McDonald’s stumbles out of the gate with its first permanent menu addition in four years

McDonald’s Corporation (NYSE:MCD) launch of the McCrispy Strips was its first new permanent menu item in over four years. A scan of reviews from food industry observers showed some descriptions of the product as “bland, soggy, and overpriced,” with comparisons to “high school chicken strips” or “elementary school floppy chicken tenders.” The chicken strips product in its early stages was rated lower to similar offerings at Chick-fil-A, Raising Cane’s, Zaxby’s, and Popeye’s. However, McDonald’s (NYSE:MCD) did score higher on value.

On Wall Street, Loop Capital downgraded the restaurant stock to Hold from Buy. The firm expressed concerns that the fast-food chain’s domestic comparable sales will not rebound as much as expected this year.

Analyst Alton Stump highlighted that McDonald’s (MCD) franchisees continue to express concern about customer reactions to the company’s chicken strips launch. “Our contacts pointed out that the new chicken strips had far less breading, which created a superior taste profile for the chicken meat itself but also a product that was less attractive and smaller in appearance compared to MCD’s previous offerings as well as chicken fingers on the menu currently among most of the company’s top competitors,” he noted.

Looking ahead, the firm thinks that the predominantly negative customer feedback during the first month of the chicken strips launch in early May suggests a potential headwind for McDonald’s (MCD) in terms of matching near-term earnings expectations.

Loop Capital kept its earnings estimates on McDonald’s (MCD) unchanged but cut its price target to $315 from $346. The PT works out to 18X the firm’s 2025 EV/EBITDA estimate.

McDonald’s (MCD) slipped 0.3% to $308.10 in early trading on Friday.