At Wal-Mart, Subway Winning A Turf War With McDonald’s

MarketWatch:

Wal-Mart Stores Inc. is losing its taste for burgers and fries.

Subway, the fast-food chain that likes to promote its sandwiches as a healthy alternative to traditional fried and grilled fare, began doing business with the world’s largest retailer only three years ago. But from a lone restaurant inside a Wal-Mart in Ozark, Ala., Subway has quickly overtaken McDonald’s Corp. as Wal-Mart’s primary fast-food concessionaire across the U.S.

At one time, McDonald’s was the exclusive in-store restaurateur for Wal-Mart. But now Subway, a unit of closely held Doctor’s Associates Inc. of Milford, Conn., is in 1,419 Wal-Marts compared with 1,021 McDonald’s. So far this year, Subway has opened 105 Wal-Mart locations in the U.S. – more than three times McDonald’s’ 34.

In some ways, Subway’s rapid rise at Wal-Mart isn’t surprising. The sandwich chain has been expanding at a torrid clip worldwide while McDonald’s has been reining in growth, focusing on boosting sales and returns at existing locations. Also, a restaurant inside a Wal-Mart can’t operate a drive-thru window. That’s a big drawback for the hamburger giant, which does about half its business with motorists.