Last Friday, Burger King scored a publicity coup in the US by declaring the day Free FryDay and giving away a bag of french fries to anyone who walked into, or drove up to, one of its 7,000 restaurants. It said about 15 million bags were handed out.
Burger King staged the event to mark the launch of its new weapon in the war with its bigger rival, McDonalds: a hotter, crispier potato chip that it is cheekily marketing with the slogan, The taste that beat McDonalds fries.
The launch came only four months after the introduction of another new Burger King product aimed squarely at McDonalds customers: the Big King burger, a shameless imitation of the Big Mac, but with 75 per cent more meat. Burger King launched it with the slogan, Get ready for the taste that beats the Big Mac.
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Burger King, a Miami-based subsidiary of Britains Diageo group, seems to have gone from strength to strength in the last year, opening more restaurants than ever before and beating even McDonalds with its rate of expansion in the US.
McDonalds, in contrast, has suffered an annus horribilis. In the US, its new range of Arch Deluxe burgers failed to take off; a 55-cent burger promotion backfired when customers found the deal had too many strings attached; and falling profits alienated the franchisees who run 85 per cent of the companys restaurants.
Meanwhile, in the UK one of McDonalds biggest markets outside the US the company suffered a public relations disaster by pursuing a libel action against two environmental activists, drawing attention to damaging allegations that would otherwise have gone largely unnoticed.
McDonalds has many more restaurants than Burger King: at September 30, it had 12,249 restaurants in the US, compared with Burger Kings 7,414, and 9,997 in the rest of the world, compared with Burger Kings 1,986. But recent experience has shown that biggest is not necessarily best.
With its size-is-everything strategy, McDonalds has sought to increase sales by the simple expedient of opening restaurants. Some 70 per cent of visits to a fast-food restaurant are made on impulse; so theoretically, more restaurants means more spur-of-the-moment trade.
But in the US, McDonalds now has so many outlets that it appears to be close to saturation point. In 1996, sales growth failed to keep up with the pace of restaurant openings, so sales per store fell, hitting profits. Faced with a revolt by franchisees, McDonalds sharply cut back the pace of expansion last year.
The store opening programme might not have hurt profits if McDonalds had been able to attract more customers with exciting products. But McDonalds has a poor record for innovation: it has failed to come up with a successful new product since the introduction of Chicken McNuggets in 1983, and the Big Mac is 30 years old this year.
While those who disdain fast food might find one burger as distasteful as another, the consensus among fast-food connoisseurs is that Burger Kings flagship Whopper sandwich tastes better than McDonalds Big Mac, in part because it is flame-broiled on a grill instead of fried on a hot plate.
McDonalds, however, has stayed ahead of Burger King not just because of its ubiquity, but because children seem to prefer its sweeter- tasting burgers. And until now, it has also been regarded as having the best french fries.
Late in 1996, McDonalds tried to capture a bigger share of the adult market by launching the Arch Deluxe sandwiches in the US, which were supposed to have a more grown-up taste. But in spite of a costly advertising campaign, the burgers failed to make much impact.
Meanwhile, Burger King was working to counter the perceived weakness in its own product line-up by developing a better french fry, eventually coming up with the product that it was giving away last week.
The new french fries, which should spread to Burger Kings international restaurants early this year, have a crispy coating that is supposed to make them taste nicer and help seal in the heat an important consideration since about 60 per cent of Burger Kings business is drive-thru and another 15 per cent is take-out.
Burger King says that in blind taste tests, 57 per cent of consumers preferred its new fries against 35 per cent preferring McDonalds, with the remaining 8 per cent expressing no opinion. Now, equipped with the preferred fries as well as the preferred burger, Burger King claims to have the best-tasting menu in the industry.
Dennis Malamatinas, who took over as chief executive believes Burger King has more potential than McDonalds because Burger King is still a long way from saturation point. And the interesting thing is that whenever we open a restaurant across the street from McDonalds, we do extremely well.
In most markets outside the US, however, Burger Kings advantage is not so clear. Saturation is not an issue for either company, but McDonalds has already succeeded in building a global brand, while Burger King is still at the starting post. According to the Interbrand consultancy, McDonalds was the worlds best known brand in 1996, while Burger King ranked nowhere in the top 100.
Last year Burger King suffered the ignominy of having to pull out of France because of unsustainable losses, leaving many of its franchised restaurants to be taken over by McDonalds. Now, Malamatinas says, Burger King is building a global brand in a disciplined way, country by country.
In this business, scale is the key success factor, he says. Its no good just opening one or two restaurants in a country. You can plant the flag and say you have operations in 200 countries, but that doesnt do much for the brand.
So does Burger King have ambitions to oust McDonalds from its number one spot? No, says Malamatinas. If there is one critical element of our strategy, it is revenues per store as opposed to number of restaurants. Offering the best food to consumers and driving revenues per store: that is the way to make money.
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