Unsold: Ten Million Pounds of McDonald’s Mighty Wings

December 22, 2013 Leave a comment

December 18, 2013, 4:34 PM

Unsold: Ten Million Pounds of McDonald’s Mighty Wings

JULIE JARGON

Some McDonald’s franchisees are in a flap over a chicken wings promotion that flopped. McDonald’s, which has been struggling to attract customers amid a sluggish economy and has suffered from some operational missteps, purchased approximately 50 million pounds of chicken wings for a limited-time promotion in the fall, according to a person familiar with the matter.Approximately 20% of that inventory remains, because the chain was unable to sell enough, this person says. Now the company is planning to offer another promotion in order to sell the wings, which are in frozen storage.

The chicken wings, which had been criticized for being too expensive and spicy, are going to return at a discount to the previous offer of three for $2.99, the person said.

When Janney Capital Markets analyst Mark Kalinowski surveyed McDonald’s franchisees in October, many of them commented on how poorly the wings were selling because they were priced well above competitors’ offerings.

“Mighty Wings are proving once again that we can’t sell premium items in large numbers because we still have the Dollar Menu,” one franchisee said in the anonymous survey.

When McDonald’s reported third quarter earnings in late October, Chief ExecutiveDon Thompson said that the Mighty Wings promotion sold within the lower range of company expectations and admitted that the price “was not considered the most competitive.”

Franchisees have been told they must participate in another upcoming promotion – the date and pricing of which are not yet clear – or else pay for the excess inventory.

McDonald’s spokespeople could not immediately be reached for comment.

 

McDonald’s Has To Get Rid Of 10 Million Pounds Of Mighty Wings

ASHLEY LUTZ

DEC. 19, 2013, 10:58 AM 17,411 12

McDonald’s has 10 million pounds of Mighty Wings it needs to sell soon.

The wings, which represent 20% of the chicken wings produced for a promotion, are in frozen storage, writes Julie Jargon at The Wall Street Journal.

McDonald’s was “unable to sell enough,” according to Jargon.

Earlier this year, CEO Don Thompson said that the chicken wings aren’t the smash success it had hoped for.

While Mighty Wings apparently met internal targets, the item “was not strong enough to offset” weak sales trends, Thompson said on a conference call.

Here are some of the reasons they flopped.

Price: In McDonald’s terms, Mighty Wings are a premium product. The wings come in packs of three for $3.69, five for $5.59, and 10 for $9.69. Thompson said the prices, which are similar to Buffalo Wild Wings, were “not the most competitive.”

Spice: Thompson said the wings were too spicy for many customers’ tastes.

Appearance: The Mighty Wings looked too much like “McNuggets with bones,” writes Susan Berfield at Bloomberg Businessweek.

Economy: Many McDonald’s customers are still struggling financially—and are more likely to spend their hard-earned money on a tried-and-true favorite.

The fast food giant is currently implementing a plan to get rid of the wings.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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