Analyst Breaks Down Popeye's Chicken Sandwich, Impact On Rivals
KeyBanc Capital Markets analyst Eric Gonzalez maintains an Overweight rating on Restaurant Brands International's stock with an unchanged $85 price target.
Popeye's chicken sandwich likely accounted for 30% of the chain's total sales with some locations selling around 1,000 sandwiches a day, Gonzalez wrote in a note. The research firm's proprietary data likely points to Popeye's doubling its market share of fast food industry traffic at its peak. This could translate to a four to five point contribution to quarterly same-store sales growth on top of a baseline of 2% to 3% before the sandwich launch.
Meanwhile, McDonald's Corp (NYSE:MCD) likely saw a "step down" in same-store sales during Popeye's chicken craze, the analyst wrote.
However, McDonald's trends likely returned to a normalized level in September as it launched its spicy BBQ chicken sandwich and kept its buy one get one for $1 promotion. Any final estimates for third quarter results will need to be monitored.
Finally, Popeye's played a "spoiler" role to sister company Burger King and Wendys Co (NASDAQ:WEN) who hoped its spicy chicken nuggets would become a big summer seller, the analyst wrote. Trends may have improved for Wendys' after Popeye's chicken craze subsided.
Shares of Restaurant Brands International were trading lower by 0.6% Monday afternoon at $75.10.
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