Now that I think about it, I'm curious about the reliability of this result. While it says that the majority of participants "questioned the price of [the] burger," it doesn't explicitly state that all of these people questioned the price because they thought 1/3 < 1/4. There are also no hard numbers provided in the quotation, and we aren't told anything about the methodology or sample size.
It seems possible that people questioned the price, not because they were confused about fractions, but because they thought that the burger was too low in quality to justify the same price as a McDonald's Quarter Pounder.
[edit: While they say that A&W's burger outperformed in blind taste tests, those taste tests could have had methodological differences (or even just a different sample of the population) that would make it impossible to compare their results to those of the focus groups.]
[edit 2: New Coke also outperformed regular Coke in blind taste tests and was also priced the same. But it was a massive failure, and not because of mathematical confusion.]
A few other points - first, from what I can tell, the third pounder used two 3 ounce patties while the quarter pounder used one 4 ounce patty. So it's possible that it looked like less to people.
Second, the third pounder later changed it's name to the Papa Burger. Though there's a lot of discussion claiming the name "third pounder" hurt sales, I can't find any information about how the change in name effected sales. And even after the name change, it still doesn't seem to have been nearly as successful as the quarter pounder or the whopper.
Third, the way A&W management talk about this makes it seem like if they just offered up a larger burger a good chunk of the population would come to them instead of McDonald's. It sounds like they convinced themselves that "bigger burger" was going to be a hugely successful campaign, but it's likely a lot of people didn't care that much.
I wouldn't be surprised if some people opted for the quarter pounder because they're bad at fractions, but my guess is that there are other, more important factors involved. When choosing a fast food place I doubt the first thing that pops into most people's minds is "how many ounces are in everyone's signature burgers?"
Regarding taste tests, it's common for very sweet drinks to win because they give a small amount to taste. The experience of drinking the normal serving size (in the US) of 12oz is a different beast.
It seems possible that people questioned the price, not because they were confused about fractions, but because they thought that the burger was too low in quality to justify the same price as a McDonald's Quarter Pounder.
[edit: While they say that A&W's burger outperformed in blind taste tests, those taste tests could have had methodological differences (or even just a different sample of the population) that would make it impossible to compare their results to those of the focus groups.]
[edit 2: New Coke also outperformed regular Coke in blind taste tests and was also priced the same. But it was a massive failure, and not because of mathematical confusion.]