After nearly 40 years, the battle of the burger giants has recently taken a turn. Wendy's has overtaken Burger King for second place in the war of the burger giants -- a title that Burger King has held since 1972. Technomic Inc. released the 2011 sales figures for the nation's top fast food companies on March 19; Wendy's has come in with sales of $8.5 billion, with Burger King coming in close behind with annual sales of $8.4 billion. Mind you, these figures hardly hold a candle to the whopping $34 billion in sales of the first-place holder, McDonald's, though it's certainly an impressive feat for Wendy's. So what exactly happened to change up these long-standing rankings?
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Burger King has recently been acquired by an international organization, 3G Capital Management. Burger King is likely still experiencing some growing pains after amalgamating with its new organization, which could explain some of the change in its sales figures for the year.
Global Versus Local
Though Burger King may have a greater number of locations in the United States than Wendy's, it actually has a much more global focus than Wendy's. Burger King has a presence many international markets while Wendy's focuses primarily on the North American market. It's possible that Burger King has put more emphasis on its international markets than on its American market in recent years, thus causing a slip in sales in the United States, allowing Wendy's to sneak into second place.
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Burger King chose to evolve its advertising angle when it eliminated the famed king from its advertisements. Sometimes changes in advertising can lead to an "identity crisis" when it comes to brand recognition with consumers. Wendy's has also made some changes to its advertising over the past year, moving to the "hot 'n juicy" burger slogan.
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Wendy's has now introduced a breakfast menu. This is completely new for the chain, which has not previously paid much attention to breakfast, catering more to the lunch and dinner crowd. Wendy's should definitely keep a close eye on Burger King through the coming years, though. Burger King has started to introduce some of its own new menu items, including more salads and smoothies, as well as new and improved chicken strips and french fries. Price Particulars
Wendy's menu items are typically more expensive than Burger King, which appears to be trying to compete more directly with McDonald's when it comes to the price point of its menu items. Wendy's has shifted toward competing with the premium burger chains, often offering pricier menu items that include more premium or specialty burgers, such as its famed "Baconator." Wendy's has also been modifying some of the interiors of its restaurants to reflect its desire to move into the premium burger market.
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Perhaps it's possible that Burger King just underestimated Wendy's. With nearly 40 years in second place on the list of burger sales, there's a chance Burger King simply didn't imagine that Wendy's could overtake it with its pricier menu items. Other Competitors
It's important to note that Technomic's statistics ranked all genres of fast food chains, not just those specializing in burgers. In considering the overall statistics, Subway and Starbucks actually came in second and third place overall, placing Wendy's and Burger King in the fourth and fifth spots. These competitors, though focusing on different segments of the market, are also competing for king of the hill status when it comes to winning your fast-food dollars. Perhaps these companies' evolution into the top spots on the list shows changing consumer desires, including an interest in premium beverages and healthier fast food meal options.
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Winning over consumers' hard-earned dollars is the ultimate goal of all retailers, including those in the fast-food market. Consumers only have so much to spend and each restaurant is vying for those dollars. Considering the competitive nature of the market, it's no surprise that Wendy's has had to evolve in order to stay relevant and compete with the bigger burger retailers that consumers can choose from. If it couldn't provide rock-bottom pricing like McDonald's, it only makes sense that it would turn to providing higher quality items, in order to improve sales revenues. Hopefully Burger King is able to take a lesson from Wendy's successes and modify its business plan, in order to stay competitive into the future.
Originally posted on Investopedia.com