Hot Dog! Burger King Has a Surprise Hit on Its Hands

By Markets Fool.com

It always seemed a little bit odd, at least to me, that fast food leaders McDonald's and Burger King, which is owned by Restaurant BrandsInternational (RBI) , did not have hot dogs on their menus.

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The tasty tubes of questionable meat fit well with the core burgers and fries menus both chain offer, yet neither had ever successfully marketed them. McDonald's had long operated under a ban on adding hot dogs to its menu because company founder Ray Kroc was against it, something he elaborated on in his book Grinding It Out: The Making of McDonald's.

"There's damned good reason we should never have hot dogs. There's no telling what's inside a hot dog's skin, and our standard of quality just wouldn't permit that kind of item," he wrote in the book.

Despite that clear injunction, Kroc's wishes were ignored and McHotDogs were tried at various times throughout the 1990s and early 2000s, but are no longer available, except in Japan.

That left an easy-to-prepare, cheap-to-make, high-margin item that Americans eat about 20 billion of each year, according to the National Hot Dog and Sausage Council, off of the menu at the two leading fast food chains in the country.

Until now, that is. Burger King changed the status quo on Feb. 11 launch of its Grilled Dogs line, which has so far met with resounding success.

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What is a Grilled Dog?
Burger King describes its new Grilled Dogs as "100% beef and flame-grilled to perfection on the same grill where the Whopper sandwich is made," according to a press release. The company also points out that by rolling out hot dogs across all its locations, it's now serving hot dogs in more restaurants than any other chain in the United States.

Grilled Dogs come in two varieties. Source: Burger King

The company offers its new hot dog in two varieties. The Classic Grilled Dog is a flame-grilled hot dog, topped with ketchup, mustard, chopped onions and relish, served on a bun. The Chili Cheese Grilled Dog is the same beef hot dog topped with warm chili and shredded cheddar cheese, and served on a fluffy baked bun. Both are sold separately or in a combo meal.

Even Alex Macedo, the company'spresident for North American operations, noted the logic of adding to its menu a food which is so often paired with hamburgers on America's grills.

"The introduction of Grilled Dogs just made sense to our guests and for our brand," he said.

How big a hit is it?
While Burger King has not released any sales figures, its biggest franchise owner, Carrols Restaurant Group, said during its Q4 earnings call that it was selling a lot of Grilled Dogs, Nation's Restaurant News reported.

"There has been an overwhelming response," CEO Dan Accordino said on the call. He also pointed out that during the time period he was talking about, advertising for Grilled dogs had not even started.

"We are selling between 80 and 120 grilled hot dogs per store per day," he said, "with no advertising."

Those are solid early numbers, but the full results won't be known until RBI reports and investors learn whether selling hot dogs brought in new customers, adding to same-store sales.

What happens next
It appears that Burger King has a hit on its hands, and the competition is taking notice. Sonic, which has long sold hot dogs, has started playing up that fact in its advertising, and launched a promotion around it's $1 Lil' Doggies mini hot dogs at about the time its rival entered the fray with Grilled Dogs.

The big question here, however, is whether McDonald's will see its rival's success and relaunch the McHotDog or something similar. Fast food has always been a me-too business, with a success by one burger chain being quickly copied by its rivals. And, while executives for the leading burger chain have not commented about adding hot dogs to their menu, it's clear based on a the company's website in the United Kingdom that the door is not entirely closed.

That site, like the U.S. one, has a section where questions from customers are answer and, of course, a query was posted about why the chain does not sell hot dogs.

"McDonald's has previously sold a promotional Hot Dog, which was available for a short period of time. It is no longer in restaurants but keep your eyes peeled as it may reappear in the future if there is enough demand for it," wrote the company.

That's not a yes, but it's also not a no, and you can imagine that if Burger King's Grilled Dogs prove to be a revenue driver, then McDonald's will find a way to answer with its own take on the tubular treat.

The article Hot Dog! Burger King Has a Surprise Hit on Its Hands originally appeared on Fool.com.

Daniel Kline has no position in any stocks mentioned. He very rarely eats hot dogs and generally only at barbecue. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.