Why McDonald’s Plans to Play Chicken
by InvestorPlace Staff | July 2, 2012 4:50 pm
McDonald’s (NYSE:MCD) first got a new head honcho and now may be serving up a dramatic shift in its menu — more chicken, less beef.
Sure, we knew that Don Thompson, the new CEO of McDonald’s now that Jim Skinner has stepped down, was an innovator — he introduced McCafe specialty coffees and smoothies to America and Canada, led remodeling efforts, added double-lane drive-throughs and extended hours for the world’s largest restaurant chain.
But this? This is like soda-maker Coca-Cola (NYSE:KO) suddenly deciding it should focus more on Sprite than the cola it’s known for — a move that breeds a little head-scratching.
So, why the change? Here are a few of the reasons:
- Consumer trends. To start, the plan is in tune with the overall trend of meat consumption. Poultry consumption is expected to increase almost 2% next year, while beef consumption is supposed to move around the same amount in the opposite direction.
- Tough economy. On top of that, chicken can be priced lower than other proteins like beef, according to Bloomberg, and thus should be appealing to the many cash-conscious consumers in today’s tough economy.
- Calorie-counting customers. The move targets those who are health-conscious too, according to Bloomberg. Chicken is perceived to be healthier — unlike the recently added Bacon McDouble — possibly because of its lower calorie count. While a box of six Chicken McNuggets has 280 calories, a Big Mac has almost double that.
The strategy will manifest itself in many new forms. Bone-in chicken wings and cashew teriyaki salads with chicken are expected, while Spicy Chicken McBites have already debuted.
– Alyssa Oursler, InvestorPlace Editorial Assistant
- [Image]: http://investorplace.com/wp-content/uploads/2011/06/McDonalds_golden_arches_630_flickr.jpg
- MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
- dramatic shift in its menu: http://www.bloomberg.com/news/2012-07-02/mcdonald-s-new-ceo-focuses-on-chicken-amid-shaky-economy.html
- now that Jim Skinner has stepped down: http://investorplace.com/2012/03/mcdonalds-mcd-ceo-jim-skinner-succession/2/
- KO: http://studio-5.financialcontent.com/investplace/quote?Symbol=KO
- overall trend of meat consumption: http://www.usda.gov/oce/commodity/wasde/latest.pdf
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