That example has no relation at all to the topic. You seem to think that they are mutually exclusive or that "only" (in the part you have quoted) refers to something it does not. Just read what I said again.
It is reality, I worked in equity research specializing in consumer products so am reasonably familiar with the space. Consumers just see the product, but the economics are about a lot more. The actual product is but one area of competition (as I explained, just anecdotally product-focused consumer companies are the best kind of shorts because they will almost always saturate their market and be unable to build an area of solid competitive advantage...because product doesn't really matter).
I suspect you will have a problem comprehending this again, so to be clear: this does not mean that companies do not compete on product. It just means that product is often not the predominant factor.
I am not sure what you are saying but there is less competition in FMCG than QSR. Distribution consolidated heavily, and FMCGs have consolidated heavily too because the game is largely about expanding SKUs on existing distributor relationships (the economic model is actually very similar to Google, if you have a distribution network then it improves economics to add SKUs...this has been key for PEP) and advertising spend.
If you look at QSR, a lot of the product innovation that you see is superficial because of the limits of the operating model. Most of the "product innovation" is competition on advertising, there is real competition here (unlike with FMCG where ad spend is often defensive) because of consumer behaviour/the product consumption cycle (if you have ever been outside the US, you will realise that advertising on US TV is extremely unusual in this regard). And property has definitely become more important over the past decade (the growing chains are ones that have grown into the demographic shifts of the past ten years, chains with locations in legacy areas, i.e. malls, that are in decline have suffered).
Again, there is no competition at the margin. The world doesn't work that way. If MCD remove sesame seeds from their bun, there is not going to be a new entrant with more seeds. Maybe they add more seeds, maybe they add more sauce but that doesn't change that if they removed seeds to make numbers (which has happened before), there is very little risk to their competitive position. Again, the proof of this is how the world actually works, not based on some theoretical model of competition that you just thought up sitting in your bedroom.