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- The new Popeyes chicken sandwich is a sign of a strong economy, according to Conor Sen, a Bloomberg columnist and portfolio manager.
- The fact that the sandwich is selling out, despite being priced at a premium to other menu items, indicates strong consumer spending, Sen said.
- Other iconic fast-food sandwiches like the Big Mac and Whopper were launched during times of economic strength to help fast-food chains boost margins during times when people would pay more.
- Read more on Markets Insider.
The new Popeyes chicken sandwich can be viewed as a positive economic indicator, according to Bloomberg Opinion columnist Conor Sen.
Sen, also a portfolio manager for New River Investments in Atlanta, wrote on Wednesday that Popeyes’ introduction of a new sandwich is a sign that consumer spending is healthy. This is because the sandwich —which has been widely well-received as a competitor to Chick-fil-A and buzzed about on social media — has been a smash hit despite costing most than most other sandwiches on the menu.
Sen writes that this is a classic play for fast-food companies that face increased pressure on margins when the economy is strong and labor markets are tight. Simply raising prices on existing items could turn consumers off, so restaurants create new, slightly pricier items.
Further, even though the Popeyes sandwich is priced at a premium, the restaurant is selling out of the item, showing that consumers are more than willing to pay the higher price for the food. That can, in turn, be viewed as a sign of economic strength.
The launch of Popeyes’ chicken sandwich mirrors the conditions around which two other iconic fast-food items were created: the Big Mac and the Whopper. Both were released during times of low unemployment, similar to today’s situation.
The Economist famously started its Big Mac Index in 1986 as a fun "light-hearted" way to track if currencies are at their "correct" level. The thinking is that one can calculate currency ratios by comparing the price of a Big Mac across different countries.
There are a few other examples of restaurants looking to new products to bring in consumers willing to pay higher prices. Sen cites the recent craze for plant-based meat products such as Burger King’s Impossible Whopper or Dunkin’s Beyond Sausage breakfast sandwich as two recent examples.
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Source: Business Insider – feedback@businessinsider.com (Carmen Reinicke)