If you're looking for a quick nibble on the go, your best bet is probably fast-food. Fast-food restaurants have been a big part of our culture for decades, providing hungry people with quick meals that are relatively inexpensive. There's no doubt that McDonald’s (MCD) is one of the biggest names in the industry, with a lengthy history of innovation and brand marketing that's almost second to none.
But as consumer tastes change, restaurants like McDonald's find themselves continuing to keep up with demand. Other players have made their way into the market, harmonizing the idea of fast food with higher-quality food choices. Collectively, brands that fall into this category make up the fast-casual segment of the market.
This article looks at McDonald's and its place in the industry, along with some of its biggest competitors in both the fast-food and fast-casual markets.
- McDonald's is one of the largest and most well-known fast-food chains in the world.
- Privately-owned Burger King is McDonald's closest competitors.
- Yum! Brands operates names like Taco Bell, KFC, and Pizza Hut with more than 49,000 locations worldwide.
- Subway is the largest restaurant chain in the world in terms of size, but sales have been sliding since 2012.
- Chipotle was formed as a spinoff from McDonald’s with a 2006 IPO and offers a range of Mexican-inspired menu items.
McDonald's: An Overview
The first McDonald's restaurant opened in San Bernardino, California, in 1948 by two brothers—Maurice and Richard McDonald—who sold their hamburgers to hungry people for 15 cents each. This concept of fast food, which eliminated the need for wait staff, worked out so well, that it developed into a franchise system. In 1955, salesman Ray Kroc opened the first franchise in Des Plaines, Illinois, where he opened the corporation.
Since then, McDonald's has expanded, with more than 37,000 locations in more than 100 countries. The chain's popularity increased with the public when the company introduced the famous golden arches as its logo in 1962 and Ronald McDonald the following year.
What's on the Menu?
What first began as a simple offering of hamburgers, french fries, milkshakes, and soft drinks, the restaurant's menu expanded to include popular items like the Big Mac, Quarter Pounder, Chicken McNuggets, and the Filet-o-Fish. McDonald's also has seasonal items like the Shamrock Shake, which it offers for a limited time at certain times of the year. Other less successful ventures included pizza and curly fries.
The restaurant's menu items generally vary based on tastes and country. For example, McDonald's offers the McLobster sandwich in eastern parts of North America—primarily in the Canadian Maritimes and New England. In India, beef and pork are not served at all. Instead, the chain offers vegetarian burger options, along with chicken sandwich options. In Europe, you can get a chicken version of the Big Mac, and beer is also on the list of menu items.
The chain also expanded some of its specialty offerings including its McCafe coffee, serving specialty beverages. In an attempt to bring loyal customers back to the counter, McDonald's also rolled out its all-day breakfast menu, serving popular items like the Egg McMuffin, McGriddles, and Hotcakes at many of its locations.
McDonald's reported revenue of $21.02 billion for the full year ending 2018. As of Jan. 13, 2020, the company's market capitalization was around $156 billion, with the stock trading at about $206 per share. The average trading volume as of that date was roughly 4.09 million.
The burger giant continues to make changes aimed at increasing its market share. In September 2018, for example, the chain cut out artificial ingredients from its seven classic burgers: the hamburger, cheeseburger, double cheeseburger, McDouble, Quarter Pounder with Cheese, Double Quarter Pounder with Cheese and Big Mac.
But it faces some big competition from the likes of other quick-service brands such as Burger King, Wendy’s (WEN), Taco Bell, KFC, and Subway. Fast-casual restaurants are also close competitors, with names like Chipotle Mexican Grill (CMG) and Panera Bread Company. Starbucks (SBUX) is a specialty quick-service brand with some offerings that overlap those of McDonald’s.
Burger King is probably one of McDonald's biggest and closest competitors, with its staple Whopper challenging the Big Mac in the sandwich war. The company’s menu includes breakfast, lunch, and dinner items available a la carte. Hamburgers, chicken sandwiches, chicken tenders, french fries, and beverages are categories featured on the menu. Burger King recorded over $1.65 billion in revenue for the full year ending 2018.
Burger King is one McDonald's biggest and closest competitors.
As of the end of 2018, Burger King had more than 17,000 locations in more than 100 countries, with roughly 11 million daily visitors worldwide. Nearly all of those locations are owned by independent franchisees. Once a publicly-traded company, Burger King became private after it was purchased by 3G Capital in 2010 for $3.3 billion. Shareholders received $24 per share in cash. Burger King is owned by parent company Restaurant Brands International—which also owns Tim Hortons and Popeyes—in which 3G Capital has a 51% stake.
Wendy’s is a fast-food restaurant chain with more than 6,700 locations worldwide. Its menu includes hamburgers, sandwiches, chicken products, and side dishes like fries, chili, and baked potatoes.
As of Jan. 13, 2020, Wendy's had a market cap of $4.97 billion, with the stock trading around $22 per share. The average trading volume as of that date was 2.88 million. The company reported 2018 revenue of $1.59 billion, though total system sales were higher because sales at franchised locations are not included in consolidated revenues.
Yum! Brands (YUM) operates several large quick-service restaurant chains including Taco Bell, KFC, and Pizza Hut. As of January 2020, the company has more than 49,000 restaurants in more than 140 countries, and more than 97% of them are franchised.
Taco Bell serves fast-food breakfast and lunch dishes inspired by Mexican cuisine including tacos, burritos, nachos, and related specialty items. KFC serves various chicken dishes and sandwiches, along with sides and beverages. Pizza Hut is a quick-service pizza restaurant chain.
The company's stock was trading around $101 per share and had a market cap of $30.72 billion as of Jan. 13, 2020. The company's revenue exceeded $5.69 billion for the full year in 2018.
Subway is the largest restaurant chain in the world in terms of size, with nearly 44,000 locations in more than 100 countries. All Subway locations are owned by franchisees, of which there are more than 21,000. The company’s menu consists primarily of sandwiches and salads.
Subway reported 2018 sales of $10.4 billion in the U.S., but its sales have been falling since 2012. Since Subway is a privately-held company, it isn't traded on any stock exchange.
Chipotle is a fast-casual restaurant chain serving tacos, burritos, bowls, and salads. The company was formed as a spinoff from McDonald’s with a 2006 initial public offering (IPO). Chipotle operates more than 2,460 locations in the U.S., Canada, the United Kingdom, Germany, and France—none of which are franchised. The company has a higher price point than its fast-food competitors, and its slogan is "food with integrity."
The company was hit with a number of back-to-back food-related problems. Between March 2008 and February 2009, Chipotle was the subject of a hepatitis and norovirus outbreak. Then, in 2015, it was embroiled in multiple E. coli, norovirus, and salmonella outbreaks. Sales suffered, but the chain managed to turn things around.
Chipotle reported revenue of $4.9 billion in 2018. As of November 2018, Chipotle’s market cap is $24.13 billion.
Starbucks is the world’s largest coffeehouse chain. As of November 2018, the company operates more than 30,000 stores in 76 countries, including more than 14,000 in the United States. None of the company’s U.S. locations are franchises. Starbucks serves coffee, espresso, cappuccino, tea, pastries, sandwiches, and other foods and markets itself as a high-quality option at a high price point.
The company reported full-year 2018 revenue of $24.7 billion, making Starbucks the second highest-selling U.S. chain restaurant behind McDonald’s. As of January 2020, Starbucks’ market cap is $108.23 billion.