McDonald’s Chicken Sandwich

Source: McDonald’s

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

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

“We expect competition to heat up in 2021 as brands across segments elevate their offerings to take a bite out of the chicken category and enhance competitive positioning,” Credit Suisse analyst Lauren Silberman wrote in a note on Friday.

McDonald’s is poised to launch its own take on Feb. 24, and Yum Brands’ KFC is rolling one out nationwide by the end of the month. Burger King is still in the testing stages.

McDonald’s new Crispy Chicken Sandwich is undercutting its main rivals, according to Silberman. The burger chain’s sandwich is being priced from $3.49 to $3.69 in test markets, compared to Chick-fil-A’s $3.75 sandwich or Popeyes’ $3.99 version.

McDonald’s may have learned a lesson from its last foray into chicken sandwiches. Its Buttermilk Crispy Chicken Sandwich, which was first launched in 2015, was priced at a premium.

Silberman estimates that restaurants in McDonald’s test markets are selling about 125 to 150 Crispy Chicken Sandwiches a day on average. If restaurants hit the higher end of that range when the item launches nationwide, then the sandwich could lift the company’s same-store sales by 4%, according to Silberman.

Burger King, on the other hand, appears to still be working out its pricing strategy. Silberman wrote in the note one of its test markets is 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 usually charges more for its current chicken sandwich.

So far, Burger King restaurants are selling about 60 to 75 chicken sandwiches a day on average, according to Credit Suisse’s data. The new sandwich could raise its same-store sales by as much as 4% if it sells 75 sandwiches per restaurant when it’s launched nationwide.

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