Fast food giant McDonald's (NYSE:MCD), facing slowing growth, has made several serious attempts to boost sales recently. In April the company launched the McWrap, featuring chicken and fresh vegetables, in an attempt to cater to healthier eaters.
Another new item recently introduced is the Egg White Delight, a version of the Egg McMuffin featuring egg whites without the yolk. Again, this item caters to those seeking lower calorie, healthier options.
The latest new item, though, is not a healthy option at all. Starting on Sept. 9 McDonald's will begin rolling out nationwide Mighty Wings, bone-in chicken wings with a variety of sauces. Some are calling the announcement a game changer, but I have doubts that Mighty Wings will be a success.
Expensive and inconvenient
There are two big problems with Mighty Wings. First, they are expensive. The wings will come in three, five, and ten packs, with the three pack costing $2.99. A dollar a wing, while acceptable at Buffalo Wild Wings, is far too pricey for fast food. Considering that you can get a double cheeseburger for the price of a single wing and 20 chicken McNuggets for the price of five wings, there seems to be very little reason to buy Mighty Wings except out of curiosity.
Another problem is convenience. One of the tenets of fast food is, for lack of a better phrase, ease of use. Wings are significantly more difficult to eat than traditional fast food items, and they leave plenty of waste in the form of bones behind.
The Mighty Wings promotion is set to run into November, timed to line up with most of football season. But given that wings are typically either eaten at a sports bar or a restaurant like Buffalo Wild Wings while watching the game or along with pizza at home with a group, I don't see how McDonald's fits into the equation.
I don't think Mighty Wings will become a permanent item, and I doubt they'll do much to drive sales. McDonald's is stepping out of its comfort zone, and results will not be good.
A better idea
While McDonald's is toying around with wings, Wendy's (NASDAQ:WEN) has a real hit on its hands. The Pretzel Cheeseburger, an attempt at a more upscale offering, is being called the most successful new product for Wendy's in a decade.
Interestingly, Wendy's is using social media to drive sales of the new item. In its most recent earnings presentation Wendy's cites that the number of consumer impressions topped one billion, while promotional videos have been viewed more than 60 million times. Awareness of a product like the Pretzel Cheeseburger is key, and Wendy's has done an excellent job promoting the new sandwich.
The Pretzel Cheeseburger is successful because it doesn't try to be healthy like the McWrap, and it doesn't try to break into new categories like Mighty Wings. Wendy's has taken what it's good at, premium fast food burgers, and put a new spin on it. It's just unorthodox enough to garner attention while still appealing to core customers.
The Pretzel Cheeseburger is at least partially responsible for Wendy's strong recent results. The company is projecting adjusted EPS to rise by as much as 29% compared to 2012, and in the long term EPS growth is projected to be in the mid-teens. Wendy's does trade at a high multiple, but the company has a legitimate turnaround story going for it.
A huge hit
Another fast food giant has also been successful with innovative new products as of late. Taco Bell, operated by Yum! Brands (NYSE:YUM), introduced the Doritos Locos tacos early last year. The taco is a standard crunchy taco with the shell made from Doritos, and since its introduction it has been a huge success. The launch has been the most successful in company history, with over half a billion sold in just over a year.
The Doritos Locos taco was successful because it didn't try to reinvent the wheel. Like the Pretzel Cheeseburger at Wendy's, the tacos are both familiar and different. The combination of Taco Bell and Doritos created plenty of buzz, and new flavors should drive sales even higher.The original Nacho Cheese flavored taco drove a 13% same-store sales increase in the second quarter of 2012. Now Taco Bell has released a new flavor, Fiery, which was launched on Aug. 22.
Another innovation at Taco Bell is the new breakfast menu, set for a national roll-out next year. The menu features most notably a Waffle Taco and a breakfast Crunchwrap, and both items have been doing well in test markets.
This breakfast menu has a real chance at success because it sticks to what Taco Bell knows. Much like the Doritos Locos Tacos, the breakfast menu is a modification of current items. Although a Waffle Taco may seem radical it's still a taco, just with a different type of shell.
Taco Bell has a winner with Doritos Locos, and it will likely have a winner with its breakfast menu next year.
The bottom line
McDonald's appears to be trying to cater to everyone at the same time. With healthy options like the McWrap mixed with dollar cheeseburgers and chicken wings the menu is quickly becoming muddled. McDonald's seems desperate to increase sales, but the new strategy may backfire. McDonald's needs to take a cue from Wendy's and Taco Bell and stick with what it knows--and wings are not it.