McDonald’s fights chicken-sandwich wars with worth, while Burger King tests its pricing

McDonald’s Chicken Sandwich

Source: McDonald’s

McDonald’s goes with decrease costs to get an edge within the chicken-sandwich wars, while Restaurant Brands International’s Burger King continues to be evaluating its choices, a Credit Suisse report mentioned.

Burger King’s sister chain Popeyes kicked off the chicken-sandwich wars in August 2019 with the launch of its model of the menu merchandise. Social media customers pitted it in opposition to Chick-fil-A’s, and Popeyes’ sandwich shortly turned a success, driving double-digit progress in same-store gross sales and including about $400,000 in annual gross sales for each 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 mentioned in a notice Friday.

McDonald’s is poised to launch its personal take on the rooster sandwich on Feb. 24, and Yum Brands’ KFC is rolling one out nationwide by the top of the month. Burger King continues to be within the testing levels.

McDonald’s new Crispy Chicken Sandwich is undercutting its foremost rivals, Silberman mentioned. The burger chain’s sandwich is being priced at $3.49 to $3.69 in take a look at markets, in contrast with Chick-fil-A’s $3.75 sandwich or Popeyes’ $3.99 model.

McDonald’s could have realized a lesson from its final foray into rooster sandwiches. Its Buttermilk Crispy Chicken Sandwich, which was launched in 2015, was priced at a premium.

Silberman estimates that eating places in McDonald’s’ take a look at markets are promoting about 125 to 150 Crispy Chicken Sandwiches a day on common. The analyst added that if eating places hit the upper finish of that vary when the merchandise launches nationwide, the sandwich might raise the firm’s same-store gross sales by 4%.

Burger King, alternatively, seems to nonetheless be understanding its pricing technique. Silberman mentioned one in every of its take a look at markets is pricing the brand new sandwich at $5.29, properly above its rivals. But two different take a look at markets are pricing the sandwich at a reduction, of $3.49 and $3.89. In markets that are not testing the brand new sandwich, the burger chain often prices extra for its present rooster sandwich.

Burger King eating places are promoting a mean of about 60 to 75 rooster sandwiches a day, based on Credit Suisse. The new sandwich might elevate its same-store gross sales by as a lot as 4% if it sells 75 sandwiches per restaurant when it is launched nationwide.

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