Burger King and McDonalds May Make Peace but Could Lose War

Posted by Leonard Fuld on Aug 26, 2015 4:17:00 PM

Burger King McDonalds

I practically choked on my breakfast this morning when I read the headline: Burger King challenges McDonalds to combine their flagship burger products into a McWhopper, for one day in honor of Peace Day on September 21.

First of all, what will a mongrel product that looks like a very unhealthy food pyramid (Don’t waste your breath Michele Obama) do for world peace? How irrelevant and self-centered!  As if world anything revolves around burgers.

Let’s put aside – for a blessed moment – the promotional stunt’s intent to grab attention in this flighty, media-rich world. No one will argue the fact that Burger King has won a small battle here, whether or not McDonald’s agrees to even come to the Yalta food table to negotiate a one-day truce.

Unintended consequences, Kodak and Polaroid, and competitive blinders.

These are just a few instinctive reactions to this announcement. The McWhopper news release stirred up a raft full of competitive questions that perhaps Burger King may have wanted to avoid.

Irrelevant competition: Just over 26 years ago Polaroid won a nearly decade-long intellectual property law suit against Kodak. Polaroid accused Kodak of patent infringement when Kodak launched its own instant photo cameras. Polaroid won the case and just over $900 million dollars. In effect, both companies lost. While they were battling in the chemical photography ocean, digital cameras and inkjet printers began their incessant march to snatch market share from the incumbents. By the turn of the 21st century both companies had become irrelevant and soon thereafter declared bankruptcy.

There’s a lot of similarity between the burger giants and the Kodak/Polaroid story. Sales at both restaurant chains have slipped and the market looks saturated in the US. While these two fast food behemoths are circling the ring, trying to wrestle the other to the mat, other restaurants have entered the market with a different proposition, casual fast dining. These include Shake Shack, Chipolte and Panera. All offer arguably healthier menus and a more relaxed, less “plastic” dining experience.

Whoever wins from hybrid products? Can you imagine Honda and Toyota proposing a Toyanda? Or, Chrysler and Mercedes…oh, we tried this experiment and it didn’t work out too well. The Internet has made most markets so transparent, it eliminated middlemen distributors and forced prices to their lowest levels across most industries. You may choose to argue with me but I believe that by artificially combining the Whopper and the Big Mac, you force unwanted consumer scrutiny. Why is the Whopper’s burger larger? Broiled, eh? Is the Secret Sauce on the Mac really better than the Whopper’s toppings? None of this is really good for either company.

Distractions from the disruption: Disruptions can take as long as 25 years to emerge but when they do strike, they come fast and furious. 

Just note the economic turmoil this past week, largely believed to be the result of China’s shaky economy. Harvard economist, Kenneth Rogoff, forecasted this event many years ago. “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could,” Mr. Rogoff said this past Monday.

The intelligence on the Kodak/Polaroid digital tsunami was out there just about a quarter century before it destroyed the value of both firms (in fact Kodak itself invented the light sensing chip that became the heart of digital photography back in 1975).

McDonalds and Burger King have not been able to make the major changes they need to in order to thrive – not just survive – over the coming years. Yes, they have converted some company-owned stores into franchises and closed others, which can improve the bottom line. Though that does nothing for the long-term. It does not fix the essential competitive challenge both face.

The long-term question for both companies is not answered by a promotional stunt. Twitter feeds live and die in the same amount of time as the short life of a fruit fly. What these companies need to do is to check the 20-year horizon and ask themselves if a McWhopper will address this challenge.

Photo source: http://www.wwaytv3.com/2015/08/26/burger-king-to-mcdonalds-lets-make-a-mcwhopper/

Topics: Competitive Intelligence, Consumer Goods, Brand Insights, Fuld + Company, Innovation, Fuld, Leonard, Competitive Strategy

Fuld + Company Blog

The material on this page draws on the research and experience of Fuld + Company thought leaders, consultants and others. Learn more about our expertise here.

Recent Posts

Request for Information

If you'd like someone at Fuld to contact you regarding your strategic competitive challenges, fill out the form below.