Fast Food

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This could be the year the chain-restaurant industry shrinks, prompting what may be the most cutthroat marketing fight ever.

"There will be actual attrition," predicts Bob Goldin, exec VP for consultant Technomic. "There will be fewer units total at end of next year than there are this year by 3,000 to 5,000 fewer. That'd be a first."

Concepts like Panera Bread and Subway Restaurants will drive industry growth, he said. "The travails of McDonald's, Burger King, Pizza Hut and others is the new reality. Even Wendy's will get dragged into it."

numbers game

The numbers game could be the spin opportunity of the year. In the early part of last year, the industry posted strong same-store sales gains that later fell off, leaving an easier comparison after the second quarter of 2003. "It will be a marketer's delight," said Harry Balzer, VP at NPDFoodWorld. "We'll be working off real weak" comparisons.

"You will see things you don't expect to see because of desperate measures" among fast feeders, he said, joking that in 2003, they will try a female-targeted Asiago burger.

Sam Rovit, director-Restaurant and Food Services Group at Bain & Co., thinks burger barons will dump drastic discounts. Said Bob Sandelman, president of consultant Sandelman & Associates: "Somebody will blink."

Some foresee an end to the chess match by the second quarter. "I don't expect it to last much longer," said Joe Casper, a 52-store McDonald's franchisee. A McDonald's spokesman, however, said that "to my knowledge, there are no plans to slow down the Dollar Menu."

Most executives were uneasy at making predictions, so here are some based on their insights:

Although a well-liked operator that one insider said stopped "years of operational erosion," Mike Roberts, McDonald's U.S. president, is too linked to ousted CEO Jack Greenberg to last out the year, predicted several insiders and observers. "Mike and I are aligned and view our business and our challenges in the same way," countered James Cantalupo, McDonald's chairman-CEO, in a statement.

hardees, burger king

Few will be surprised if CKE Restaurants' gives up on its turnaround attempt at Hardee's. "I don't want to close out any possibilities in the future, but we're moving forward with the test," commented Andrew Puzder, CKE president-CEO.

And not many believe Burger King Chief Global Marketing Officer Chris Clouser will stay at the recently sold company. "Senior management is being asked to remain with the company, period," said a spokesman who said he was speaking for the company and Mr. Clouser.

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