For McDonald’s, keeping pace is the ultimate challenge

The company’s chicken sandwich efforts show just how difficult it can be to remain ahead in the restaurant business, says RB’s The Bottom Line.
Photograph courtesy of McDonald's Corp.

the bottom line

This morning, McDonald’s revealed its next effort to compete against Chick-fil-A: a two-market chicken sandwich test that appears to be a prelude to a national launch later next year. The sandwich is a clear shot at the Atlanta-based chain and even comes in a similar style of packaging.

But you can be excused if you’ve heard something like this before. McDonald’s has made numerous efforts to develop a product to rival Chick-fil-A over the years, with varying degrees of success.

That it is continuing to try shows just how difficult it can be for a chain like McDonald’s to keep pace right now. Every time the company improves a product, someone else comes out with something better.

McDonald’s is huge—it is double the size of the next largest restaurant chain, Starbucks. A lot of Americans visit the chain on a regular basis.

To support that size, it has to be a lot of things to a lot of people at a time when consumers are shifting spending to specialists. That’s incredibly difficult and may help explain why the chain is losing traffic. There are simply too many competitors, all of which are pushing to offer better or cheaper options.

That means McDonald’s has to constantly evaluate its offerings to ensure they are competitive. For instance, next year it will have to find a way to compete with yet another incursion at breakfast when Wendy’s enters the morning market. Even then, it has to find a way to keep from losing beverage business.

Meanwhile, rival Burger King generated strong sales this year by offering an Impossible Whopper, and suddenly people think McDonald’s should have a plant-based option.  

Chicken has been an especially painful thorn in its side, however.

McDonald’s has been a massive seller of chicken products since the introduction of Chicken McNuggets in the late 1970s. It has made various efforts since then to improve its offerings, only to watch competitors soon steal its thunder with their own versions.

More than a decade ago, for instance, McDonald’s introduced a Southern Style Chicken Sandwich featuring butter and pickles.

It also had a Crispy Chicken Sandwich for years. In 2015, it replaced that with the Buttermilk Crispy Chicken Sandwich, a product considered a success at the time of its offering. Two years later, it introduced Buttermilk Crispy Tenders, and they too were considered a success at the time.

None of that has stopped Chick-fil-A from gaining traction. Chick-fil-A gets $4 million per store per year despite being closed Sundays and has doubled in size over the past five years, making it the country’s third-largest concept.

To make matters worse, along comes Popeyes Louisiana Kitchen with its own chicken sandwich. It proved so popular that hordes of customers flocked to that chain’s restaurants, braving 45-minute waits and sometimes angry workers.

Indeed, Popeyes’ chicken sandwich quickly made consumers and even McDonald’s operators forget all about those buttermilk chicken products. Franchisees earlier this year put some pressure on the company to develop a better competitor to Chick-fil-A.

The company last year tried a made-to-order chicken sandwich in the Seattle area that was ultimately deemed too complex for a broader rollout.

McDonald’s test of its new Crispy Chicken Sandwich, as well as the Deluxe Crispy Chicken Sandwich, will test the company’s ability to regain sales by improving its products. Don’t necessarily count it out, either.

Last year, McDonald’s started making its Quarter Pounders with fresh beef, made to order. The result has been an increase in sales of those burgers, even in the face of competitors such as Shake Shack, Five Guys and Wendy’s.

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