MCD McDonalds Corp

By Heather Haddon and Jacob Bunge 

The hottest item in the burger business is chicken.

At least 10 major U.S. fast-food chains have introduced fried-chicken sandwiches in the past three months, or are set to shortly. Many of those peddling the new poultry items are better known as hamburger chains, including McDonald's Corp., Shake Shack Inc. and Jack in the Box Inc.

Restaurant operators, grappling with slowdowns and restrictions brought on by the Covid-19 pandemic, aim to capture consumers' enthusiasm for crispy, breaded-chicken sandwiches. That fervor helped build Chick-fil-A Inc. into one of the nation's top fast-food chains over the past decade, and made Popeyes Louisiana Kitchen Inc.'s offering a social-media sensation after its 2019 debut.

The chicken-sandwich war, as industry competitors describe it, means diners have lots of options -- such as a Korean-style iteration at Shake Shack, a McDonald's version topped with spicy pepper sauce and a new KFC offering that the chain bills as its "best chicken sandwich ever." The sandwich craze also might bring lasting changes to the restaurant business, with owners spending thousands of dollars on new equipment for battering chicken filets to compete for what some franchisees say is the future of eating out.

Shake Shack began selling its new fried-chicken sandwich in the burger chain's South Korean restaurants during the fall, before it made its debut in the U.S. this month. One of the first limited-time items it put on menus during the pandemic was a spicy chicken sandwich, also during the fall.

"We just want to sell more chicken," said Shake Shack Chief Executive Randy Garutti in an interview. "People are always going to love burgers and chicken, and we want to be known for both."

The largest restaurant and convenience chains promoted 213 chicken sandwiches through November last year, up 22% from a year earlier, industry research firm Technomic Inc. said. Many of those sandwiches have found a permanent place on menus.

Fast-food restaurants remain bastions of beef, with Big Macs, Whoppers and other burgers outselling breaded-chicken sandwiches by roughly 3-to-1, according to data from market-research firm NPD Group.

Beyond fast food, though, chicken has been Americans' meat of choice for decades.

Chicken overtook beef in 1992 as the most-consumed meat per capita in America, according to the U.S. Department of Agriculture. Consumers bought 1.4 billion more units of chicken than beef last year in grocery stores, according to Nielsen figures.

The number of fast-food customers who ate a chicken sandwich rose 21% last year from 2019, outpacing burgers, roast beef and other similar items, according to Technomic surveys.

"It's hard not to succumb to temptation," said Mimi Finley, a Tampa, Fla.-area stay-at-home mom and former restaurateur who likes to sample chicken sandwiches from fast-food chains.

Chick-fil-A's signature chicken-breast sandwich, served with pickles on a buttered, toasted bun, helped make the Georgia-based company the third-biggest U.S. restaurant chain by domestic sales, behind McDonald's and Starbucks Corp. Fanatical diners camp out ahead of the chain's new restaurant openings, and Chick-fil-A overtook KFC as the leading U.S. chicken chain by domestic sales in 2011, according to Technomic.

The 2019 launch of the Popeyes Chicken Sandwich spawned long lines at restaurants and a temporary shortage that upset some customers and sent the chain searching for supplies. The Restaurant Brands International Inc.-owned chain's sales grew by double-digit percentages, and have remained elevated since.

"Others have seen that success and are catching up," Sami Siddiqui, president for the Americas at Popeyes, said in an interview about the company's sandwich.

The new sandwiches are well-timed for fast-food chains and chicken suppliers.

The jumbo-size boneless, skinless breast meat favored for such products is typically the poultry industry's most profitable cut. The average weekly price for a boneless, skinless chicken breast last year was about $1.01 a pound, the lowest level in more than 30 years. The price had languished below $1 since August, until it crept back above that level this month, according to data compiled by market-research firm Urner Barry.

Sit-down-restaurant closures and export slowdowns have helped build supplies. The quantity of frozen breast meat in U.S. cold-storage facilities in late November stood 23% above last year's level.

Some in the chicken industry said the sandwich launches could send prices higher. Prices for jumbo boneless, skinless breasts have topped $2 a pound only twice in the past decade, in 2013 and in 2014, according to Urner Barry.

Both peaks, which came when meat prices already were riding high, coincided with fast-food chicken skirmishes. McDonald's in 2013 launched chicken wraps, while Dunkin', Jack in the Box and Wendy's Co. all promoted chicken sandwiches. A year later, Wendy's and McDonald's both introduced new chicken sandwiches, while KFC promoted its Double Down sandwich, in which bacon, cheese and sauce were sandwiched between hunks of fried chicken.

Hailing the new chicken competition are poultry executives, who face pandemic-constrained dining and surging grain prices. "We wish all the participants much success," said Joe Sanderson, chief executive of Sanderson Farms Inc., the third-largest U.S. poultry producer, after Tyson Foods Inc. and Pilgrim's Pride Corp.

Chicken sandwiches tend to be more profitable than beef ones sold in chain restaurants, as they draw on a cheaper commodity, according to industry research firm Revenue Management Solutions. Chicken sandwiches typically cost less on menus than big burgers, a possible draw for budget-conscious consumers during the pandemic, the firm said.

Restaurant chains and franchisees are investing heavily in the battle. KFC said it worked with six bakeries to find a bun able to handle its quarter-pound white-meat filet that will make its nationwide debut in February, a chicken patty about 20% larger than its existing crispy option. Church's Chicken owners spent about $3,000 per restaurant to buy equipment to make the chain's new chicken sandwich, while Burger King owners are buying battering stations to install in kitchens as the Restaurant Brands chain tests a hand-breaded chicken sandwich.

At McDonald's, which hasn't had a Southern-style battered-chicken sandwich on its U.S. menus nationwide for years, franchisees have been pushing for one.

"We cannot afford to be last in a category that clearly is the future of fast food," the National Owners Association, a group of McDonald's franchisees in the U.S., said in an email to members last month.

Responding to customer demand, McDonald's said it would begin selling a Crispy Chicken Sandwich next month with crinkle-cut pickles on a buttered potato bun, while adding two other chicken sandwiches to the permanent menu.

McDonald's executives told franchisees during an internal meeting in December that a successful crispy-chicken-sandwich launch was a priority. Executives said they were studying how to introduce more chicken at breakfast, an option long sought by franchisees in the South.

"Developing a reputation for great chicken represents one of our highest aspirations," McDonald's U.S. President Joe Erlinger said during an investor presentation last month.

Write to Heather Haddon at heather.haddon@wsj.com and Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

January 19, 2021 05:44 ET (10:44 GMT)

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