McDonald's Corp. is taking its Chicken McBites national early next year, the biggest change to its 2012 food and marketing calendar.
The Oak Brook-based fast-food chain will feature the mini-fried chicken pieces as a limited-time promotion in early spring, according to executives. Other items to be rotated onto its menu include a 100% fruit-juice slush called a Cherry Berry Chiller and a blueberry banana nut oatmeal later in the spring.
The company also will add flavors to existing products, such as its premium chicken sandwich and coffees and hot chocolate.
A spokeswoman declined to comment on the plans and the company didn't provide any specifics on its product rollout in its third-quarter conference call with shareholders this morning. On the call, McDonald's CEO James Skinner said only that the U.S. is planning a number of marketing promotions around new products next year.
McBites, which first test-marketed in Australia and then Detroit this year, are bite-sized nuggets similar to chicken versions of popcorn shrimp. Chik-fil-A Inc. already sells something like this, called Nuggets. The Atlanta-based chain also has Chick-n-Minis, which are nuggets in a bun and trays in three sizes that serve eight to 25 people.
McBites will come in packages of 4, 6 and 12 ounces and priced from $1.99 to $4.99, accompanied by dipping sauces.
The Cherry Berry Chiller is being tested in several Michigan markets. It is made with 100% fruit juice blended with crushed ice. In some markets, a small size is free with any large sandwich.
McDonald's, meanwhile, reported strong third-quarter earnings that beat analyst expectations. Net income rose 9% to $1.51 billion on a 14% gain in revenue to $7.17 billion.
Sales at stores open more than a year increased 5% for the quarter, including a 4.4% advance in the U.S. Management expects year-over-year revenue to rise 4% to 5% in October.
The company credited its recent gains on several menu items. McDonald's original McNuggets, now with four new dipping sauces, grew 10% in the quarter. Frozen strawberry lemonade and mango pineapple fruit smoothies launched over summer boosted McCafe beverage sales by 16%. Units of breakfast offerings, which account for 25% of sales, were up 20% over last year.
Besides new products, McDonald's management addressed pricing in the face of rising commodity costs which are squeezing margins. Ingredient costs rose 8% in the third quarter, on top of 6% and 1% in the two previous quarters, and the company expects them to increase further.
“These prices, which typically moderate after the summer, have remained high,” Chief Financial Officer Peter Bensen told analysts. “As a result, we now expect commodity cost in the U.S. to be up a little more than previously expected, 4.5% to 5% for the full year with fourth-quarter increases easing compared to second and third quarter.”
When asked what the higher expenses will mean for the Dollar Menu in 2012, Mr. Skinner declared: “Dollar Menu is here to stay. We have support by our franchisees for the Dollar Menu going into 2012.”
McDonald's already hiked prices twice this year, by 1% in March and 1.4% in May, and will consider more as necessary.
“We will continue to evaluate additional price increases in light of this inflationary environment always balancing our goal of driving traffic and marketshare gains with effectively managing the impact of rising costs,” Mr. Bensen said.
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