Burger King, Wendy's Testing New Burgers

By Markets Fool.com

The fast-food battle to create novelty menu items to capture consumer attention has intensified.

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Blame Yum! Brands (YUM) for pushing boundaries with its Doritos Locos Tacos at Taco Bell, its bacon and cheese stuffed crust at Pizza Hut, and Kentucky Fried Chicken's move to use fried chicken as bread. It's no longer enough to add barbecue sauce to a burger or get a celebrity endorser to pitch a new sandwich.

In 2016, rising above the noise in order to get attention means new flavors, bold ideas, and offering up things people want but maybe never thought of before. We're not quite at the "Hot Fudge Burger," but you have to imagine it has been suggested.

Two leaders in the burger space -- Wendy's (WEN) and Restaurant Brands International's (QSR) Burger King -- both have new hamburger concepts in the testing stage that could be the next big fast-food hit.

 

What is Wendy's doing?

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One way to gain attention for a relatively low-brow food like a hamburger is adding upscale ingredients. That's why chains have tried grass-fed beef, heirloom tomatoes, and cheeses not normally found in fast-food restaurants on burgers in recent years. That's the direction Wendy's has chosen for its new hamburger, the Truffle Bacon Cheeseburger.

Truffles are an exotic ingredient, something that scream "class" while not being scary to customers. This is not a pate or a caviar burger. It's a hamburger with a bit of fancy mushroom. The new burger, which was discovered by GrubGrade, is being tested at a Wendy's in Billerica, Massachusetts.

The new hamburger comes with truffle aioli, truffle parmesan cheese sauce, and a croissant bun. At the test location, it was priced at $4.99 for just the burger or $7.09 for a combo meal with fries and a drink. In addition, the same location offered Bacon Truffle Fries, a variation on the bacon cheese fries the chain has been selling.

 

What is Burger King doing?

 

If Wendy's is trying to act all fancy with its new burger, Burger King has decided to go decidedly more downmarket. It has ripped a page out of the Taco Bell handbook by offering a burger topped with Doritos.

Given the massive success of the Doritos Locos Taco, this is not a bad idea, and it's one Burger King has been testing in Spain, Fortune reported. Unlike the Taco Bell Doritos products, which morph the snack chip into a taco shell, Burger King has opted to keep things simple. The new Steakhouse Doritos Burger is a handful of Doritos on top of two hamburger patties served topped with cheese.

Spain is one of Burger King's largest markets outside the United States, and if the Steakhouse Doritos Burger does well there, it's logical that the chain that brought you Mac 'n Cheetos will bring it to its home market.

 

Why are Burger King and Wendy's doing this?

 

The fast-food business has become an arms race where the various chains compete for attention. One way to do that is discounting, which all the major players have done, but that's a mixed blessing because it brings in low-margin traffic.

Special items, especially outrageous ones, can bring customers through the door. The problem is that the bar for novelty has been continuously raised to the point that truffle sauce and topping a burger with some Doritos may not be enough to get people interested.

Items like these new burgers can be very lucrative because they can bring in new traffic and lead to higher checks per customer. These novelty products tend to be sold at a premium price, which raises margin.

The challenge is having an offer that tempts people enough that they will not only come to you store, but forgo your cheaper discount offers to try it. It's hard to know whether either of these two new offerings meets those standards, but you can assume both Wendy's and Burger King will continue to try to innovate in ways that will intrigue the public.

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