McDonald’s desires to win hen sandwich wars with worth

McDonald’s Chicken Sandwich

Source: McDonald’s

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

In August 2019, Burger King’s sister chain Popeyes kicked off the Chicken Sandwich Wars with the introduction of their own version of the menu item. Social media users took on Chick-fil-A’s, and Popeyes’ sandwich quickly became a hit, generating double-digit sales growth in the same store and around $ 400,000 in annual sales for each location.

“We anticipate competition will 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,” wrote Lauren Silberman, an analyst at Credit Suisse, on Friday in a note.

McDonald’s is ready to release its own version on February 24th, and Yum Brands’ KFC is rolling out 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, according to Silberman. The burger chain’s sandwich costs between $ 3.49 and $ 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. The Buttermilk Crispy Chicken Sandwich, which was first launched in 2015, 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. If restaurants hit the high end of that range on nationwide launch, the sandwich could increase the company’s sales in the same store by 4%, according to Silberman.

Burger King, on the other hand, seems to be still working on its pricing strategy. Silberman wrote in the note that one of his test markets is valued the new sandwich at $ 5.29, well above its competitors. Two other test markets rate the sandwich at a discount of between $ 3.49 and $ 3.89. In markets where the new sandwich is not tested, the burger chain usually charges more for the current chicken sandwich.

According to Credit Suisse, Burger King restaurants currently sell an average of 60 to 75 chicken sandwiches a day. 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.

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