Why McDonald’s Plans to Play Chicken

by InvestorPlace Staff | July 2, 2012 4:50 pm

[1]McDonald’s (NYSE:MCD[2]) first got a new head honcho and now may be serving up a dramatic shift in its menu[3] — more chicken, less beef.

Sure, we knew that Don Thompson, the new CEO of McDonald’s now that Jim Skinner has stepped down[4], 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[5]) 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[6]. 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

Source URL: https://investorplace.com/2012/07/why-mcdonalds-plans-to-play-chicken/

---