McDonald’s USA’s decision to extend its testing of Mighty Wings in the Chicago market this week could signal an eventual national rollout for the chicken wing product, according to a research note from securities analyst Lynne Collier of Sterne Agee.
The Oak Brook, Ill.-based chain with more than 14,000 quick-service restaurants in the United States tested its Mighty Wings item for a limited time last summer in Atlanta.
“Given that we believe that the Atlanta test proved successful,” Collier wrote, “we believe that it is likely that we will continue to see additional McDonald’s markets featuring wings and would not rule out a national launch in the future.”
Collier’s channel checks among McDonald’s operators revealed that the wings would be sold in orders of three, five and 10 pieces. A starting price likely would be about $3, Collier estimated.
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McDonald’s biggest quick-service competitors also have focused on chicken in the new year or have developed chicken-wing-like products before.
In new menu additions revealed on Jan. 2, Burger King included upgraded chicken nuggets with “all white meat” and a “crispy tempura-style batter.” Wendy’s last chicken limited-time offer was a Mozzarella Chicken Supreme sandwich during the holidays, but the chain also sold Boneless Wings for a limited time starting in June 2009. And one of the flavors for Taco Bell’s 99-cent Loaded Grillers is a Spicy Buffalo Chicken Griller that simulates a Buffalo wing wrapped and grilled in a tortilla.
Collier also noted that a chain the size of McDonald’s wading into the market for chicken wings could affect fast-casual or casual-dining chains specializing in wings.
“We believe that wings could be a successful new product launch for McDonald’s,” she wrote. “However, we note that a national launch by McDonald’s could create cost pressure on wings as it relates to supply. Potentially, this could result in sustained high pricing for companies selling wings, such as Buffalo Wild Wings.”
That dynamic in the commodity market for chicken wings already had a major effect for much of 2012. For its most recent quarter, which ended Sept. 23, 2012, Minneapolis-based Buffalo Wild Wings reported a 5-percent decrease in net income despite having more stores open compared with a year earlier and same-store sales increases in the mid-single digits.
During that time period, the average price of chicken wings rose 70 percent to $1.97 per pound, compared with $1.16 per pound in the chain’s year-earlier third quarter, Buffalo Wild Wings said.
McDonald’s is maintaining a robust menu innovation pipeline in the United States in order to turn around some recently soft domestic same-store sales. Its popular McRib sandwich is available nationwide as a limited-time offer, including as a $1 add-on to the purchase of any Extra Value Meal. The chain also recently added the Grilled Onion Cheddar Burger to the Dollar Menu.
McDonald’s operates or franchises more than 34,000 restaurants worldwide.
Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN
