Saturday, July 10, 2004

Salads helping Wendy's sales

Burger King in danger of losing No. 2 spot

By Sara Thorson
The Associated Press

COLUMBUS - The burger wars aren't being fought with burgers, but with salads.

Wendy's is neck-and-neck with rival Burger King, poised to take over as the nation's No. 2 restaurant chain behind McDonald's, analysts said Friday.

But its burgers aren't what put the company there. Analysts say the suburban Columbus chain's salads and atmosphere attract adult fast-food eaters, a niche market not covered by McDonald's often kid-focused strategies.

Wendy's U.S. sales for its hamburger stores last year were about $7.3 billion, while Miami-based Burger King had sales of about $7.9 billion during the same period, according to estimates by Technomic, a Chicago company that tracks food-service industry trends.

But Peter Oakes, a restaurant analyst with Piper Jaffray, said his estimates showed Wendy's and Burger King in a dead heat for 2003 sales - at $7.3 billion each.

Oakes predicted Wendy's sales would exceed Burger King's by about $200 million in 2004.

Either way, analysts agree Wendy's is quickly closing the gap. Technomic estimates show that Wendy's was $1.5 billion behind Burger King in U.S. sales in 2002, compared with $600 million in 2003.

"It's highly likely that Wendy's will overtake Burger King in 2004," said Bob Goldin, executive vice president of Technomic. "A lot of that depends on how many units Burger King closes."

According to Burger King's Web site, it has 225 fewer stores now than it did in 2003, leaving it with 7,679. Meanwhile, Wendy's has set a goal to expand further into New England and California, building its U.S. store base to 8,500 to 9,500 stores by 2015. The chain now has 5,761 U.S. stores.

In Greater Cincinnati, Wendy's has 65 restaurants to Burger King's 47.

Burger King recently reported its fifth straight month of increased sales for stores open more than a year, but Morningstar Inc. analyst Carl Sibilski said that's still not encouraging.

"I highly doubt that this is a turnaround for them," he said. "Their CEO has departed and they seemed confused over their marketing strategy."

Burger King chief executive Brad Blum left this month over strategic differences with its board of directors. ---

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