McDonald's Is Shrinking in the U.S. but These 5 Rivals Just Keep Growing

NEW YORK (TheStreet) -- Struggling burger giant  McDonald's (MCDmay be retrenching in the U.S., but that doesn't mean some of its fiercest rivals in the fast food business are doing the same.

In fact, many of those competitors are growing aggressively, which could make it harder for the Golden Arches to improve its sales as it leaves certain communities. According to a report from the Associated Press, McDonald's plans to close more restaurants in the U.S. than it opens this year for the first time since at least 1970.  

In April, McDonald's announced that it will close about 350 underperforming restaurants this year, primarily in Japan, the U.S. and China. Those restaurant closings, McDonald's said, were in addition to the 350 global restaurant closings originally planned for 2015.

"Most of these restaurants were not contributing to our overall profitability or cash flow, and we will continue to review our restaurant portfolio with the intent of optimizing our asset base around the world," said the company in a statement. In other words, McDonald's could look to pare down its supersized U.S. store tally further in 2016.

While McDonald's is closing restaurants in the U.S., these key competitors are moving forward amid their better sales and profit results, and have not announced any significant closings.

1. Sonic (SONC)

The retro burger and fry joint will open 34 to 44 new franchised drive-ins this year. "McDonald's is the 800-pound gorilla; when their business is off, it benefits the rest of us," said Sonic chairman, president and CEO Clifford Hudson in an interview with TheStreet on June 9. The Golden Arches' U.S. same-restaurant sales fell 2.6% in the first quarter. On the other hand, Sonic reported back in March that its fiscal second-quarter same-store sales rose 11.5%.

2. Wendy's (WEN)

Founder Dave Thomas would be proud to know his company will open 80 new locations in the U.S. this year. The chain, known for its square burgers, will also remodel 450 locations to include a more contemporary look and feel. Wendy's is also trouncing McDonald's in terms of sales growth. 

Wendy's same-restaurant sales are expected to grow 2.5% to 3% at company-operated restaurants in 2015. At a May 4 presentation to analysts and media, McDonald's execs failed to divulge details on sales guidance for this year, instead emphasizing initiatives to refranchise hundreds of locations and improve menu quality and wait times.

Further, McDonald's went on to say it will no longer provide monthly sales reports, which over the years have become a key resource for investors in assessing the burger giant's fortunes.

3. Chipotle (CMG)

The red-hot burrito and salad bowl company continues to expand rapidly in the U.S., capitalizing on strong demand for its organic fast food. Sales surged 10.4% in the first quarter and this year alone will bring about 190-205 new U.S. locations. The range includes several new sites for its upstart concepts -- Asian-cuisine inspired Shophouse and fast-casual pizza maker Pizzeria Locale.

4. Dunkin' Donuts

Dunkin' Brands (DNKN) remains one of the more aggressive franchise outfits in the U.S., as an expanding number of breakfast items and lunch sandwiches have led to consistent sales growth and an appetite from franchisees for more locations. This year, Dunkin' Donuts will open a whopping 410 to 440 new U.S. stores. As icing on the cake, its Baskin Robbins ice cream chain will open 5 to 10 new sites.

Dunkin' Donut's first-quarter same-restaurant sales rose 2.7% in the first quarter, improving from a 1.2% rise a year earlier. For 2015, Dunkin' Donuts expects U.S. comparable store sales growth of 1% to 3% for its namesake division.

5. Starbucks (SBUX)

It may sometimes seem like there's already a Starbucks on every street corner in the U.S., but that's not how Starbucks sees it. The Seattle-based coffee king plans to open 600 new restaurants in the U.S. this year.

Each of those restaurants will feature Starbucks' revamped breakfast sandwiches and pastries, which could steal market share from McDonald's Egg McMuffin. Additionally, Starbucks' new mobile order and pay platform will be nationwide by the end of the year, giving it a big leg up on McDonald's.

Starbucks may understand what McDonald's is going through. Amid sluggish sales that caused founder Howard Schultz to return as CEO in early 2008, Starbucks announced that year it would close 600 underperforming company-operated stores in the U.S.

Since then, Starbucks sales and profits have rebounded, perhaps offering some hope to McDonald's that by reducing its footprint and refocusing on its operations, a turnaround can be achieved.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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