McDonald’s chicken, beverage expansion faces competitive pressure

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McDonald’s chicken and beverage competition

Highlights

McDonald’s aims to gain 1.5 percentage points of global market share in chicken and beverages by 2030, targeting categories worth $130 billion and $230 billion respectively.
Consumer Edge data shows Chick-fil-A, 7 Brew, Starbucks, Dutch Bros. Coffee, and Dunkin' increased their spending share in the third quarter, while McDonald’s and burger chains including Burger King saw mixed performance.
McDonald’s reports slightly negative U.S. comparable sales in July and August but expects September improvement; Bernstein maintains a $295 price target with shares closing at $235 amid concerns over slow returns from new initiatives.

Growth targets and spending shift

As reported by CNBC, citing Consumer Edge, chains specializing in chicken and drinks are capturing more customer spending even as McDonald’s pursues higher market share in both categories by 2030. The company says it wants to add 1.5 percentage points of global market share in chicken and beverages, identifying both segments as major expansion opportunities.

At its September investor day, McDonald’s highlights the size of those markets as a reason for the push. CEO Chris Kempczinski tells CNBC that chicken represents a $130 billion category where McDonald’s holds about 20% share, while beverages represent a $230 billion category where it has roughly 10% share, compared with the $50 billion global beef category where it already has about 40% share.

Consumer Edge data shows Chick-fil-A gaining 0.58 percentage points of limited-service restaurant spending in the third quarter from a year earlier, the largest increase among the chains it tracks. Coffee chains also post gains, with 7 Brew adding 0.4 percentage points, while Starbucks, Dutch Bros. Coffee and Dunkin' rank among the top 10 gainers, for a combined 0.88 percentage points of spending share.

Sales recovery signs and investor concerns

McDonald’s remains the largest individual chain in customers’ overall limited-service restaurant spending, but its share is lower than a year earlier. Burger King, owned by Restaurant Brands International, gains 0.24 percentage points, the biggest increase among burger chains.

Michael Gunther, senior vice president at Consumer Edge, says restaurant operators are competing for a smaller pool of discretionary spending as consumers become more selective. That pressure comes as McDonald’s works through sluggish sales, although executives say trends improve toward the end of the third quarter.

At the investor day, McDonald’s says U.S. comparable sales are slightly negative in July and August, but expects September to turn positive. Consumer Edge data also shows the company’s year-over-year spending share declines narrowing across every income group in September.

Wall Street remains cautious on how quickly the chicken and beverage strategy can translate into results. Bernstein analyst Danilo Gargiulo says after the investor day that U.S. beverage launches do not yet generate enough sales to offset broader weakness, while McDonald’s next chicken platform, including hand-breaded and grilled chicken items, appears further away than he expected.

Gargiulo says the scale of investment behind McDonald’s Next exceeds his expectations and adds pressure to near-term earnings. He maintains a market perform rating on the stock with a $295 price target, while shares close around $235 on Friday.

Our earlier article on Goldman Sachs upgrading its near-term global equities outlook explained that the bank moved to an “overweight” stance ahead of third-quarter earnings, citing more attractive valuations after a pullback. It also highlighted the key risks investors were watching—higher oil prices, sticky inflation, and elevated bond yields—and noted Goldman’s more constructive view on government bonds as a potential hedge.

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