Look out Chick-fil-A and Popeyes, McDonald's new chicken sandwich is 'really good,' analyst says

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McDonald’s teases chicken sandwich to compete with Chick-fil-A and Popeye’s.

Source: McDonald’s

Chick-fil-A and Popeye’s are about to get some new, crispy competition.

Fast-food restaurant chain McDonald’s is expected to launch a crispy chicken sandwich in the beginning of next year and Telsey Advisory Group said its going to be a “big U.S. hit for the chain.”

“We believe MCD’s new Crispy Chicken Sandwich and Biscuit will usher in a successful new U.S. lineup of better-quality chicken in 2020 and 2021,” said Bob Derrington, Managing Director and Senior Research Analyst at the Telsey Advisory Group in a note to clients on Thursday.

The U.S. chicken marketplace has grown more than 14% this year to about $4.5 million sales per store, according to the firm. Chick-fil-A, Popeye’s and Wendy’s have achieved great success from the popularity of their chicken sandwiches. The so-called “chicken wars” have put pressure on McDonald’s to find a competitive chicken option for the fast-food chain.

“We believe MCD’s new Crispy Chicken product is almost ‘ready for primetime’ and successfully face-off against its major nemesis Chick-fil-A,” said Derrington, who tried a trial of the sandwich last week in Tennessee. “MCD’s New Crispy Chicken Sandwich Tastes Really Good!,” he added.

After trying a test of McDonald’s crispy chicken sandwich, here’s what the analyst concluded:

  • The new Crispy Chicken breasts were lightly battered, juicier and more flavorful, and in our view a terrific upgrade from MCD’s more heavily battered, less juicy Buttermilk Crispy Chicken.
  • McDonald’s Crispy Chicken includes a full muscle chicken breast, lightly breaded with a sweet fried flour coating.
  • The Crispy Chicken sandwich is served on a lightly buttered and toasted premium Brioche potato bun and topped with two crinkle-cut pickle chips.

Derrington said no matter how good the sandwich is, its up to McDonald’s marketing team and to convince consumers to buy it and operations team in store to execute and deliver a strong product experience.

McDonald’s base crispy chicken sandwich was “priced aggressively” at only $3.49, while Chick-fil-A’s sandwich is priced at $3.79. Both of Popeye’s sandwiches retail for $3.99, Derrington noted.

Telsey Advisory Group has an outpeform rating on McDonald’s, as well as Wendy’s and Jack in the Box. The firm has a neutral rating on Yum! Brands, Domino’s Pizza and Restaurant Brands.

Shares of McDonald’s are up nearly 10% this year.

—with reporting from CNBC’s Michael Bloom.

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