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

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

Key Points

  • McDonald's is expected to launch a crispy chicken sandwich in the beginning of next year and Telsey Advisory Group said it's going to be a "big U.S. hit for the chain."
  • 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 rise in popularity of their chicken sandwiches.
  • 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, it's up to McDonald's marketing team to convince consumers to buy it and the 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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