In a world where everyone is rushing from one activity to the next, drive-thru dining offers a cheap, easy alternative to the traditional family dinner. A long list of fast food restaurants – known in the industry as Quick Service Restaurants or QSRs – are competing for diners’ dollars.
Of course, by any measure, McDonald’s (MCD) is the undisputed market leader and winner of the Burger Wars, but the second-place slot is up for grabs. Today, the top contenders are Wendy’s and Burger King.
The rivalry between McDonald’s (MCD) and Burger King often makes for entertaining press. The two exchange jabs on social media, and when they are located opposite one another, employees get in on the action with “sign wars”. For example, Burger King employees went viral with a sign that said, “Why work for a clown when you can work for a king?”
Rivalry or no rivalry, practically speaking, Burger King market share doesn’t remotely threaten that of McDonald’s.
Does that mean McDonald’s stock is a buy, or is Burger King more likely to deliver growth and shareholder returns? These are the fast food facts you need to know before investing.
Fast Food Market Share Size
Fast food gets a lot of negative press for the overuse of fat, salt, and sugar in the most popular menu items. However, that doesn’t stop diners from including these restaurants in their daily or weekly routines. After all, the meals are tasty, fast, and cheap, and they tend to appeal to even the pickiest eaters – a big help for busy parents.
The global fast food industry, which includes everything from burgers and fries to tacos and pizza, saw revenues of more than $647 billion in 2019.
COVID-19 depressed sales a bit in 2020, but the longer-term industry outlook is promising. Experts project the global fast food market will reach upwards of $931 billion by 2027, which represents a compound annual growth rate (CAGR) of 4.6 percent.
Who Is The Leader In The Fast Food Industry?
Looking at the leader in the fast food industry is not as straightforward as it seems – at least from an investment perspective. While McDonald’s and Burger King are the top QSRs in the burger niche, Burger King isn’t an independent entity. In fact, many of the top fast food restaurants are consolidated under parent organizations.
For example, in 2014, Burger King and Tim Hortons merged under holding company Restaurant Brands International (QSR). The group expanded to include Popeyes in 2017. Similarly, holding company Yum! Brands, Inc. owns KFC, Pizza Hut, and Taco Bell.
This structure adds complexity for investors who want to add QSR stock to their portfolios. It’s not a matter of comparing McDonald’s vs. Burger King – it’s McDonald’s vs. Burger King, Tim Hortons, and Popeyes combined.
What Market Share Does McDonald’s Have?
When all fast food restaurants are considered, including those that don’t serve burgers, McDonald’s owns the biggest share of the market.
In 2019, McDonald’s controlled an impressive 21.4 percent, with Starbucks coming in a distant second at 7.52 percent.
KFC held 2.82 percent of market share, and Subway owned 2.8 percent.
Domino’s Pizza was in fifth place at 1.57 percent, closely followed by Pizza Hut at 1.24 percent.
Burger King Market Share
Burger King market share might amount to less than two percent of the total fast food market, but that doesn’t diminish the company’s success.
After all, when only burger restaurants are considered, Burger King comes in second worldwide and either second or third in the United States.
Burger King and Wendy’s trade the US second place title back and forth regularly. Most recently, Wendy’s took it from Burger King in 2020.
Burger King differentiates itself from its fast food peers with fresh ingredients and a strong value proposition. For example, the new $1 Your Way Value Menu launched in December 2020, which brought customers in after their COVID-related hiatus.
The company is also working to eliminate artificial colors, flavors, and preservatives from key menu items in an effort to attract health-conscious patrons.
How Many Burgers Does Burger King Sell Per Year?
Around the world, Burger King serves more than 15.5 million diners each day. Of course, not every one of those meals includes a burger – other popular menu items like chicken nuggets and chicken sandwiches have their own loyal fans. Still, by some estimates, Burger King might sell nearly half a billion burgers per year.
It’s worth noting that Burger King is attempting to appeal to the health-conscious and vegetarian/vegan population with a meatless Impossible Whopper featuring Impossible Foods’ plant-based meat alternative.
The new item has been well-received, and it is expected to remain on the menu.
Who Is Bigger McDonald’s or Burger King?
McDonald’s might be bigger than Burger King, but there is no chance of it knocking Burger King out of the fast food business altogether. Burger King enjoys a loyal customer base, and it is hard at work building its brand.
Like McDonald’s, Burger King is increasing the use of digital tools like mobile ordering, contactless payments, and digital menu boards. It is expanding the use of delivery services in many markets, which is having the desired effect of increased revenue.
Parent company Restaurant Brands International is leveraging similar tools with Tim Hortons and Popeyes. If those businesses achieve the same success as Burger King, Restaurant Brands International’s shareholders may see strong returns.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.