McDonald's Tests Hand-Breaded Chicken to Recapture Market Share
The fast-food giant is piloting new chicken tenders and sandwiches in nearly 200 locations as part of a broader strategy to compete with rivals and attract consumers amid inflation.
McDonald's is expanding tests of hand-breaded chicken menu items, including tenders and sandwiches, to approximately 200 restaurants in the U.S. and Ireland next year. This initiative represents a significant effort by the global fast-food chain to regain market share and appeal to customers impacted by inflation.
The company has already been offering hand-breaded chicken nuggets, strips, and sandwiches in select Chicago-area stores and at 10,000 locations across Asia. The move aims to challenge competitors like Chick-fil-A and Raising Cane's, which are known for their daily hand-battering and breading processes.
"Hand-breaded chicken items are a significant opportunity to upgrade taste and quality," said Jill McDonald, executive vice president, during a recent investor presentation. The chain has identified chicken products as a key area for growth, with a goal to gain 1.5 percentage points of market share in this category by 2030. This strategy is part of an $8.5 billion spending plan announced by McDonald's, which also includes a focus on chicken offerings as consumers increasingly shy away from rising beef prices.
Implementing hand-breaded chicken presents operational challenges for McDonald's, a company built on speed and efficiency. Unlike pre-breaded, frozen products, the new items require raw, marinated, and frozen chicken to be thawed, battered, and breaded on-site. This necessitates new equipment, such as thawing cabinets, and dedicated workstations for employees. The process is more complex and time-consuming than simply frying pre-breaded nuggets.
Employee workflow is also a consideration. Staff handling raw chicken must adhere to strict cross-contamination protocols, potentially limiting their ability to perform other tasks behind the counter. McDonald's indicated that its "NEXT" operational improvement plan aims to optimize labor distribution, potentially mitigating the need for additional staff. The company is also exploring AI-driven solutions, such as the ArchIQ program piloted in China, which automates drive-thru orders to free up employee time.
Previous attempts by fast-food chains to introduce similar menu items have faced hurdles; Burger King, for instance, discontinued a hand-breaded chicken sandwich years ago due to implementation difficulties. McDonald's acknowledges these challenges and stated that a broader rollout of its new chicken items will depend on the success of the upcoming pilot program.
The NEXT program also encompasses enhancements to existing products, including new Chicken McNugget flavors and refined cooking procedures. The investment in these operational changes is expected to cost U.S. franchisees approximately $800,000 over several years, with McDonald's providing financial support through cash and rent concessions.
McDonald's continues to expand its global footprint, with plans to open an additional 2,100 restaurants worldwide this year. The company currently operates over 13,700 locations in the U.S., largely managed by franchisees. The new restaurant openings are projected to contribute to systemwide sales growth, with an expected 2.5% contribution in 2027 and around 2% by 2030. Despite these expansion and product development efforts, McDonald's stock has seen a decline of over 23% year-to-date.