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Burger King Modifies Value Menu

Zacks Equity Research

The world’s No. 2 hamburger chain Burger King Worldwide (BKW) has undertaken a series of initiatives such as unit expansion, reimaging, closing underperforming units and several other growth initiatives to improve brand recognition. The new addition is also part of the company’s brand-building efforts.

Recently, Burger King altered its “Value Menu” by including items that cost about a dollar. The new version of the menu named “KINGDEALS Value Menu” is expected to hit the U.S. stores this year.

The restaurateur added two limited-time products to its KINGDEALS Value Menu options priced at only $1. Along with these new offerings, the restaurateur offers 20 other items under its value options.

The Value Menu — launched more than a decade ago — has been a driving force in generating sales even in the time of recession. Over the years, management has been trying to shore up this line.

The Zacks Rank #3 (Hold) company continues to gain market share, driven by price value proposition and premium limited-period offerings. In Nov 2013, the company rolled out a new item — BBQ Rib Sandwich — for only a dollar throughout the U.S. This limited-time offer comes on the heels of the overwhelming demand for BBQ fire-grilled flavors. 

Innovation and introducing new items have become a trend among all the restaurateurs. Another hamburger restaurateur, The Wendy's Company (WEN), added two spicy items to its Right Price Right Size Menu options in Dec 2013. These two limited-time products — Spicy Chipotle Crispy Chicken Sandwich and Spicy Chipotle Jr. Cheeseburger — have been priced at only 99 cents. These items have been launched to tap the demand for spicy foods.

Other Stocks to Consider

Some better-ranked stocks in the restaurant industry include Fiesta Restaurant Group, Inc. (FRGI) and Cracker Barrel Old Country Store, Inc. (CBRL). While Fiesta Restaurant sports a Zacks Rank #1 (Strong Buy), Cracker Barrel carries a Zacks Rank #2 (Buy).

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