The chicken in Popeye’s sandwich crunches audibly when you bite in, with all those nooks and crannies on the surface shattering into a thousand delicious pieces.
Nick Kindelsperger | Tribune News Service | Getty Images
No wonder Popeyes ran out of its new chicken sandwich.
An analyst at KeyBanc Capital Markets estimates the fast-food chicken restaurant sold about 1,000 chicken sandwiches a day. Sandwich sales also accounted for about 30% of Popeyes sales in the time it was available while store traffic doubled, the analyst said, citing proprietary tracking data. For this reason, the firm is bullish on the parent company, Restaurant Brands International, and raised its earnings estimates.
The sales boom got its spark after a Twitter feud with Chick-fil-A in August led consumers to try the new sandwich. The chicken sandwich’s massive popularity also sent ripples through the fast-food industry as Popeyes same-store sales skyrocketed.
“Unbeknownst to [parent Restaurant Brands International] at the time, the launch of a new chicken sandwich at Popeye’s and subsequent twitter debate would be a viral sensation that would disrupt the fast food industry and likely shape the outcome of 3Q19 results for some of the category’s largest players,” analyst Eric Gonzalez said in a note.
Popeyes officially launched its chicken sandwich on Aug. 12 but it wasn’t until a week later that the fast-food chain’s new product took off.
On Aug. 19, Chick-fil-A tweeted “Bun + Chicken + Pickles = all the [heart] for the original” about its own chicken sandwich, seemingly going after Popeyes iteration. Both sandwiches are made with fried chicken, a buttered bun and pickles.
Popeyes replied to Chick-fil-A’s tweet, saying: “… y’all good?”
Popeyes’ tweet went viral, kicking off a frenzy that led to the chain running out of sandwiches before the end of August.
KeyBanc’s Gonzalez raised his same-store sales estimate for Popeyes to 8% from 2%, noting that estimate may be “conservative” as the chain maintained its newly found momentum after the sell-out. The Popeyes chicken-sandwich notoriety also limits upside to McDonald’s same-store sales and played “spoiler” to Burger King’s Impossible Burger launch and Wendy’s’ Spicy Chicken Nuggets promotion, the analyst added.
“The U.S. fast food category is characterized by its low-single-digit SSS growth rate,” Gonzalez said. “As such, for a mid-size chain like Popeye’s to more than double its market share over a period of several days last month likely means that larger fast food players including McDonald’s, Burger King, and Wendy’s are likely to feel its impact.”
Gonzalez has an overweight rating on Restaurant Brands International, the parent company of Popeyes. His price target of $85 per share implies a 12.5% upside from Friday’s close of $75.55.
—CNBC’s Michael Bloom and Amelia Lucas contributed to this report.