McDonald's CEO Thinks He Could Bring Pain to These 5 Rivals That Sell Sandwiches

Ouch, Micky D!

Author:: Lindsay Rittenhouse
Publish date:: Jul 30, 2017 3:00 PM EDT

McDonald's Corp. (MCD) - Get Report came to bring the pain. Sandwich chains, beware.

On a Tuesday, July 25, company earnings call, McDonald's CEO Steve Easterbrook said the fast-food giant is beginning to regain the customers it has lost over a "handful of years" to the growing consumer shift to digital and healthier eating, due in large part to new technology in its stores like self-ordering kiosks and innovative menu items,such as its Signature Crafted sandwiches.

"Our gain will result in pain being felt elsewhere," Easterbrook said in response to an analyst's question on competition.

While Easterbrook failed to mention specific companies, he said McDonald's "gain" has "opened up [the competition] gap" among sandwich chains.

McDonald's Signature Crafted menu line includes the Maple Bacon Dijon burger made with 100% fresh beef (640 calories), the Pico Guacamole burger made with 100% fresh beef (580 calories) and the Sweet BBQ Bacon Chicken sandwich, made with Artisan grilled (640 calories) or crispy (810 calories) chicken.

McDonald's reported second-quarter earnings of $1.70 a share on revenue of $6.05 billion, beating Wall Street's estimates for earnings of $1.62 a share on revenue of $5.96 billion. Micky D's same-store sales for the period climbed 3.9%, compared to the 3.1% expectation.

Here are five fast-food companies that could feel the pain Easterbrook warned of.

Doctor's Associates Inc., better known as Subway, has long been a rival of McDonald'. As it surpasses the Golden Arches as the largest fast-food chain in the U.S., McDonald's, with roughly 14,140 restaurants in the U.S., could become a serious threat to Subway, the operator of about 26,740 sandwich shops in the U.S. Subway has historically been viewed as a healthier alternative to fast-food giants like McDonald's.

McDonald's could give Chick-fil-A, the king of chicken, a run for its money with its new lineup of assorted grilled and chicken sandwiches. Micky D's Sweet BBQ Bacon chicken sandwiches, for example, might be chosen over Chick-fil-A's new BBQ chicken sandwich.

McDonald's creative sandwich launch could hurt Arby's Restaurant Group Inc., a long-time rival of Subway and the operator of fast-food restaurants known for their roast beef sandwiches.

Panera Bread Co. is a leading competitive force in the sandwich space. The company, known best for its soups, salads and sandwiches, has typically been favored by health-conscious millennials as it was one of the first fast-food chains to "go clean" with all-natural ingredients. But, with McDonald's crafted menu and slow shift to using fresh beef, millennials may starting eating McDonald's.

Wendy's Co. has always been one of McDonald's main competitors, but the rivalry may have gotten more intense with the Golden Arches starting to adopt 100% fresh beef. Micky D's expects to transition its Quarter Pounder burgers to 100% fresh beef by the second half of 2018. Fresh beef, having been used in all of Wendy's burgers since 1969, was something the company has historically held over McDonald's head.

Subway

Doctor's Associates Inc., better known as Subway, has long been a rival of McDonald'. As it surpasses the Golden Arches as the largest fast-food chain in the U.S., McDonald's, with roughly 14,140 restaurants in the U.S., could become a serious threat to Subway, the operator of about 26,740 sandwich shops in the U.S. Subway has historically been viewed as a healthier alternative to fast-food giants like McDonald's.