Chicken's run

Chicken has overtaken beef at McDonald's, it's been 50 years in the making

My gift to you this holiday season is a short entry about something completely different. If you want to hear more about food, please comment!

Today, I’m talking about food. McDonald’s has made headlines for decades for its capability to manipulate the global supply chain through massive volume. Beef production is a major driver of climate change and McDonald’s has been the driver of beef consumption in the world for decades. Lately, chicken sales have skyrocketed at the fast food leader, pulling even with beef sales for the first time. 

Food supply chains shift to chicken

The USDA has tracked the supply of major animal based proteins in the United States for over a century:

Beef is increasingly not what is for dinner. Why did this happen? I have read about health conscious choices and environmental concerns over grazing lands, but the simplest answer is that chicken is more efficient to produce. From IEEE Spectrum, chickens can convert ~1.7 pounds of feed into 1 pound of live weight whereas beef has a ratio of around 12:1. Processing the chicken yields about 60% of that live weight as edible meat, and for a cow it’s closer to 40%. That means I’m getting 4 times more meat for the feed I put in and I can get even more meat to market considering that chickens are raised and slaughtered in about 2 months compared to 1-2 years for cows (depending on feed). We’re not headed to a world where consumers accept beef prices that are more than five times chicken prices, so there’s no reason to expect that chicken will stop its run anytime soon.

Beef vs Chicken in fast food

From a New York Times article about McDonald’s struggles in 2003:

So along with the entire hamburger category, the company has been losing market share to what the food industry calls the fast-casual restaurants like Panera Bread, Baja Fresh, Pret A Manger and Chipotle Grill (McDonald's has an ownership stake in the last two) that have successfully domesticated exotic tastes for the mass audience.

The fast-casual segment of the market grew 3 percent in 2002, while the restaurant industry as a whole shrank 2 percent, according to the NPD Group, a market research company.

McDonald's has been experimenting with new foods like a salad topped with hot slices of grilled or crispy chicken that is scheduled to go on sale nationally in March. Customers will be able to eat a griddle cake sausage sandwich, called McGriddles, in the spring and will soon be able to petition an in-house barista for a cup of premium ground coffee and pastries, a concept the company calls McCafe.

Since this switch 20 years ago, McDonald’s has been on the rise going from ~$13 to today’s nearly $300 per share as one of the best performing blue chip stocks over the time frame. The trend goes beyond McDonald’s as well. Chipotle stated back in 2022 that chicken is “easily” their most popular protein and both their stock price and continued expansion (adding 7% more stores in 2022). Then there’s Chick-fil-A which is harder to get data for as a private company but anecdotally disrupts traffic patterns everywhere they add one because it is so busy. 

Real, lasting change is driven by money

It’s not a surprising statement to say that at-scale change requires a driving force that everyone understands. Even then, change in real world assets takes time. Time and understandable impact means the change has to drive efficiency and eventually money. Farmers and restaurants don’t care at scale that chicken has a lower carbon footprint than beef. I’d venture to say that consumers don’t care that chicken is a more heart-healthy protein than beef. They are making the switch because it makes economic sense to them. Finding those opportunities where the money makes sense and aligns with battling climate change is what I’ll continue writing about in 2024.