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Sozzi: Burger King Takes a Bite out of McDonald's Customer Base

NEW YORK (TheStreet) -- There will always be two major wars in the land of food to watch. Coca-Cola (KO)KO versus Pepsi (PEP)PEP and Burger King (BKW)BKW versus McDonald's (MCD)MCD. Who is winning the war tends to change frequently due to new product releases and the associated marketing blitz. I am here to report that big, bad Burger King is thieving McDonald's customers in the U.S., and nobody is even talking about it...until now.

First, let's set this up with a few observations:

  • McDonald's U.S. same-restaurant sales were down in January, February and in the fourth quarter of 2013. On the other hand, Burger King's same-restaurant sales improved each quarter of 2013, and were positive in the fourth quarter.
  • Burger King shares are up a sizzling 15.3% year to date compared to a meager 0.86% gain for McDonald's. While McDonald's is complaining of competitive industry conditions, overhauling its exec team, and handing out free coffee, Burger King has shared more positive things with investors in every quarterly release dating back to the first quarter of 2013.

There are three specific reasons for the Burger King revival, which is especially impressive considering the growing popularity of Chipotle (CMG)CMG, Panera Bread (PNRA)PNRA and Starbucks' (SBUX)SBUX push into evening foods:

Marketing: Burger King is using craftier titles associated with new, premium, products that invoke emotions with customers. Are you more intrigued by an Angry Whopper from Burger King or a Bacon Clubhouse Burger from McDonald's? Exactly.

Perception of yumminess: Burger King is releasing burgers and sandwiches that connect with what a consumer is buying elsewhere. Fried onion petals. Jalapenos. Chipotle sauce. Turkey Burger. Combine that with Satisfries, and Burger King is able to build a perception amongst consumers that its products offer the biggest bang for the buck and are fresh ideas.

Execs get it: Whereas McDonald's is out of control with releasing new menu options that slow lines and confuse customers, from pastries to a $12 burger in Switzerland, Burger King is keeping it much simpler. In fact, the focus, according to the company is on "releasing fewer, more impactful products." By going that route, Burger King is able to market its new products more effectively.

Now I am off to grab a salad after taking about this greasy stuff. Brian Sozzi out.

-- By Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

At the time of publication, Sozzi held no position in the stocks mentioned.

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