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TheStreet Open House

Food Fight! Burger King Battles McDonald's Over Breakfast With Burgers

NEW YORK (TheStreet) -- There's an all-out burger war in the U.S. fast food industry.

You have the name game going on between McDonald's (MCD) and Yum! Brands' (YUM) Taco Bell over "Ronald McDonald" and their competitng breakfast menus, including Taco Bell's Waffle Taco.

Turns out Burger King (BKW) has a new idea to increase breakfast sales. Say hello to the breakfast burger.

Yes, Burger King announced it is bringing burgers to its breakfast menu. You will soon be able to order a Whopper, Big King, or Chicken Sandwich at over 5,000 Burger King locations in the United States bright and early.

To me this seems like a no-brainer that could increase Burger King's traffic. The move could appeal to late-night workers looking for filling food, or people who have been up for half a day and would rather get a burger than a sausage biscuit. Essentially, Burger King does not have to do any marketing or testing of new breakfast products because it knows its burgers are loved by millions of Americans.

Current breakfast items offered by Burger King include the Croissan'wich, sausage biscuit, Cinnabon minibon and Seattle's Best Coffee. The coffee brand, which is owned by Starbucks  (SBUX), could see a lift in sales if more people frequent Burger King.

McDonald's has 25% of the breakfast market share, which brings in a reported $50 billion. Taco Bell is slowly taking part of that business away and Burger King could be the latest to gain significant share in the breakfast segment. Burger King already has a strong breakfast segment and could become a bigger thorn in McDonald's side with the burger offerings. Of course, McDonald's could follow the same strategy and offer its Big Mac for breakfast.

The move by Burger King means it can stay out of the brutal contest between McDonald's and Taco Bell. Taco Bell has a string of commercials that feature men named Ronald McDonald saying they prefer the new Taco Bell items. The launch of new items at Taco Bell also prompted McDonald's to give away free coffee for two weeks, an attempt to boost sales and keep customers. Burger King won't have to do either of these but is said to be working on some radio commercials.

In the recent first quarter, Burger King reported comparable-same store sales growth of 2.0%. Total systemwide sales grew 6.9%. The company ended the quarter with 13,677 stores, including 7,393 in the United States/Canada region. Same-store sales in the U.S. and Canada increased only 0.1%.

In fiscal 2013, total system sales increased 4.2%. Same-store sales grew 0.5%. Burger King Worldwide added 670 restaurants in the full year and continues to work on a re-franchising strategy that is seeing less company owned locations for the number two fast food burger chain.

At the Monday close of $25.62, shares of Burger King are up 37% for the past 52 weeks and 12% for the year to date. Since going public in 2012, shares are now up almost 70%. The company's shares sit close to the high end of its 52-week range. A continued focus on re-franchising locations and increasing breakfast sales could easily send shares higher.

At the time of publication, the author held no positions in any of the stocks mentioned.

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

>>Read more: McDonald's Uses Ronald to Beef Up Its Social Media Presence

>>Read more: Pershing's Ackman Seeks to Rally Allergan Investors

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