Market Share Is Shifting In The Chicken Sandwich Category After Popeyes’ 2019-20 Dominance

The historic success of Popeyes sandwich launch in 2019 yielded droves of copycat products across segments. Now we’re starting to see how that pervasiveness is shaking out.

During a Q3 earnings call last month, McDonald’s

MCD
CEO Chris Kempczinski said his company has gained “significant” share in the QSR chicken market since its sandwich launch in February. He added the sandwich was a driver of both the company’s sales growth and brand elevation.

Meanwhile, KFC’s chicken sandwich, launched around the same time as McDonald’s, also seems to be providing the chain with a strong tailwind. During parent company Yum Brands

YUM
’ Q3 call in October, CEO David Gibbs attributed the sandwich to KFC’s 13% two-year same-store sales growth (along with its group-friendly buckets). In the previous quarter, Gibbs said the sandwich had yielded more than twice the volumes of previous iterations and that it had become a challenge to keep up with demand.

Could the success of these products be chipping away at some of the market share Popeyes gained in the past two years? Likely.

“Popeyes grabbed a little bit of market share last year and has probably given a little bit of it back this year,” said Mark Kalinowski, president and CEO of Kalinowski Equity Research. “Popeyes is lapping enormous same-store sales, but even after taking that into account, the competition has raised its game and they’ve seen a pinch. But, Popeyes is still much better off than it was two or three years ago because of its chicken sandwich.”

Conversely, its sister chain Burger King had a relatively lackluster quarter despite taking a different approach to its new chicken sandwich by hand breading the product in-store. Same-store sales dropped by 1.6% in Q3 and during parent company RBI’s earnings call in October, CEO Jose Cil called the performance of its sandwich–called the Ch’King–“modest.”

That’s a wildly different tune than McDonald’s and KFC’s enthusiastic sandwich updates.

The numbers are wildly different, too. Kalinowski recently surveyed a group of McDonald’s franchisees, who reported their average restaurant is selling 160 to 170 chicken sandwiches a day.

“That’s quite a bit,” he said.

By comparison, his Burger King franchisee contacts report they’re selling 50 or less Ch’Kings per day.

“The average McDonald’s does double the sales of the average Burger King, but even taking that into account, it seems Burger King is relatively underperforming,” Kalinowski said.

He attributes McDonald’s success to its marketing muscle and the convenience factor.

Indeed, McDonald’s was sure to be a winner here due to footprint alone. Nearly every chain has upgraded their chicken sandwich offering and the product by nature has become somewhat homogenous. McDonald’s has simply made that homogenous yet high-demand product much more accessible through its 14,000 restaurants. Compared to Popeyes 2,500 or so units, KFC has also added more accessibility with its nearly 4,000 restaurants.

Of course, Popeyes didn’t make the discovery that consumers are craving high-quality chicken sandwiches. That honor goes to Chick-fil-A, which has grown from a regional player to the third-largest restaurant chain in the country in less than 25 years driven by its signature sandwich.

Granted, consumer demand for chicken overall has grown, providing a boon for the concept and the category in general. But this latest quarter has proven just how special a simple chicken sandwich can be now that there are many more options. And there may not be an end in sight to this so-called chicken sandwich war. As Kalinowski puts it, “the sky’s the limit.”

“Chicken is a very popular protein. It’s affordable and it comes in various formats–grilled and fried,” he said. “And if you think about it, Chick-fil-A has a lot of room for unit growth for years to come and will become that much more established as one of the top three restaurant chains in the country.”

Indeed, the chain is less than one-fourth the size of McDonald’s and is growing in several markets throughout the U.S.

The potential across the board here is significant. Our appetite for chicken sandwiches–portable, affordable, versatile chicken sandwiches–is so insatiable that Popeyes’ product success single-handedly triggered a growth spurt for the chain and generated about $400,000 more per restaurant.

So, McDonald’s selling 160-plus chicken sandwiches a day bodes well for the chain and likely supports Kempczinski’s “significant share” comments. The question now is whether McDonald’s is taking share from just Popeyes or Chick-fil-A or somewhere else.

“It’s hard to say if Chick-fil-A has been affected by all of the chicken sandwich entries because it’s privately held. If I had to guess, I think Chick-fil-A is holding its own and then some,” Kalinowski said. “If I’m McDonald’s, Chick-fil-A is who I’d be concerned about competitively.”