Burger Wars

by Elaine Schwartz    •    Mar 21, 2012    •    1258 Views

By Mira Korber, guest blogger.

Times have changed. Wendy’s is now the second largest fast food chain restaurant in the US.

This interesting Atlantic article describes how Wendy’s savvy marketing pushed BK from second place to third. By focusing on quality food instead of comic advertising, Wendy’s successfully finished 2011 with higher revenue than Burger King, though it claims 1,300 fewer restaurants.

Wendy’s marketed their product as the freshest on the market, while BK attempted to lure in young men to their restaurants by using the “king” image in advertisements. It backfired.

The numbers? BK end of year sales: $8.4 billion; Wendy’s end of year sales: $8.5 billion. Oh wait…McDonald’s devoured both BK and Wendy’s with total sales of $34 billion. That’s a lot of burgers.

Read this Econlife post from 2011, before Wendy’s officially overtook BK in the final numbers.

The Economic Lesson

Wendy’s has differentiated itself by touting its healthy ingredients. Demand for Wendy’s burgers increased because healthy food also increased the utility of the product. With higher utility, more people purchased Wendy’s burgers, and it moved to the #2 spot.

An Economic Question: How do advertisements affect your demand curve for fast food?

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