McDonald's New U.S. Table Service Option Can't Possibly Be as Awful as Burger King's

Editors' pick: Originally published Nov. 16.

Updated with details on McDonald's table service 

Hopefully McDonald's (MCD) has better ideas on how a fast-food chain should do table service than fellow burger flipper Burger King.  

McDonald's said at an event Thursday that it will offer table service at all of its over 14,000 U.S. restaurants, up from about 500 or so today. The Golden Arches originally launched table service at 600 of its restaurants in southern California last December. McDonald's didn't return a request for comment on the new initiative. 

What McDonald's has cooking on the table service front can't possibly be as bad as what's on display at Restaurant Brands (QSR) Burger King chain. 

TheStreet recently visited a New York City Burger King to try out its relatively new full-service dining option. Housed on the second floor of this particular Burger King, we were greeted by a hostess and seated at a table where a server took our order. The menu was Burger King's typical array of burgers, chicken sandwiches and fries. The real allure of sit-down ordering, however, was the new ability to buy beer (cans and bottles, domestic and imported) and alcoholic shakes, and then relax for a bit after work. As the photos below show, the entire dining experience bordered on embarrassing even when considering our low expectations heading in. The alcoholic shakes well, let's just say Burger King's test kitchens need to hit the reset button.

Then again, maybe the dining experience and sub-par boozy drinks shouldn't have been a shocker.   

"Alcohol is a big challenge for quick-service restaurants [such as Burger King], and we don't see a lot doing it mostly because it's expensive to get a beer/liquor license. There are also huge operational issues as servers are often underage, there's no traditional bar meaning they often have to undergo special training, and the chains don't like storing a lot of inventory," explained David Henkes, Advisory Group Senior Principal at Technomic.

Sitting down to eat at a fast-food joint often leads to a higher check. Food is still meh, however.

As we could attest, Starbucks (SBUX) has found some operational difficulties with its new evenings menu that serves beer and wine alongside small plates of food. 

For Burger King, it began to venture into serving alcohol in the U.S. in 2010 with the opening of several "Whopper Bars" in New York City, Miami, and Las Vegas. The initiative proved unsuccessful, headlined by the closing of a location in Times Square due to a host of food safety violations. More recently, Burger King has begun to sell beer at some locations in the U.K.

Burger King spokesman Patrick McGrade didn't respond to several emails from TheStreet on how many Burger King locations in the U.S. now sell alcohol and also offer table service.

It's easy to see why McDonald's and Burger King are dipping their toes into table service, an option that often leads to a higher average check. 

Burger King's same-store sales in the third quarter in North America fell 0.5% due to a mixed response to the new Whopperito. A year ago, Burger King North America saw sales rise 5.2%. Company CEO Daniel Schwartz acknowledged that industry conditions in the U.S. continue to be "soft." Restaurant Brands shares have shed roughly 5% over the past three months vs. the relatively unchanged S&P 500.  
 
McDonald's U.S. sales rose 1.3% in the third quarter, a slower pace than the 1.8% increase seen in the second quarter. In the first quarter, McDonald's U.S. same-store sales rose 5.4%. As a result the cooling sales growth, McDonald's stock has only risen about 0.9% so far this year. The Dow Jones Industrial Average, in which McDonald's is a component, has tacked on 8.3% year to date.

"We are mindful of the headwinds, most notably in the U.S.," McDonald's CEO Steve Easterbrook told analysts on a conference call.

"The table service is new -- as they perhaps try to compete with more upscale/fast casual type of establishments, it brings a certain differentiating factor," said Henkes, adding, "Mostly, the reason Burger King would do it is for day-part expansion - the quick- service and fast casual operators that sell alcohol do it as a further amenity to support a dinner emphasis."
 
Here's a look at our not-so-fun experience at Burger King.

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