MIAMI Burger King seems set to heat up the burger and value wars with a $1 double cheeseburger this summer.
According to securities analyst David Palmer and published reports, Burger King franchisees will vote this week on whether to introduce a $1 double cheeseburger this summer, only months after rival McDonald's removed its double cheeseburger from the chain's popular Dollar Menu.
McDonald's raised the price of its standard double cheeseburger to $1.19 late last year in the face of escalating food costs and franchisee complaints that a profit could not be made on the item. On its Dollar Menu, McDonald's replaced the double cheeseburger with a McDouble, which included one less slice of cheese.
ABurger King spokeswoman would not confirm whether a $1 double cheeseburger may be on the menu soon, except to say that "many product and menu options are always in development and under consideration."
Palmer, an analyst at UBS Securities LLC in New York, wrote in a report this week that Burger King's move could be a "major value introduction."
"The impact would be a significant lift to Burger King traffic trends, but a hit to food costs," he said. "The introduction could hurt traffic trends at burger competitors, and encourage competitive response."
Additional discounting among fast-food players also could further hurt any recovery at casual-dining or other full-service chains, Palmer also noted.
He estimated that Burger King's same store sales fell between 3 percent and 4 percent in June, after a 4-percent to 5-percent decline in May. Meanwhile, McDonald's continued its same-store sales surge, posting a 2.8-percent increase in May at domestic stores.
As consumers remain tight-fisted in their spending habits, restaurants have been focused on lower-priced items to draw guest traffic, sometimes even at the expense of profit margins. The quick-service sector has benefited from traffic gains from $1 items or $4 or $5 meals. KFC and Sonic both introduced national value menus this year, and Subway's $5 Footlong promotion has been a big hit with customers.
Contact Sarah E. Lockyer at [email protected].
