Unlike Burger King, McDonald's, Subway and Starbucks all dominate in distribution with gigantic retail footprints.
McDonald's and Subway are doing well in the recession because they have tremendous values you cannot miss, they're literally everywhere. Starbucks has not fared well, closing locations, and reducing prices on their super premium priced coffee, killing their margins and offering nothing of real value other than discounts that leave their coffee still more expensive than other offerings.
How is that relevant to Burger King? Burger King will never catch up in footprint, unless it merges with another player like Wendy's and it hasn't focused on values.
Burger Kings has done a good job of bringing in the Super-Heavy Users, males who eat in store multiple times per week. They've done so with a distinct flavor and attitude that has built a core audience.
But strategically, that means they have fewer customers who spend more with them. So when those customers have to cut back, it's bigger impact for Burger King. Their competitors have larger user bases and are less dependent on each individual customer. By Burger King not focusing on value menus, which should be fairly easy to do, they haven't been fulfilling the needs of their core audience, who is more financially strapped.
When McDonald's decides they wantto be in a new business category or offering, they retrofit their stores and marketing clout to deliver results. They single handedly are going after Starbucks right now with their coffee initiative. They see the vulnerability, and they are moving accordingly.
It would not be overly difficult for McDonald's to create healthier sub sandwiches, which they've tested several times, or to roll out flame broiled burger options.
If they had to choose amongst the two, sub sandwiches on the surface looks like the best option. Until you look at McDonald's real clout, location and value. Subway alone and its collective sub brethren outnumber McDonald's locations and they're very competitive on price.
A flame broiled McChicken, McRib, Filet O' Fish, Quarter Pounder and Big Mac could overnight bring Burger King to it's knees, especially as value menu items in substantially more McDonald's locations.
Flame broiling could also be an operational nightmare for McDonald's. Sort of like "Made To Order" and "Coffee Bistros." "Made To Order" brought McDonald's operations back to excellence and at the time was a page out of Burger King and Wendy's operation books. Coffee Bistros are up and running and will secure McDonalds dominance in breakfast.
So Burger King, get busy on values before McDonald's eats your lunch.
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