Special Report | August 2014 | By Sam Oches

The QSR 50

In the $225 billion limited-service restaurant industry, these 50 brands reign supreme.
Biggest quick service restaurant brands build unit counts and system wide sales.
In an attempt to climb out of a same-store-sales growth funk, McDonald’s is refreshing many components of the brand. McDONALD’S
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1.

McDonald’s

There’s an age-old saying woven into kids’ vernacular, a commandment of sorts underlying playground activities the world over: “First is the worst, second is the best, third is the one with the hairy chest” (third, depending on your playground, may also have a treasure chest).

While McDonald’s executives are unlikely to complain that nearly $36 billion in U.S. sales is the “worst,” they probably don’t love that being the benchmark for the quick-service restaurant industry for decades has painted an enormous target on their backs, or that the post-recession foodservice climate has equipped competitors big and small with the kind of market-grabbing ammo they need to finally make a dent in the Golden Arches’ long-impenetrable armor.

It’s not to say McDonald’s is faltering. Business continues to grow, and the company’s stranglehold on Americans’ wallets—especially in rural and other non-urban markets—is firm; its brand affinity is deeply embedded in our culture. But these days, there’s a growing hint of urgency flowing from Oak Brook. Recent high-profile menu adds like the Premium Chicken McWrap and Mighty Wings were non-starters, while the Dollar Menu & More value menu drummed up more debate about the relationship between discounting and franchisees’ profitability than it did consumer excitement. Meanwhile, comparable sales have been a roller coaster, the waves of the nation’s wage debate have been lapping at headquarters’ doors, and competitors like Taco Bell are throwing down the gauntlet in the breakfast daypart, threatening to stake a long-term claim in a space McDonald’s has long dominated.

All of this has squeezed McDonald’s between a rock and a hard place. On the one hand, pressure is on to enhance food and service to compete with fast casuals; on the other, failed menu extensions seem to have proved that the brand might be better off sticking with the traditional burgers and fries value that made it so successful in the first place. Will customizable burgers, seasoned fries, a rejuvenated Ronald McDonald, a commitment to purchase more sustainable beef, and mobile ordering help find the right balance between the two? McDonald’s hopes so, as all have either been teased, tested, or tweeted this year as the company strives for something, anything, that will finally stick in today’s crowding industry playground.

2.

Subway

Novelty has always found its place in the quick-service industry, an industry in which consumer trends change at the drop of a dime and getting the customer’s attention in an increasingly noisy field requires a little bit of showboating. Even Subway, the largest restaurant chain in the world and as sure a bet as there is when it comes to brand exposure, has twirled its toes in the pool of novelty, this year throwing some Fritos on a sandwich (the Fritos Chicken Enchilada Melt) to see what happened and crashing New York Fashion Week with “Project Subway,” a contest to see what kind of outfits designers could come up with using only Subway packaging products.

Mostly, though, Subway has used the last year to fortify its position as a company committed to a healthy, active lifestyle. The brand expanded its athlete spokesperson campaign through a partnership with former soccer mega-star Pele, who will serve as a “global brand ambassador,” and it teamed up with First Lady Michelle Obama in her Partnership for a Healthier America (PHA), which aims to improve childhood nutrition. The latter move made Subway the first quick serve to team up with PHA and saw the brand commit to its first kid-focused marketing campaign.

3.

Starbucks

Howard Schultz is on a warpath. The Starbucks CEO, who rescued the brand from oversaturation and dilution in the mid-2000s when he returned from an eight-year retirement, has the coffee giant on the straight-and-narrow, a path clearly defined by a company culture rooted in creativity, sustainability, and social consciousness.

But the real trick up Schultz’s sleeve is in the brand diversification strategy he’s masterminded at Starbucks. The acquisitions of La Boulange, Teavana, and Evolution Fresh have given Starbucks skin in the food, tea, and juice games, respectively, while also providing the opportunity to proliferate the company culture in new ways; Oprah, for example, became a new brand partner by developing the Teavana Oprah Chai Tea, which debuted this year in Starbucks and Teavana stores nationwide, as well as in the Teavana Fine Teas + Tea Bar units the company opened in Seattle, New York, Los Angeles, and Chicago.

While Starbucks is busy rolling La Boulange and Evolution Fresh products out to more of its company-operated stores, Schultz and company are already moving on to their next diversification phase: The brand’s new craft soda line, Fizzio, debuted this summer in Golden Ginger Ale, Spiced Root Beer, and Lemon Ale flavors.

4.

Wendy’s

Perhaps no other quick-service limited-time offer has drummed up as much buzz in the last 18 months as Wendy’s Pretzel Bacon Cheeseburger did when it debuted in July 2013. The pretzel-bunned burger unleashed a widespread pretzel trend last year and led to a 3.2 percent comparable same-store sales increase in 2013’s third quarter. But Wendy’s wasn’t done in what it called the “Year of the Bun”; brioche and ciabatta burgers followed soon after the mega success that was the Pretzel Bacon Cheeseburger, all in an effort to enhance Wendy’s menu to more of a fast-casual quality. For more on how Wendy’s used the last year to give its menu, store, and brand a premium spin, click here.

5.

Burger King

When Burger King announced the launch of its Satisfries in September 2013, it was a welcome change of pace for a brand that had spent the preceding three or four years rolling out massive LTO menus and novelty products that didn’t seem to have much promise for long-term success. The Satisfries, though, gave Burger King a new kind of weapon in its menu arsenal: The french fries were the first significant healthier fry product among major quick-serve players and gave Burger King a major selling point in the ongoing nutrition conversation.

But where the Satisfries were a proactive move to get ahead of the industry in the fries department, much of the rest of Burger King’s moves in the last year seem to have been reactive. In response to the “breakfast wars” between McDonald’s and Taco Bell, Burger King inserted itself by announcing it would make burgers available during the morning daypart. After McDonald’s revamped its value menu with the Dollar Menu & More, Burger King renamed its own dollar menu the King Deals Value Menu. And to combat McDonald’s signature Big Mac, Burger King re-released its Big King burger, which had originally been discontinued in the ’90s.

With unit counts and systemwide sales both down over 2012, Burger King may want to consider its own advice found in its brand-new tagline—which replaced the 40-year-old “Have It Your Way” in May—if it wants to climb back into the top-five competition: “Be Your Way.”

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