 8% of the sales.
- “Management also on occasion benchmarks McDonald’s against the entire restaurant industry, including the IEO segment defined above and all other full-service restaurants. Based on data from Euromonitor International, the restaurant industry was composed of approximately 16 million outlets and generated $2.3 trillion in annual sales in 2012. McDonald’s Systemwide restaurant business accounted for 0.2% of those outlets and about 4% of the sales.”
Because CKE Restaurants is now privately held, there’s no solid data on its two chains this year. But I’d say Hardee’s continues at No. 6 with estimated 2013 sales of $2.2 billion while Carl’s Jr. would be No. 7 with an estimated $1.7 billion in sales. Put Whataburger No. 8 at an estimated $1.55 billion.
Here are a few other interesting bits from the Top 5 Burger Chains’ SEC filings:
- Motley Fool, which delights in writing foolish things, recently ran a piece suggesting that Burger King is making “strategic moves aimed directly at dethroning its larger rival McDonald’s.” This is nonsense, of course, considering among many other things, McDonald’s average restaurant sales, which are double those for Burger King. Satisfries are great and all, but BK isn’t dethroning anyone soon.
- Jack in the Box says 70% of its sales at company stores come via its drive-thru windows. For Wendy’s, 64.8% of sales are through the window.
- Wendy’s is shifting ad spending in favor of national media. Last year, franchisees contributed 3.25% of retail sales for national advertising and 0.75% for local/regional ads. Beginning this year the mix is 3.5% national/0.5% local.
- Burger King notes that entered into contracts with Coca-Cola Co. and Dr Pepper/Snapple Inc. to offer their soda brands. The contract obligates BK to purchase a specified number of gallons of soft-drink syrup. How much? “As of December 31, 2013, we estimate that it will take approximately 16 years to complete the Coca-Cola and Dr Pepper/Snapple, Inc. purchase commitments.” Drink up.
McDonald’s Corp. has realigned some management roles following the surprising announcement that Tim Fenton will step down as chief operating officer, effective Oct. 1, 2014. Fenton, 56, who has worked with McDonald’s for 41 years, said he needed to step aside due to chronic asthma.
“I simply cannot continue to meet the global travel demands of this position and will focus on improving my health closer to home,” Fenton (r.) said in a company announcement. “I intend to always be of service to this great company, our employees, customers and suppliers.”
The company said Fenton will continue to serve as COO during a transition period after which he will function as a special advisor to CEO Don Thompson focused on global franchising, restaurant portfolio optimization and other strategic business initiatives.
The company will not replace Fenton in the COO title. Instead it elected CFO Peter Bensen and Global Chief Brand Officer Steve Easterbrook executive vice presidents and expanded responsibilities for each of them. Bensen will assume oversight for worldwide supply chain, development and franchising. Easterbrook will take on oversight for the Restaurant Solutions Group; corporate strategy; and the Global CSR [corporate social responsibility], Sustainability and Philanthropy department.
Talk about the bond between a brand and its buyer and this is what you mean. Joshua Baxter is a native of Kingsport, Tenn., but moved to Seattle six years ago. One of the things he says he misses most is Pal’s Sudden Service, the 57-year-old, double-drive-thru burger chain that’s headquartered in Kingsport.
On visits home, Baxter often had eaten at several Pal’s just to hold him until the next time, he told the Times News. But before a recent trip back to Tennessee, Baxter said he decided to go all out and plan a route that would take him to all 26 Pal’s in a single run. The trip took a little more than 13 hours and took him 400 miles across Tennessee and Virginia. His wife thought the idea was, well, “a little out of the ordinary,” he said.
At every stop, “I definitely got a Frenchie Fry, and tea as needed,” Baxter said. But he did more than gobble fries. At each Pal’s he left $5, paying forward for the next Pal’s customer. “I guess that was me making it a little more worthwhile,” he said.
“Pal’s is Pal’s. There’s no comparison,” Baxter said in explaining his journey.
Michael Symon—TV Iron Chef and B Spot owner—won the People’s Choice award for the fourth time at this year’s South Beach Wine & Food Festival Burger Bash. But the Best of the Bash award was won by someone who doesn’t have a TV show or a string of restaurants: Brad Halsten, owner of The Burger Dive in Billings, Mont. His Blackened Sabbath burger with blackened spice, bacon, a beer-battered onion ring, garlic-basil mayo, goat cheese and arugula bested some of the biggest names in burgers. Halsten won $10,000 and a promise from Red Robin, which sponsors the award, that his burger will be the inspiration for a future entry in its Finest premium-burger line. BurgerBusiness.com caught up with Brad Halsten back in Billings.
Brad Halsten receives his Best of the Bash check from Bash host Rachael Ray and judge/TV show host Robert Irvine.
How did a burger chef from Billings end up on a stage in Miami with an oversize check?
Well, I’d heard of the Burger Bash and I always wanted to go test myself and my place against the top burger joints and the chefs I’d seen on TV. I wanted to be part of it.
So last June I searched out who was in charge of the food festivals in New York City and South Beach and I found [festival founder] Lee Schrager’s name. I figured I’d just send him an email and see what happened. He could ignore me or tell me to go away or respond. And within two hours I got a reply from Lee that said, “Just returned from Montana and you’re on my radar.”
Coincidentally a week or two before I contacted him he was here and ate at our place. I guess that’s what he does, but he already knew us. Then in August we got an invitation.
You had six months to prepare? How many burger ideas did you go through before deciding what you’d serve?
Honestly not a whole lot. I really only tried a couple of ideas and with the first one that I started serving to customers—we called it The Test Pattern—they said, “This is the one.” Some regulars said it was the best burger they ever had. So we went with it. We served it as a special off and on just to keep getting feedback.
It’s a twist on the Blackened Sabbath burger I already had on the menu. We just took it to a new level. We changed it from blue cheese to goat cheese because that’s kind of hot right now. And I added arugula to the bottom bun because I watched videos from past Bashes and Spike Mendelsohn [of D.C.'s Good Stuff Eatery] was a judge one year. He said one of the things they were looking out for were soggy buns. I wanted to make sure I didn’t have a soggy bottom bun. I put mayonnaise on the bottom bun and added arugula to keep the burger juices out. Click here to continue reading How Burger Dive Bested the Burger Bash