Burger King's Whopper revamp lifts US sales 8.5% past Wendy's slump

A corporate chef who once worked magic at Popeyes overhauled the Whopper, and the recipe change is helping Burger King overtake Wendy's in the burger wars.

Burger King's US same-store sales rose 8.5% in the second quarter, outpacing McDonald's 0.8% growth as a Whopper overhaul drives a comeback.

"We're selling a lot more full-priced whoppers, and it's a great value on a standalone basis," Sami Siddiqui, chief financial officer of Restaurant Brands International, Burger King's parent, said on the company's earnings call.

Whopper sales have climbed 20% since the chain unveiled the revamped burger in February, overseen by a corporate chef who previously worked at Popeyes. Burger King's US and Canada same-store sales grew 8.6%, beating the 6.2% analysts expected, while adjusted operating income rose 13%. Wendy's, by contrast, reported US same-restaurant sales down 7% and cut its dividend to fund a turnaround.

The divergence reshapes a US burger market where McDonald's still leads with $139 billion in systemwide sales last year, versus $29 billion for Burger King and $14 billion for Wendy's. Burger King plans to spend $700 million on restaurant revamps and technology through 2028.

Value menus and the K-shaped economy

McDonald's stumble comes as the economy has split along income lines, with lower earners cutting back on dining out. McDonald's customers skew lower-income than many rivals, said R.J. Hottovy, head of analytical research at location analytics firm Placer.ai. CEO Chris Kempczinski acknowledged the chain "simply didn't execute at the level we needed to" rolling out its value menu of items under $3.

Burger King has leaned into value with its $5 Duos and $7 Trios, letting customers pair a Whopper Jr. with chicken fries. "Providing great value across the menu with the right mix is really the formula," Siddiqui said.

Rivals beyond the drive-thru

Burger King also faces competition from sit-down chains and convenience stores. Chili's has turned around its results partly by selling burgers that compete on price with McDonald's, including its Big QP Burger. Convenience-store operators such as Sheetz, Wawa and Buc-ee's have also become more credible for fast food, Hottovy said.

Restaurant Brands International (NYSE: QSR) shares fell about 2% after the quarter as weakness at sister brands offset Burger King's strength. Tim Hortons posted flat comparable sales of 0.1% and Popeyes slipped 5.2%, a fifth straight quarter of domestic contraction.

The Whopper revamp gives Restaurant Brands a growth engine even as its other chains lag. Investors will watch whether Burger King sustains its momentum through the holiday quarter as the chain rolls out more store refreshes.

This article is for informational purposes only and does not constitute investment advice.