The report added Chick-fil-A’s expansion shows no signs of letting up. It spotlighted whitespace in the Midwest and Northeast, saying growth “is likely to remain robust for years to come.”
Chick-fil-A has nearly doubled its U.S. store count in the last 12 years, hitting 2,400 units and $10 billion in total systemwide sales by year-end 2018. And its chicken sandwich hasn’t changed since the brand debuted 53 years ago in Atlanta.
For comparison, McDonald’s closed 2018 with 13,914 domestic units, a decline of 122 year-over-year. Nearly all (13,229) were franchised as the brand pushed (in millions), $38,524.05 in total systemwide sales. Average-unit volume was $2.769 million. Chick-fil-A’s stores reported $4.167 million per location.
What’s interesting to note as well is the fact Chick-fil-A ended 2018 as one of only five restaurant brands in America with at least $10 billion in total U.S. systemwide sales—McDonald’s, Starbucks, Subway, and Taco Bell (Wendy’s and Burger King were knocking at the door) were the others.
And that’s with just 2,400 restaurants, all closed on Sundays. Starbucks had 14,825 locations; Subway 24,798; and Taco Bell 6,588.
So, it’s understandable McDonald’s franchisees tagged Chick-fil-A as the company’s biggest threat to market share. Respondents in Kalinowski’s survey didn’t list a single burger chain. An eye-opening 89 percent picked Chick-fil-A as the brand’s top rival.
As far as Popeyes goes, Kalinowski said the chain could grow by half and still only gain 0.9 percent in market share, being the 20th largest quick-serve on the landscape at 2,368 restaurants and systemwide sales (in millions) of $3,325.00. “So although Popeyes is to be applauded for its massive chicken sandwich success, that success—in context—suggests minimal/immaterial competitive impact on McDonald’s,” the report said. Eleven percent of franchisees in the survey picked Popeyes as McDonald’s biggest challenger, however, proving just how deep this chicken sandwich conversation runs.
Adam Werner, co-leader of the restaurant, hospitality, and leisure practice at AlixPartners, told MarketWatch that McDonald’s needs to jump into poultry battle. “McDonald’s competitors are forcing change and forcing McDonald’s to keep up,” he said.
According to reports from Bloomberg, the pressure pushed McDonald’s to use the flavor enhancer MSG in its new Crispy Chicken sandwiches.
The chain told Yahoo Finance in response, “We are always listening to our customers regarding our menu offerings. So far, our customers in Houston and Knoxville have had a positive response to the test of our Crispy Chicken Sandwich and Deluxe Crispy Chicken sandwich. Feedback and insights from the test will inform our decisions moving forward.”
The FDA has labeled MSG safe, despite its controversial history. Popeyes and Chick-fil-A use MSG in their chicken sandwiches. McDonald’s doesn’t feature the ingredient on its national menu.
The chicken activity precedes McDonald’s fourth-quarter earnings, set for Wednesday. The company is coming off a period where global same-store sales lifted 5.9 percent, year-over-year, beating experts’ 5.6 percent prediction. Net income dropped 2 percent to $1.6 billion.
McDonald’s also grew U.S. comps a solid 4.8 percent, although it was comprised of a “healthy average check increase,” driven by product mix changes (two-thirds) and menu pricing (one-third as domestic pricing was up nearly 3 percent), and not traffic.
Will menu innovation play a larger role in 2020? SunTrust Robinson Humphrey analysts believe so, pointing to the Bacon BBQ Burger release in early December and the chicken sandwich push.
Additionally, McDonald’s announced Tuesday that it’s adding Chicken McGriddles and a McChicken Biscuit breakfast sandwich to its early offerings for the first time (both are LTOs). “McDonald’s is committed to remaining a leader in the quick-service breakfast category through our delicious offerings, consistent menu innovation, and a faster drive-thru experience,” Linda VanGosen, VP of menu innovation, said in a statement.