McDonald's Chicken Push Hits Franchisee Resistance Over Bird Size

McDonald's franchisees have told BTIG analyst Peter Saleh that the chain's plan to expand hand-breaded chicken is "doomed for failure" — partly because of cost, and partly because the chickens themselves are too big.

The complaint cuts to the center of McDonald's biggest bet on chicken in years. Saleh said franchisees reported the bird McDonald's would use is simply too large.

"Franchisees indicated that the bird is too large, producing tough meat, and that the company should evaluate moving to a smaller bird of a different breed," Saleh wrote in his note.

McDonald's is currently testing hand-breaded chicken in several U.S. markets, according to Saleh. The company did not immediately respond to a request for comment.

What would hand-breaded chicken cost operators?

The kitchen math is the harder problem. Franchisees — independent operators of McDonald's restaurants — said the new fryers, drains and exhaust hoods likely needed to prepare hand-breaded chicken could demand six-figure investments per restaurant. Installation would require multiday closures and add labor hours in the kitchen. The changes would also introduce new food-safety concerns, the operators said.

Some franchisees acknowledged that hand-breading was the only way to keep pace with Chick-fil-A and Raising Cane's. But Saleh noted that McDonald's past chicken offerings, with different cuts and seasonings, had failed to resonate with consumers.

"Some noted that no other quick-service burger concept offers hand-breaded chicken for good reasons, and cited the poor precedent offered by Burger King," he said.

What does the Burger King precedent show?

Burger King's hand-breaded Ch'King sandwich lasted roughly 15 months, from 2021 into 2022. The chain killed it over weak sales, operational snags and difficulty selling the sandwich during late-night hours, Saleh said.

McDonald's shares rose 0.4% on Monday but remain down about 18.3% so far this year. The company has spent months trying to win back customers squeezed by inflation and lured by rivals' discounting, with lower-income consumers struggling most. Over the summer, management admitted that too many simultaneous promotions had muddied messaging for both staff and customers.

Last month, McDonald's announced its biggest menu upgrade ever. Alongside hand-breaded chicken, the overhaul includes new Chicken McNugget flavors, new wings, wraps and other sandwiches, plus fresher coffee, larger burgers and restaurant remodels. Analysts said more diners have shifted to chicken partly because beef prices climbed this year and partly because sandwiches and tenders are easier to eat in the car.

How is the rest of the business performing?

Sales slowed somewhat in October compared with September but stayed positive, the franchisees BTIG spoke with indicated.

One bright spot: the new beverage platform. Franchisees praised the lineup of McCafe drinks and craft sodas, which Saleh said caters to younger, higher-income shoppers but has also performed well in rural and less wealthy areas. The platform accounts for around 2% of sales. Customers who buy those drinks spend about $16 on average on a meal overall — roughly 40% to 50% more than the typical customer.

The remodel program drew sharper criticism. Saleh put the total remodeling cost for a restaurant at more than $1 million. Franchisees said the effort "didn't have enough test cases to inspire confidence, and that McDonald's hasn't provided enough detail on co-investment with franchisees," according to the note.

What comes next on the menu?

The McRib returns to menus next month, Saleh said. In December, McDonald's plans another movie-related collectible promotion, entering a thriving collectibles market where Snoopy cups at Starbucks and SpongeBob toys at McDonald's have fetched premiums on eBay.

The December promo faces a high bar. Last year's "Grinch"-themed socks, sold with a "Grinch"-themed meal, moved quickly.

"Comparisons are very difficult (6.8% comps last year), but many noted the Grinch socks sold out in a few days, so a good collectible tie-in with more supply could allow the system to eke out a decent result against this," Saleh said.

Until McDonald's answers the bird-size question and details the franchisee co-investment, its largest menu bet in company history rests on an operational base that its own operators openly doubt.