McDonald’s aims to win chicken sandwich wars with value

McDonald’s is looking to win the chicken sandwich war with lower prices, while Restaurant Brands International’s Burger King is still determining its strategy, according to a Credit Suisse report.

In August 2019, Burger King’s sister chain Popeyes kicked off the chicken sandwich war with the launch of its own version of the menu item. Social media users pitted him against Chick-fil-A, and Popeyes’ sandwich quickly became a hit, leading to double-digit growth in same-store sales and adding around $ 400,000 in annual sales for each location. .

“We expect the competition to intensify in 2021 as brands in all segments increase their offerings to take a piece of the chicken category and improve their competitive positioning,” wrote Credit Suisse analyst Lauren Silberman in a note Friday.

McDonald’s is set to launch its own version on February 24, and Yum Brands’ KFC will be rolling one out nationwide by the end of the month. Burger King is still in the testing phase.

McDonald’s New Crispy Chicken Sandwich, Silberman says, is undermining its main rivals. The burger chain sandwich price ranges from $ 3.49 to $ 3.69 in test markets, compared to Chick-fil-A’s $ 3.75 sandwich or $ 3.99 version. by Popeyes.

McDonald’s may have learned a lesson from its latest foray into chicken sandwiches. Its buttermilk crispy chicken sandwich, which first launched in 2015, had a steep price tag.

Silberman estimates that restaurants in McDonald’s test markets sell on average between 125 and 150 Crispy Chicken Sandwiches per day. If restaurants hit the high end of that range when the item is launched nationwide, the sandwich could increase the company’s same-store sales by 4%, according to Silberman.

Burger King, on the other hand, always seems to be working out its pricing strategy. Silberman wrote in the note that one of his test markets was pricing the new sandwich at $ 5.29, well above its rivals. But two other test markets are pricing the sandwich at a discount, ranging from $ 3.49 to $ 3.89. In markets that aren’t testing the new sandwich, the burger chain typically charges more for its current chicken sandwich.

So far, Burger King restaurants sell an average of 60 to 75 chicken sandwiches a day, according to data from Credit Suisse. The new sandwich could increase comparable store sales by 4% if it sells 75 sandwiches per restaurant when it launches nationwide.