Chess pieces representing McDonald's and Burger King on a map of the U.S.

Strategic Moves: How Fast Food Giants Play the Game of Location and Information

Elliot Brynn in Business & Economy December 2025 • 4 min read.

"Uncover the hidden strategies McDonald's and Burger King use to dominate markets, from secret insights to counter moves."

In the high-stakes world of fast food, success isn't just about having the best burger. It's a strategic game where location is everything, and knowing your competitor's next move is crucial. Think of it as a real-time chess match, where McDonald's and Burger King are constantly reacting to each other's decisions, all while trying to grab the biggest slice of the market. But what drives these decisions? Is it all about secret market research, or is there more to the story?

For years, economists and industry experts have tried to decode the intricate dance between these fast-food behemoths. Traditional models often assume that companies like McDonald's have a complete picture of the market, with perfect knowledge of customer preferences, competitor strategies, and potential profits. But in reality, information is often incomplete, and companies must make decisions based on educated guesses and calculated risks.

A recent study sheds new light on this complex decision-making process, introducing a novel framework called "Bayes stable equilibrium." This approach acknowledges that companies don't always have all the answers but learn from each other's actions and adapt their strategies accordingly. By examining the entry and exit decisions of McDonald's and Burger King in various markets, researchers are uncovering the hidden strategies that shape the fast-food landscape.

Decoding the Fast-Food Strategy: Location, Location, Location

Chess pieces representing McDonald's and Burger King on a map of the U.S.

The study highlights that in dynamic settings where firms can react after observing their opponents' choices, intuitions suggest firms' actions would change over time. However, in many strategic settings, stable outcomes are characterized by players publicly observing decisions without deviating. This article analyzes such situations with incomplete information, constructing a novel "Bayes stable equilibrium" framework to analyze such scenarios.

Bayes stable equilibrium facilitates estimating games with weak assumptions on players’ information, leveraging the observability of actions at equilibrium situations. The framework offers a tractable equilibrium notion, satisfying consistency and facilitating econometric analysis. Key benefits include:

Strategic Agility: Firms react and revise strategies based on rivals' actions.
Real-World Relevance: It acknowledges that companies often lack complete information and make educated guesses.
Informational Robustness: The framework remains valid even when analysts don't know the exact information structure governing firm decisions.
Computational Efficiency: It provides practical methods for estimating and testing hypotheses.

By applying this framework to the fast-food industry, researchers can understand how the strategic decisions of McDonald's and Burger King are influenced by market information. The framework addresses the consistency issue and facilitates econometric analysis, allowing for flexible assumptions about player information.

The Future of Fast-Food Strategy: Adapting to a Changing World

As consumer preferences evolve and new competitors emerge, the strategic dance between fast-food giants is sure to become even more complex. By understanding the underlying principles that drive these decisions, businesses can gain a competitive edge and adapt to the ever-changing dynamics of the marketplace. The lessons learned from McDonald's and Burger King offer valuable insights for any company seeking to thrive in today's competitive world.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1016/j.jeconom.2023.105499,

Title: Stable Outcomes And Information In Games: An Empirical Framework

Subject: econ.em

Authors: Paul S. Koh

Published: 10-05-2022

Everything You Need To Know

Why do McDonald's and Burger King often open restaurants near each other?

The strategic placement of McDonald's and Burger King locations is a key aspect of their competitive strategy. They engage in a real-time chess match, constantly reacting to each other's decisions. The proximity is a result of their understanding of market information, their anticipation of competitor's moves, and their adaptation to stay ahead in the competitive landscape. This is part of their strategic game where location is everything.

What is 'Bayes stable equilibrium,' and how does it relate to the fast-food industry's strategic decisions?

The 'Bayes stable equilibrium' is a novel framework that acknowledges the incomplete information that McDonald's and Burger King operate under. Unlike traditional models that assume perfect knowledge, this framework recognizes that companies learn from each other's actions and adapt their strategies accordingly. By examining the entry and exit decisions of the fast-food giants in various markets, researchers are uncovering the hidden strategies that shape the fast-food landscape. It facilitates estimating games with weak assumptions on players’ information, leveraging the observability of actions at equilibrium situations.

What are the main benefits of using the 'Bayes stable equilibrium' framework?

The 'Bayes stable equilibrium' framework offers several key benefits: Strategic Agility, allowing firms like McDonald's and Burger King to react and revise strategies based on rivals' actions. Real-World Relevance, acknowledging that companies often lack complete information and make educated guesses. Informational Robustness, which means the framework remains valid even when analysts don't know the exact information structure governing firm decisions. Computational Efficiency, providing practical methods for estimating and testing hypotheses.

How does the concept of 'strategic agility' apply to the competition between McDonald's and Burger King?

Strategic agility, as described in the context of 'Bayes stable equilibrium', is crucial for McDonald's and Burger King. It means that they constantly monitor each other's moves, such as new locations or promotional campaigns, and swiftly adjust their own strategies in response. For example, if McDonald's opens a new restaurant in a specific area, Burger King might then evaluate the situation and decide to open a nearby location to compete directly for the same customer base. This reactive and adaptive behavior is a defining characteristic of their competitive relationship.

How can businesses apply the lessons learned from McDonald's and Burger King's strategic decisions in today's competitive landscape?

Businesses can apply the principles demonstrated by McDonald's and Burger King by understanding that success hinges on strategic location decisions, market research, and anticipating competitors' moves. The 'Bayes stable equilibrium' framework provides insights into how to make decisions with incomplete information, a common scenario in the business world. Businesses should focus on strategic agility, real-world relevance, and informational robustness, adapting to consumer preferences and emerging competition. By understanding these underlying principles, businesses can gain a competitive edge and thrive in the ever-changing marketplace.