McDonald’s Corp. is bringing back Chicken Selects to its menu and should begin appearing at U.S. restaurants for at least a limited time in early March, the Oak Brook, Illinois-based company said this week, according to Bloomberg Business. The product, made with fried strips of tenderloin chicken meat, was last sold in 2013 after more than a decade on the menu.
McDonald’s is suffering through a difficult sales slump and shaking up its leadership. The increased demand from McDonald’s should proof helpful with chicken-breast prices through the summer, said Brett Hundley, an analyst for BB&T Capital Markets. “It’s a good thing for the chicken industry,” said Hundley. “Continuing limited-time offers are definitely a positive for keeping supply and demand aligned.”
The chicken industry is in its third year of strong profits, but import restrictions in China and export woes at West Coast ports have stoked fears of a domestic glut, Hundley said. For McDonald’s and other fast-food restaurants, lower-priced poultry has helped offset the mounting cost of beef.
“We anticipate that chicken will be featured heavily in food service this year due to the high prices of beef and pork,” said Farha Aslam, an analyst with Stephens Inc. “The restaurants are expected to have more chicken features and to run the promotions for a longer than normal period. This is expected to support chicken prices.”
McDonald’s cut Chicken Selects from its menu in 2013 as part of an effort to streamline its offerings. That decision was made before beef prices climbed to a record high last year. McDonald’s now hopes customers will embrace the return of the tenders, which will be available in orders of three.
U.S. production of chicken broiler meat will increase 3.6 percent to 39.5 billion pounds, the U.S. Department of Agriculture forecast last week. The increased production has raised questions over whether profit margins will suffer, Hundley said. “Investors are concerned the chicken industry is going to oversupply the market as it has historically done,” he said.
McDonald’s is trying to get back on track after its worst slowdown in more than a decade. Steve Easterbrook, currently senior executive vice president, will replace Don Thompson as chief executive officer on March 1. Easterbrook is facing a more competitive market — both from traditional rivals and newer fast-casual chains like Chipotle Mexican Grill Inc. and Panera Bread Co. Visits to fast-casual restaurants grew 8 percent in 2014, according to Bonnie Riggs, a restaurant industry analyst at NPD Group. Fast-food chains, in contrast, are seeing little growth in traffic. “It’s really about a battle for market share,” Riggs said. “Flat growth is the new normal.”
