Fast-Food Chains Going After Sit-Down Diner Dollars

Fast-food chains are targeting cash-strapped patrons of casual-dining restaurants with premium products that are blurring the line between the two dining categories.

One chain boosting its high-end offerings is Burger King Holdings Corp. (BKC). The No. 2 burger chain has installed a new broiler at over 60% of its stores in the U.S. and Canada that can cook foods like thicker burgers, ribs, kebabs and a host of other items that could give sit-down chains like DineEquity Inc.'s (DIN) Applebee's, Brinker International Inc. (EAT) Chili's or Ruby Tuesday Inc. (RT) a run for their money.

"The lines between a QSR and a casual diner, from a product standpoint, are starting to blur,"Goldman Sachs restaurant analyst Steven Kron said, referring to quick-service restaurants, jargon for fast-food chains.

While premium products can give a tasty boost to sales at fast-food restaurants and can help them stand out among their direct competitors, introducing them during an economic downturn may seem counterintuitive.

Burger King Chief Executive John Chidsey explains: For "someone who was having a premium burger at an Applebee's or a Chili's that's paying $9 to $11 dollars and can come to Burger King for a Steakhouse Extra Thick burger and pay $5 to $6 dollars, that's value to them."