Who's Disrupting The Restaurant World?

Citi issued a report on the fast food restaurant industry highlighting McDonald's Corporation MCD and Yum! Brands Inc. YUM. Analyst Gregory Badishkanian discussed major innovations that are being conducted by both restaurants that may significantly change the landscape of the industry.

McDonald's CEO Steve Easterbrook has embarked on a handful of initiatives to change the company's perception and increase its sales.

• Create Your Taste: This high-end platform would allow customers to fully customize their burger including toppings, buns and sauces. However, there is a concern among franchisees about the capital investment needed to implement this initiative.
• Sirloin Third Pound Burgers: Priced at $5, analysts are concerned that customers would be unwilling to pay that much for a McDonald's burger.
• All-Day Breakfast: Franchisees are concerned that this initiative will slow down service times. However, according to the National Restaurant Association, 72 percent of adults say they wish restaurants would offer breakfast items throughout the day.
• Antibiotic-Free Chicken: McDonald's has pledged to phase out chicken raised with antibiotics that are important to human health.
• Wages: McDonald's has said that they will pay at least $1 more than minimum wage for all employees. However, this will only affect the 1,500 restaurants McDonald's owns, not any of the franchisees.

Related Link: Restaurants Face Comps Headwind In FY15, According To Wunderlich

Yum! Brands is experimenting with new menu items for its Taco Bell locations. The company is focusing on its breakfast offerings, combining traditional breakfast favorites such as scrambled eggs with tacos. Along with other restaurant companies, Yum is implementing customization options to its Taco bell locations. It is allowing customers to substitute meat options in their tacos and quesadillas.

Yum! Brands is scheduled to post earnings after Tuesday's market close.