Popeye’s and McDonald’s Both Want a Piece of Buffalo Wild Wings' Business

The latest restaurant chain to get in on the chicken wing craze is Popeye's and its new Bayou Buffalo Wicked Chicken. Will these wings flop like Mighty Wings or soar like Buffalo Wild Wings?

Jan 7, 2014 at 3:42PM

These days, every quick-service restaurant is looking to get in on the chicken wing craze. After all, look what chicken wings did for Buffalo Wild Wings (NASDAQ:BWLD)(NASDAQ:BWLD) and its shareholders: shares are up more than 87% in the past year. Shares of Popeye's Louisiana Kitchen parent AFC Enterprises (NASDAQ:PLKI) are up slightly more than 37%, while shares of McDonald's (NYSE:MCD) have lagged the market and are up only 7% in the past year.

Could chicken wings be the menu innovation to get shares of AFC Enterprises and McDonald's to fly like Buffalo Wild Wings?

Foray into wings not going as well as expected
McDonald's Mighty Wings promotion has not taken off like the company expected. Matter of fact, Mighty Wings ended up being a dud. A big reason for this was that McDonald's priced itself out of the market. The prices for Mighty Wings were on par with prices at Buffalo Wild Wings--the wings were priced at three for $3.69, five for $5.59, and 10 for $9.69. Consumers were just not willing to pay Buffalo Wild Wings prices at McDonald's. The other problem with Mighty Wings was that many customers found them to be too spicy.

The end result is that McDonald's and its franchisees are sitting on 10 million pounds of unsold wings. To sell its remaining supply of Mighty Wings, McDonald's is going back to the original offer of three for $2.99. If McDonald's wants to be in the chicken wing business, it looks like it needs to go back to the drawing board (or in this case the kitchen) and cook up a new batch of wings for its menus.

Not looking to be left out of the chicken wing market
Considering that Popeye's is known for its fried chicken, it makes sense for the chain to have wings on its menus; but now Popeye's is looking to "out buffalo" the buffalo wing with its new Bayou Buffalo Wicked Chicken. According to Popeye's, "[P]acking flavor on flavor from the inside out, Popeye's starts with the Louisiana-style buffalo marinade, then the thin strips of tender, juicy, all white meat are sauced and tossed in our Bayou Buffalo sauce and fried up fresh. Bayou Buffalo Wicked Chicken is served with Popeye's new Bleu Cheese Dipping Sauce, regular fries, and a biscuit for only $3.99 through [Jan.] 26."

Buffalo Wicked Chicken is a smart move by Popeye's and its timing is perfect with the NFL football playoffs. This promotion should also help keep same-store sales running strong--in the third quarter, same-store sales rose an impressive 5.1% across all global locations. Popeye's continues to grow as well, with the chain opening 33 net new locations in the quarter.

It's all about the wings
When us Fools think of wings, the first restaurant that comes to mind is Buffalo Wild Wings. The chain was built around chicken wings, but Buffalo Wild Wings, or B-Dubs, is also known for its burgers, sandwiches, appetizers, and plenty of beer and alcohol to watch your favorite sporting events. Each location has more than 30 flat screens to stay on top of the action.

Buffalo Wild Wings has really focused on its drinks menu to get customers in the door. The latest move is that the chain is swapping Coca-Cola products for PepsiCo, which gives Buffalo Wild Wings the chance to offer products from PepsiCo's snack division like Doritos-flavored chicken wings. B-Dubs has also partnered with Craft Brew Alliance and has rolled out its own draft beer called Game Changer. This focus has certainly worked, as the chain serves more draft beer than any other chain restaurant in the U.S.

Foolish assessment
McDonald's has the lowest P/E multiple at 17 and has the highest dividend yield at 3.3%. AFC Enterprises is next and is trading at 25 times earnings. Buffalo Wild Wings is considered a growth stock and has the highest multiple, trading at 40 times earnings. For value investors, McDonald's looks to be the best bet with its low P/E and high dividend yield.

Buffalo Wild Wings has plenty of growth ahead, but its shares will be more volatile due to its high P/E. AFC Enterprises looks to be the sleeper among the three, but that might be about to change as Popeye's has been posting impressive same-store-sales numbers. It's certainly a stock to watch. 

We put our money where our mouth is
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

 

Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings and McDonald's. The Motley Fool owns shares of Buffalo Wild Wings and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers