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Analyst Breaks Down Popeye's Chicken Sandwich, Impact On Rivals

September 9, 2019 3:23 pm
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Analyst Breaks Down Popeye's Chicken Sandwich, Impact On Rivals

Restaurant Brands International Inc (NYSE:QSR)'s Popeye's concept realized a notable benefit in trends when its chicken sandwich took the country by storm. But did it have any impact on rivals?

The Analyst

KeyBanc Capital Markets analyst Eric Gonzalez maintains an Overweight rating on Restaurant Brands International's stock with an unchanged $85 price target.

The Thesis

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.

Price Action

Shares of Restaurant Brands International were trading lower by 0.6% Monday afternoon at $75.10.

Related Links:

What The Truck?!? – There's No Driver Shortage Or Chicken Sandwiches At Popeyes

KeyBanc Explains Why Popeyes Unit Economics Matters

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