McDonald’s desires to win hen sandwich wars with worth
McDonald’s Chicken Sandwich
McDonald’s will gain an edge in the chicken sandwich wars with lower prices, while Restaurant Brands International’s Burger King is still evaluating its options, a Credit Suisse report said.
Burger King’s sister chain Popeyes started the Chicken Sandwich Wars in August 2019 with the introduction of the version of the menu item. Social media users pitted it against Chick-fil-A’s, and Popeyes’ sandwich quickly became a hit, generating double-digit sales growth in the same store and adding around $ 400,000 in annual sales for each location.
“We expect competition to intensify in 2021 as brands in various segments expand their offerings to get a bite out of the chicken category and improve their competitive position,” Credit Suisse analyst Lauren Silberman said in one Notice on Friday.
McDonald’s is poised to launch its own version of the chicken sandwich on Feb.24, and Yum Brands’ KFC is launching a nationwide version by the end of the month. Burger King is still in the test phase.
McDonald’s new Crispy Chicken Sandwich undercuts its main competitors, Silberman said. The burger chain’s sandwich costs $ 3.49 to $ 3.69 in test markets, compared to the $ 3.75 sandwich from Chick-fil-A or the $ 3.99 version from Popeyes.
McDonald’s may have learned a lesson from its recent foray into chicken sandwiches. Introduced in 2015, the Buttermilk Crispy Chicken Sandwich was offered at a premium price.
Silberman estimates that restaurants in McDonald’s’ test markets sell an average of 125 to 150 crispy chicken sandwiches a day. The analyst added that the sandwich could increase the company’s sales in the same store by 4% if restaurants hit the high end of that range when it launches nationwide.
Burger King, on the other hand, seems to be working on its pricing strategy. Silberman said one of its test markets priced the new sandwich at $ 5.29, well above its competitors. Two other test markets rate the sandwich at a discount of $ 3.49 and $ 3.89, respectively. In markets where the new sandwich isn’t being tested, the burger chain usually charges more for the current chicken sandwich.
Burger King restaurants sell an average of 60 to 75 chicken sandwiches a day, according to Credit Suisse. The new sandwich could increase sales in the same store by up to 4% if it sells 75 sandwiches per restaurant when it launches nationwide.