McDonald’s Corporation (MCD), Red Robin Gourmet Burgers, Inc. (RRGB): The Burger Wars – Who’s Winning

The aforementioned Buffalo Wild Wings (NASDAQ:BWLD), the beer, wings, and sports themed chain, has also been offering burgers as a way to hedge previously high chicken wing commodity costs and attract customers. I’ve liked Buffalo Wild Wings (NASDAQ:BWLD) but at a 30.26 P/E and at 52-week highs after March Madness, now is not the time to buy in. It has good corporate governance, reasonably paced expansion plans, PEG at 1.33, and a great CEO in Sally Smith. Still, the stock tends to droop in the summer heat and there will be sales on the shares.

The King storms the castle

Burger King Worldwide Inc (NYSE:BKW) which was brought public (again) last summer, is the second largest fast food hamburger chain globally. The stock is up close to 40% since its September low at $13.00.

Its P/E is supersized at 55.42 but it has a yield of 1.30% (at a sustainable 12% payout ratio) and the lowest PEG of these at 1.28. Burger King operates 11,707 company owned and franchised restaurants worldwide. While it may be a faster grower its operating margin is 26.69%, compared to 30.21% at McDonald’s Corporation (NYSE:MCD). Its short interest is Whopper sized at 14%.

Burger King Worldwide Inc (NYSE:BKW) announced a stock buyback of $200 million through 2016 and raised the dividend by 20%.

Burger King has been challenging McDonald’s with their own version of gourmet burgers: Chipotle Mexican Grill, Inc. (NYSE:CMG) burgers, turkey burgers, veggie burgers, and the bacon cheddar stuffed burger (you can order it with bacon and cheddar loaded tater tots as your side…mmm bacon). It’s also offering the Whopper Jr. for $1.29.

Something to remember is that 3G Special Situations Fund, which took Burger King Worldwide Inc (NYSE:BKW) private in 2010 and then public last summer, still owns the lions’ share of stock. They have appointed Burger King’s CEO Bernardo Hees to head Heinz as part of the deal 3G has with Berkshire Hathaway on their Heinz deal together. Daniel Schwarz will become new Burger King CEO.

Burger King reports on April 26.

Winning the battle or the war

McDonald’s Corporation (NYSE:MCD) is still the multinational behemoth, a mature grower with a good yield, a Dividend Aristocrat no less, and boasts over 100 billion served (as of 1993) and a $100 billion market cap.

Burger King has kept up with McDonald’s every move since going public, however. Not only that, the share repurchase and dividend increase should attract value investors.

Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)’s Burger Works will increasingly challenge McDonald’s (Burger King as well) as it takes a fast food approach to expansion. Its Burger Works may be a small fry now but watch out, Mickey D.

The article The Burger Wars and Who’s Winning originally appeared on Fool.com and is written by AnnaLisa Kraft.

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