McDonald’s is gearing up to trial hand-breaded chicken items in nearly 200 locations across the United States and Ireland next year. This move is part of their strategy to regain customers who have been affected by inflation.
The fast-food giant has already introduced hand-breaded chicken strips and sandwiches in a few spots in the Chicago area and in around 10,000 locations throughout Asia.
This initiative aims to capture market share from competitors, particularly Chick-fil-A and Raising Cane’s, both of which prepare hand-battered and -breaded chicken daily in their restaurants.
Executive vice president, Jill McDonald, mentioned during a recent investor presentation that hand-breaded chicken offers “a significant opportunity to upgrade taste and quality.”
However, integrating fresh breaded chicken into the McDonald’s model poses some challenges. Customers typically expect quick service, and introducing fresh food demands new equipment, additional workstations, and a more intricate cooking process, according to previous reports by Bloomberg.
Last week, McDonald’s announced an ambitious, multi-year spending plan totaling $8.5 billion, focusing on chicken products, especially as beef prices continue to rise. The chain aspires to increase its market share in chicken offerings by 1.5 percentage points by 2030.
A major hurdle will be making space for new equipment in existing restaurants. The chicken will arrive raw and frozen, so the restaurants will require thawing cabinets.
Additionally, a separate workstation must be set up for employees to handle the battering and breading process before sending it to fryers. Currently, McDonald’s chicken nuggets come to restaurants pre-breaded, frozen, and partially cooked, simplifying the cooking process.
This new method not only demands more space, but also more time compared to the existing process.
Employees tasked with handling raw chicken won’t be able to assist in other duties like assembling sandwiches due to contamination concerns. This raises worries that franchisees might need to increase labor hours.
McDonald’s has emphasized that its “NEXT” plan includes operational enhancements aimed at efficiency. They intend to redistribute labor in locations to avoid adding more staff to manage the new breaded items.
In addition, an AI system named ArchIQ is being implemented, which has launched in 8,000 locations in China. This program will help take orders at drive-thrus and reportedly “free up 50 hours of labor each week,” according to Brian Rice, the company’s technology executive vice president.
Despite these changes, challenges remain. For instance, Burger King discontinued its hand-breaded chicken sandwich four years ago after finding the process chaotic to maintain in restaurants.
McDonald’s is collaborating with franchisees to address their concerns, stressing that any broader implementation of the new chicken offerings will hinge on the pilot program’s success.
The NEXT initiative also aims to introduce new flavors for Chicken McNuggets and optimize cooking times and oil usage, ensuring that existing chicken menu items are even tastier, as noted by Jill McDonald.
Implementing these changes is projected to cost US franchisees around $800,000 over several years. McDonald’s plans to support this with $8.5 billion in cash and rental reductions, though the assistance will vary by operator.
Furthermore, the company has plans to open 2,100 new restaurants globally this year. McDonald’s operates more than 13,700 locations in the US, with a significant majority run by franchisees.
They anticipate that the new restaurants will account for about 2.5% of systemwide sales growth by 2027, with an expectation of around 2% growth by 2030.
It’s worth mentioning that McDonald’s stock has seen a decline of over 23% this year.
