Burger King To Offer $1 Double Cheeseburger - WSJ

In a tactic that could set off a price war with its biggest rival, Burger King is taking aim at one of McDonald's bestselling offerings: the $1 double cheeseburger. Burger King plans to test its own, 30% larger $1 double cheeseburger in three as-yet unspecified U.S. markets, starting early in 2008. "[T]he dollar double cheeseburger is the most powerful weapon our competitor has to continue their growth and steal disproportionate share from the category," Burger King's CFO told employees in an email notifying them of the test. Burger King franchises are allowed to set their own prices, and a handful of L.A.-area Burger Kings are already selling the sandwich for $0.99. Widening the challenge could ultimately be harmful to both Burger King and its rivals; as the WSJ notes, the "burger battles" of 2000 and 2003 took a toll on many industry participants. Still, the company appears to believe it has no choice. "The fact remains that we are still at a double-digit disadvantage to McDonald's and Wendy's in 'Best Value for the Money' ratings," said Russ Klein, president of global marketing, strategy and innovation. Burger King's Value Menu represents approximately 12% of total sales, while McDonald's Dollar Menu accounts for 23% of revenue and Wendy's Super Value Menu accounts for 25%.

Sources: Wall Street Journal, Reuters
Commentary: Burger King Beats; Announces Secondary Offering • Eleven Fast Food Stocks To Take A Bite Out Of
Stocks to watch: BKC. Competitors: MCD, WEN, YUM. ETFs: FXD
Earnings call transcript: Burger King F1Q08

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