McDonald’s is currently planning to expand its share in the thriving global chicken market to boost its underperforming sales in the United States.
On Wednesday, the world’s largest burger chain set a target: by 2030, its share in the global chicken market will increase by 1.5 percentage points.
The company is currently focusing on white meat products like chicken. It previously estimated that its share in the chicken fast-food market is over 10%, while the beef burger share is around 45%.
The price of beef in the United States has increased by more than half since 2021, leading to reduced demand, while global demand for chicken has surpassed beef.
Chicken, as a lean protein, is versatile and increasingly becoming the preferred choice for consumers worldwide.
McDonald’s is currently heavily promoting its chicken sandwiches and wraps, and has been testing “hand-breaded” chicken wings, chicken thighs, and chicken tenders to compete more fiercely with chains like Chick-fil-A and Raising Cane’s.
Financial research and investment banking institution Bernstein analyst Danilo Gargiulo warned that products wrapped in-store would require more labor, specialized equipment, and food safety measures, potentially raising costs.
On Wednesday, McDonald’s also set a complementary goal to increase its beverage sales share by 1.5 percentage points, expanding in this category.
McDonald’s held its first “Investor Day” event in nearly three years in Chicago on Wednesday, meeting with shareholders and analysts to announce the aforementioned goals.
In pre-market trading that day, McDonald’s stock rose by 0.5%.
The presentation at the “Investor Day” detailed the new strategies proposed to franchisees in June, aimed at improving the menu, renovating stores, integrating marketing with social media creators, and enhancing service, especially for many customers ordering through in-store digital screens.
McDonald’s stated on Wednesday that adding more stores on top of its 46,000 existing locations will increase network sales by nearly 2.5% by 2027, slowing to 2% growth by 2030.
The company promoted Skye Anderson to succeed Joe Erlinger as McDonald’s USA President last month.
In addition to renovation expenses borne by franchisees themselves, McDonald’s will provide approximately $8.5 billion in funding to franchisees over the next 10 years to help them implement this strategy. This investment includes deploying a generative artificial intelligence platform to improve efficiency and increase average cash flow per restaurant by $100,000.
Gargiulo stated in a press release that McDonald’s franchisees are currently facing challenges of low foot traffic, rising costs, and pressure on restaurant profitability.
With declining foot traffic in McDonald’s largest market, the United States, and sluggish sales growth, its stock has dropped by nearly one-fifth this year. In the second quarter, McDonald’s same-store sales in the US only grew by 0.8%, while the international business segment saw at least a 1.5% growth in same-store sales.
McDonald’s is facing intense competition and the dual challenge of weak consumer spending from low-income consumers, who are a key consumer group critical to its survival.
(Based on a report from the Financial Times)