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.
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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. (WEN - Get Report) 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.