How McDonald’s Is Fighting the Chicken Sandwich War

The chicken sandwich war has returned.

Bloomberg tells us that it began in 2015 after Chick-fil-A moved to NYC. During 2019, when Popeyes came out with its new fried chicken sandwich, the lines at some of its restaurants stretched around the block. Extra crispy with an unusually thick pickle slice, the sandwich was so popular that Popeyes employees had to work overtime. Offering an alternative, KFC added a Cheetos chicken sandwich to the menu.

And now, with an international weapon, Shake Shack has a Korean-style chicken sandwich and Wendy’s, a loaded Nacho chicken sandwich:

But perhaps, McDonald’s might have the best new ammunition.

Chicken Sandwich Wars

Yesterday, McDonald’s added a Big Mac Chicken sandwich to its menu. Similar to its namesake, the chicken version will have two tempura-battered chicken patties but no onions.

However, at a “dupe” restaurant called McDonnell’s, McDonald’s did a teaser taste test. Like the pop-ups, we see at malls but more ephemeral, McDonnell’s in LA (reputedly) was around for just a day. An enterprise called Chain partnered with McDonald’s for the concept:

MacDonald’s also briefly tested its Big Mac Chicken Sandwich in the U.K., Australia, Canada, and Miami.

Our Bottom Line: Monopolistic Competition

Telling us what is special about their sandwich is precisely what McDonald’s, Wendy’s, KFC, and all others have to do. Each chain tries to differentiate its chicken from everyone else’s.

In a monopolistically competitive market, it all makes sense.

Monopolistic competition is composed of two halves. The monopoly part indicates the company is producing something unique that you associate solely with it. But the competition half says that lots of others have something that could be identical or very similar. A beauty salon is the perfect example. You can get a haircut at many hundreds of shops. But the one person who does your hair is what makes the place unique.

Because we can say the same thing for a fried chicken sandwich, you can see why there is a war among the big chains. Each is trying to distinguish its version from all the others.

In the four basic market structures, monopolistic competition is located to the left on the scale. Its position indicates less price and non-price power than those firms located to right. For monopolistic competition, businesses tend to be smaller and the market is their boss:

As economists, we can applaud McDonald’s for recognizing diminishing marginal utility. Making the McDonald’s chicken sandwich a limited edition, they assured its brief availability and future desirability. It is a tactic that could win this battle in the chicken sandwich war.

My sources and more: For the Chicken Big Mac details, WSJ and McDonald’s are two possibilities. But Fast Company’s description of the McDonnell’s idea was most interesting. All added to the facts in our 2019 first and second rounds that we described at econlife (and from which we quoted parts of today’s post).

Our featured image is from McDonald’s.