McDonald’s is still the top revenue-generating fast food company in the world. Burger King is #2. Will recent shakeups have any impact on their positions?
This article is free of opinion and bias, and is based solely on international and corporate statistics and accredited media reports. All listed facts within this article are fully-attributed to several economic indicators and media outlets, including Corporate.McDonalds.com, RBI.com (Restaurant Brands International), Wikipedia, The Washington Post (George F. Will), and Investopedia.com (Christina Majaski, Chip Stapleton, Kimberly Overcast).
Earlier this month, I posted an article about recent business volatility of the McDonald’s chain. From “Plans for McDonald’s Closings in 2022”: 239 U.S. McDonald’s locations closed in 2021, 200 closed in 2020, and the company has not added locations for eight years. Current plans are reported to be ambitious.
The article further stated, however, current business statistics from McDonald’s corporate office, including topping $23 billion in 2021 global revenues: McDonald’s said in a financial report that global revenues topped $23.2 billion last year (2020), a 21 percent jump from 2019 and the highest level since reaching $24.6 billion in 2016. Profit soared 59 percent from a year earlier, to $7.5 billion. In the United States, comparable McDonald’s restaurant sales in the fourth quarter grew 13.8 percent from a year earlier — the highest increase ever — from a combination of menu price increases, promotions around the McRib and the Crispy Chicken Sandwich, and the company’s digital loyalty program.
Excerpted from the former’s history, as written and attributed on Wikipedia: McDonald's is an American multinational fast food corporation, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger stand, and later turned the company into a franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix, Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and proceeded to purchase the chain from the McDonald brothers. McDonald's had its previous headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in June 2018.
It should be noted that at no point since the company initially reached #1 in revenue on a worldwide basis has McDonald’s relinquished its annual top spot as the globe’s highest revenue-generating fast food burger chain.
Excerpted from the latter’s history: The company was founded in 1953 as Insta-Burger King, a Jacksonville Florida–based restaurant chain. After Insta-Burger King ran into financial difficulties in 1954, its two Miami-based franchisees, David Edgerton and James McLamore purchased the company and renamed it "Burger King.” Over the next half-century, the company changed hands four times, with its third set of owners, a partnership of TPG Capital, Bain Capital, and Goldman Sachs Capital Partners, taking it public in 2002.
A read of the Wikipedia entries for both show some similarities in past business, en route from simple beginnings to public companies. In that event, let us explore both company’s current business trends.
In a 1980’s effort to dominate the worldwide fast food burger market, Burger King launched a negative ad campaign against its more financially successful competitor — that was outselling them three to one. See vintage George F. Will Washington Post article from 1982 here, entitled “The Political Wars and the Burger Wars.”
Will’s article discusses Burger King’s aggressive tactics, which ultimately failed. From the article: Faced with a stagnant market, Burger King launched a negative campaign against McDonald's and Wendy's, claiming, among other things, that "independent taste tests" proved that Americans prefer Burger King's "Whopper" to McDonald's and Wendy's comparable products.
McDonald’s sued, accusing Burger King, in part, of misleading the public. The courts did little, however, to curb Burger King’s advertising… but ultimately the #2 company dispensed of them and remained in its secondary position.
The needle did not move.
Decades later, in December of 2021, Investopedia.com published “McDonald’s vs. Burger King: What’s the Difference?” Written by Christina Majaski, reviewed by Chip Stapleton, and fact-checked by Kimberly Overcast, the article gives a recent snapshot of the two companies:
McDonald's has the highest market capitalization of any fast-food restaurant chain in the U.S., at more than $168 billion in October 2020. (It's worth noting that Subway has more stores and Starbucks has higher revenues.) It has 36,000 franchises in nearly 120 countries, employs 1.9 million people, and serves more than 70 million meals every day.
After a tumultuous and disappointing start to the 21st century, Burger King's shareholders saw The Wendy's Company, Subway, and Starbucks take turns passing them as McDonald's' chief competitor, at least in terms of sales revenue. Then, private equity firm 3G Capital purchased the struggling giant for $4 billion in 2010. It ignited a recovery effort that has turned out to be quite successful.14 Burger King merged with Canadian coffee staple Tim Hortons in 2014 to form a new publicly-traded company called Restaurant Brands International (NYSE:QSR).
McDonald’s and Burger King are two of the world’s perennial fast food chains and neither shows any true signs of abating. Both have seen their share of controversies, both have overcome legal and business issues to remain in their respective positions.
Unless Burger King substantially upticks its increasingly strong business, it will likely remain a venerable #2 in terms of revenue worldwide for fast food burger giants.
Thank you for reading.