McDONALDS:FUNDAMENTAL ANALYSIS+PRICE ACTION & NEXT TARGET|LONGđź””
There was perhaps no greater source of criticism against McDonald's for missing out on the opportunity to brag about chicken sandwiches than its own franchise owners, but after the fast-food giant's second-quarter earnings report, they should feel like masters of the situation.
McDonald's reported sales and revenue that exceeded Wall Street expectations, thanks in large part to the success of the three chicken sandwiches it launched in February. The company saw double-digit growth in comparable sales in the U.S., not only from the pandemic recession but also on a two-year basis.
The fast-food chain may have been too late to enter the chicken sandwich war, but it is quickly making up for a lost time.
When McDonald's finally entered the fray, there was every reason to believe that its impact would be marginal. Popeyes Louisiana Kitchen had a good 18-month head start on its competitor, and other fast-food and fast-casual chains followed suit to join what was becoming a cultural phenomenon. Even chicken king Chick-fil-A perfected its chicken sandwich to stay relevant.
Nevertheless, McDonald's persisted, seemingly oblivious to what was happening around it, but taking fading fire from its franchise owners, who began to act to develop their sandwich.
They saw that they were losing customers, and they needed to add something to their menu to generate buzz.
That's why launching a corporate-backed three chicken sandwich initiative had all the hallmarks of being too little and too late. Nevertheless, it turned out to be exactly what McDonald's customers were looking for.
Mobile location data from analytics company Placer.ai showed that consumers rushed to McDonald's literally at a moment's notice. She noted that on the day sandwiches appeared on the menu, foot traffic at McDonald's restaurants was up 19 percent from a year earlier, and there was an increase in the days that followed.
Keep in mind that these numbers were compared to attendance rates before the pandemic led to the eventual closure of the restaurants' dining rooms. That said, the growth was even well above 2019 levels.
Placer.ai Vice President of Marketing Ethan Chernofsky said: "The launch was so significant that it fundamentally changed the trajectory of McDonald's.
While it helped lift first-quarter results at the time, it's clear that the second quarter has paid off as well. McDonald's sales figures were up 26 percent from a year ago and 15 percent from two years ago.
McDonald's really hit a marketing extravaganza this past quarter. In addition to the fact that the chicken sandwiches resonated with consumers, the company also had a big hit with its chicken nuggets promotion featuring BTS, the South Korean K-pop (or Korean pop) boy band.
The company also experienced a significant rebound globally, with sales growth of 2.6% in international markets. The growth was more modest than in the U.S., as many overseas markets still face tight COVID-19 restrictions.
However, McDonald's is not stopping there. Building on its partnership with BTS, Travis Scott, and J Balvin, the company announced a new celebrity pairing, this time with rapper Saweetie. The company will introduce the "Saweetie Meal," which includes a Big Mac, chicken nuggets, fries, a drink, and sauces, including Saweetie and Sour Sauce.
McDonald's may not be about to ruin the feathers of leaders Popeyes and Chick-fil-A just yet, as both chains, according to Placer.ai, have seen an increase in traffic themselves. But now, at least, it has a fighting chance. With the recent release of its own Ch'King chicken sandwich by Popeyes, a sister chain of Burger King, the sibling rivalry from Restaurant Brands International could go in McDonald's favor.
Until the company introduced its new chicken sandwiches, McDonald's stock was up much less. Since March, however, the company's stock is up about 20 percent, and the restaurant's stock is now looking better than it has in a long time.
Focusing on its core menu, giving customers and franchise owners the food they want, and smart partnerships have put McDonald's back on top.
McDonald's reported sales and revenue that exceeded Wall Street expectations, thanks in large part to the success of the three chicken sandwiches it launched in February. The company saw double-digit growth in comparable sales in the U.S., not only from the pandemic recession but also on a two-year basis.
The fast-food chain may have been too late to enter the chicken sandwich war, but it is quickly making up for a lost time.
When McDonald's finally entered the fray, there was every reason to believe that its impact would be marginal. Popeyes Louisiana Kitchen had a good 18-month head start on its competitor, and other fast-food and fast-casual chains followed suit to join what was becoming a cultural phenomenon. Even chicken king Chick-fil-A perfected its chicken sandwich to stay relevant.
Nevertheless, McDonald's persisted, seemingly oblivious to what was happening around it, but taking fading fire from its franchise owners, who began to act to develop their sandwich.
They saw that they were losing customers, and they needed to add something to their menu to generate buzz.
That's why launching a corporate-backed three chicken sandwich initiative had all the hallmarks of being too little and too late. Nevertheless, it turned out to be exactly what McDonald's customers were looking for.
Mobile location data from analytics company Placer.ai showed that consumers rushed to McDonald's literally at a moment's notice. She noted that on the day sandwiches appeared on the menu, foot traffic at McDonald's restaurants was up 19 percent from a year earlier, and there was an increase in the days that followed.
Keep in mind that these numbers were compared to attendance rates before the pandemic led to the eventual closure of the restaurants' dining rooms. That said, the growth was even well above 2019 levels.
Placer.ai Vice President of Marketing Ethan Chernofsky said: "The launch was so significant that it fundamentally changed the trajectory of McDonald's.
While it helped lift first-quarter results at the time, it's clear that the second quarter has paid off as well. McDonald's sales figures were up 26 percent from a year ago and 15 percent from two years ago.
McDonald's really hit a marketing extravaganza this past quarter. In addition to the fact that the chicken sandwiches resonated with consumers, the company also had a big hit with its chicken nuggets promotion featuring BTS, the South Korean K-pop (or Korean pop) boy band.
The company also experienced a significant rebound globally, with sales growth of 2.6% in international markets. The growth was more modest than in the U.S., as many overseas markets still face tight COVID-19 restrictions.
However, McDonald's is not stopping there. Building on its partnership with BTS, Travis Scott, and J Balvin, the company announced a new celebrity pairing, this time with rapper Saweetie. The company will introduce the "Saweetie Meal," which includes a Big Mac, chicken nuggets, fries, a drink, and sauces, including Saweetie and Sour Sauce.
McDonald's may not be about to ruin the feathers of leaders Popeyes and Chick-fil-A just yet, as both chains, according to Placer.ai, have seen an increase in traffic themselves. But now, at least, it has a fighting chance. With the recent release of its own Ch'King chicken sandwich by Popeyes, a sister chain of Burger King, the sibling rivalry from Restaurant Brands International could go in McDonald's favor.
Until the company introduced its new chicken sandwiches, McDonald's stock was up much less. Since March, however, the company's stock is up about 20 percent, and the restaurant's stock is now looking better than it has in a long time.
Focusing on its core menu, giving customers and franchise owners the food they want, and smart partnerships have put McDonald's back on top.
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