Chicken power

Chicken power

The popularity of the recently unveiled–and more recently shelved—Popeyes’ BYOB chicken sandwich was surprisingly trendy.

KeyBanc Capital Markets equity research analyst Eric González, a fast food trend follower, has never seen such popularity in chicken.

For the short time in August that the “Bring Your Own Bun” (BYOB) was available, González estimates Popeyes’ store traffic doubled and about 1,000 chicken sandwiches were sold in each store every day, accounting for about 30% of total sales. “Just to give you an idea of how much ahead of expectations this was… a good [limited-time offer] gives you a 2 to 3 point same stores sales lift. You’d take that all day long,” he said.

The big win was a tribute to the sandwich’s great taste and a wildly successful social media campaign that generated $65 million in earned media value in just two weeks, according to Apex Marketing Group.

Unfortunately, Popeyes has been unable to cash in on that earned media over the past two weeks, since the chain managed to sell out of chicken sandwiches in the midst of a mass US oversupply.

Fortunately, the restaurant is at the heart of two bullish trends: a growing American appetite for chicken, and a roaring fast food sector.

Quick service and fast-casual restaurants—including traditional fast food outlets, as well as pricier chains like Chipotle and Shake Shack—outperformed the S&P by 14% year-to-date through the end of July and by 27% over the past 12 months, note Goldman analysts led by Katherine Fogertey.

Americans have been consistently eating more chicken, with US consumers tripling their chicken consumption since 1960, while beef and pork have declined notably.

Fast food restaurants have been offering chicken items for years, but the success of Chick-fil-A, which generated $10 billion in total sales last year to become the third most popular fast food chain in the US—and Popeyes’ breakout new sandwich—have others looking to add more poultry to their menus.

McDonald’s and other competitors in the quick-service fast food industry are expected to roll out similar sandwiches starting next month, Gonzalez says.

Goldman’s research team estimates 70% of the industry’s sales growth over the past five years can be explained by consumers’ rising wages, lower gas prices, and a boost from third-party apps like Grubhub and Uber Eats.

Popeyes only makes up a small portion of profits for owner Restaurant Brands International, which is anchored by Canadian behemoth Tim Hortons and Burger King, but the success of its chicken sandwich could change the calculus for the brand, as Popeyes is already growing faster than both.

For the first time ever, more poultry than red meat was eaten by US consumers per capita last year, with chicken almost closing the gap with a combination of beef, pork, veal, and mutton/lamb by itself.

Chicken also has become much less expensive in recent years, driving a surge in buying from cash-strapped US workers who have seen the costs of health care, education, and housing skyrocket while their paychecks have stayed roughly the same.

2019-09-19T21:24:36+00:00

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John Bärr
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