Wednesday, November 9, 2011

McDonalds moving up but who’s moving down?

During the past 4 decades hamburgers drove sales and propelled the overall restaurant industry.  Without a doubt the hamburger is now globally recognized as a penultimate American food.  It is ready-2-eat, hand held and prepared to eat on the run; convenient, simple and affordable.  Contrary to popular belief Americans do not eat hamburgers daily.  Today there simply is not room in the US marketplace for all of the hamburger chains in America today. Things are about to change.
McDonalds with innovative new products, continually reimaging stores and a focus on the consumer is the global leader in restaurant sales and the hamburger niche.  In the United States the undercurrents of a sector in upheaval and transition is emerging for every position except number one.  McDonalds is and will remain number one for many years to come.
However legacy second tier hamburger chains the ilk of Wendy’s, Burger King, Sonic are circling in a quagmire of their own making.  Each is trying to re-energize the halo of success they have not seen in years.  Success to date has proven allusive for each in their effort to re-energizing.  It is very likely that one or two of the three might very well be much smaller in five years than it is today.
One of the reasons is that there are new chain hamburger companies that are growing while garnering momentum including upstarts the ilk of Five Guy’s, Smashburger. Each is garnering market share from legacy second tier players and growing new units fast.
The next company in the QSR niche to watch will be In-N-Out Burgers.  If In-N-Out Burgers does half as well in Texas as they do in California and Nevada they will accelerate growth and watch out.  One of these three; Wendy’s, Burger King or Sonic might just scale back the way Burger Chef did.  Carl’s Jr. and Jack In The Box have repositioned and staked out a differentiated path yet the California economy nagging the sales door.
In fact we may have seen the tipping point at the mid-priced burger category now that seemingly all celebrities including the likes of, Bobby Flay, Emeril Legasse each have opened and are more and more gourmet burger restaurants.  While Red Robin and Fuddruckers struggle to maintain market share, The Hard Rock Café and TGI Fridays are trying to pull away from the burger category. 
Clearly some of the legacy players have lost focus. If they refocus on the consumer rather than hamburger niche they can regain momentum.  The upstarts with a focus on a “better burger or better for you burger”  are positioning to win; have momentum on their side and will continue to garner maker share. I believe a shake-out in the hamburger niche will begin with McDonalds staying at number the new momentum players will continue moving up.
Steven A. Johnson is Grocerant Guru at Tacoma, WA based foodservice consultancy Foodservice Solutions® and writes a blog at: He can be found on LinkedIn at:, Johnson,

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