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Why Taco Bell entered the Chicken Sandwich War

Welcome to Buy/Sell/Hold, Marker’s weekly newsletter that’s 100% business intelligence and 0% investment advice. Each week, our writers Steve LeVine and Rob Walker make sense of the most important developments in business right now — and give them a Buy for clever moves or positive trends, a Sell for mistakes or missed opportunities, or a Hold if they’re noteworthy but too early to call.

🍗 Even Taco Bell wants a piece of Popeyes’ chicken sales🍗

The Buy/Sell/Hold Analysis

In summer 2019, Popeyes fired the first shot in the chicken sandwich war, going after chicken king Chick-fil-A and vowing to take no prisoners. After just two weeks, the first battle reports were in: The Popeyes sandwich was a runaway hit. Straight out of the gate, Popeyes had grabbed more than 30% of the already-competitive chicken sandwich market, announcing it had plumb sold out due to astronomical demand. People trying to get a grasp of this chicken sandwich mania blamed Chick-fil-A and its viral, decade-long growth into a 2,500-location phenomenon, surging past Wendy’s and Burger King in revenue. But there was no doubt that Popeyes’ newcomer had struck a nerve.

All of that was before Covid-19. What we thought of as a war in 2019 has ballooned into a grizzled, multiyear saga. According to one survey, chicken sandwich sales grew a whopping 420% in 2020, with Americans ordering 2.5 billion fried chicken sandwiches — roughly eight for every man, woman, and child in the country. Chick-fil-A, surging back from Popeyes’ guerrilla attack, had a 45% market share, with Popeyes halving its 2019 peak and falling to 16%.

Just in the last month, though, we have three new combatants: One is McDonald’s, which this week released its new $5.99 Crispy Chicken Sandwich,” a straight rip-off of Chick-fil-A and Popeyes, garnished with the same simple pickle. Arch-rival Burger King announced its own brand-new chicken sandwich on Wednesday.

But the third competitor is far more surprising: Taco Bell. Next month, it’s introducing the “Crispy Chicken Sandwich Taco.” Debuting March 11 in Nashville and Charlotte, North Carolina, the item is priced right, at $2.49, and is really just a dressed-up version of an item already on the menu — the Crispy Tortilla Chicken (nestled in “taco bread”) — which makes it a shrewd economic play for the chain.

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I immediately got a temperature check on this latest contender. The gauge was my teenage daughters: The older one, after dinner, often insists we drive to Taco Bell so she can have something on hand to eat later; her younger sister only orders some form of fried chicken at restaurants, regardless of the cuisine. The older one responded that she would definitely want to try Taco Bell’s sandwich taco “‘cuz Chick-fil-A chicken sandwiches and Popeyes chicken sandwiches are AMAZING.” As for the younger one, she was a bit more skeptical: “Why are they making chicken sandwiches? Maybe business has been bad.”

Aren’t both answers precisely the point? Fast or near-fast food has been one of the very few Covid-19 winners: Chipotle, Domino’s, and the chicken franchises have had sales off the charts over the last year. Taco Bell, owned by Yum Brands, has been meh, and now it wants to share in the bonanza. Taco Bell isn’t haphazardly mocking up a Frankenstein menu item — it’s doing it because the chicken sandwich war, silly or hyped as it may sound, is real, and fast-food chains are making tons of money off of it. Even as it’s trolling Popeyes with its Crispy Chicken Taco Sandwich, Taco Bell is consciously aware of where the action is, and is getting in on it.

Interestingly, Popeyes was quick to notice Taco Bell’s strategy. It went to TikTok this week with a tongue-in-cheek video suggesting that it now effectively has tacos, too — so long as you hold its sandwiches on their side.

Verdict: Buy

— Steve LeVine

⚡Lightning Round⚡

Spotify is turning up the volume. The Swedish music and podcast streaming platform with some 345 million users in 95 countries announced plans on Tuesday to make its worldwide presence even broader — expanding to 80 more countries, and adding 36 languages to the service. Nigeria, Pakistan, Jamaica, and Belize are among its first new locales, but perhaps what matters more than any single market is the clear signal that Spotify is ready to take on mega-rivals like Apple and Amazon in a truly worldwide scrap for listeners. Buy.

LinkedIn pushes the limits of its relevance. LinkedIn, the professional networking platform owned by Microsoft, is reportedly developing a service connecting freelancers with companies and people hiring for temporary work, according to The Information. It’s yet another major feature being grafted onto a company that has a long history struggling to define its focus and balance being a social network, networking service, educational product, media company, and job listing board, to name just a few priorities. With the already-growing gig economy having expanded during the pandemic, it’s a tempting market to explore — but this new service would be competing with gig-focused startups like Fiverr and Upwork. Sell.

Jay-Z’s very good, very lucrative week. In case you’ve been worried that Jay-Z just hasn’t had enough success lately, you’ll be relieved to hear that luxury and liquor conglomerate LVMH has taken a 50% stake in his champagne brand Armand de Brignac (popularly known as Ace of Spades). The deal is seen as uniting LVMH’s global reach with Jay-Z’s trendsetter cred — and arguably comes just in time for an awful lot of post-pandemic cork-popping. Meanwhile, as if to prove that Jay-Z is about more than conspicuous consumption, one of his less nightlife-oriented investments also looks poised for a payoff: Oatly, the alt-“milk” juggernaut, whose celebrity backers also includes Oprah, has filed for an initial public offering. We look forward to drinking an Oatly/Ace of Spades premium cocktail mash-up in the near future. Buy.

Coinbase counts its coins ahead of a public listing. On Thursday morning, the cryptocurrency exchange published its S-1, revealing $1.2 billion in revenue and $322 million in profit for 2020. Since its launch in 2021, Coinbase has been a major force in pushing crypto and its culture into the mainstream; on Wednesday, the remote-first company even announced it was aligning with a core philosophy of crypto — decentralization — by forgoing any geographical headquarters. But there’s an irony to Coinbase’s financial heft and its quest to be listed on Nasdaq: As a singular organization raking in so much revenue from crypto and seeking legitimization and funding from traditional finance, it’s beginning to look a lot like a centralized bank — the very entity crypto was intended to disrupt. Hold.

📈 The Number: 12%

That’s how many more questions female economists received while presenting at conferences compared to their male counterparts, according to a working paper by a team of economists reported on by the New York Times.

The paper also found that women were more likely to face questions that were patronizing or hostile from conference attendees. This discrepancy is in addition to the fact that women economists are less frequently invited to present at conferences in the first place, accounting for fewer than a quarter of all talks delivered in the last few years (and fewer than 1% of speakers being Black or Hispanic).

The study’s findings are just the latest data point validating years of allegations of bias against women and minorities in the economics profession. In 2017, Alice Wu, then an economics undergraduate student at UC Berkeley, conducted an analysis of conversations on Economics Job Market Rumours, an anonymous online forum used by economists to discuss job opportunities in the field, and found a shocking degree of overt misogyny. Last year, the economist Claudia Sahm, who served on the Obama administration’s Council of Economic Advisors, wrote a scathing and widely read blog post titled “Economics is a Disgrace” detailing the sexism she had faced in her career in the industry. (The profession doesn’t fare any better on the racial front, either.) Given the outsized influence that economists have in helping shape politics and policy and advising major corporations, the biases of the profession ought to be a significant cause for concern not just among economists themselves, but for all of us.

— Kaushik Viswanath, Senior Editor, Marker

📖 Marker Read of the Week: Who needs threats of antitrust when Mark Zuckerberg and Tim Cook are engineering their own mutually assured destruction?

🔎 Marker’s New Fixation 🔎

Before the pandemic, I didn’t devote huge mental energy to the order of operations for entering and exiting my apartment. Now, with each minor action a reason to pause and consider risk, I have been forced to adopt a strict routine upon reentry: remove and hang masks, hand wash #1, disinfect phone and doorknob, hand wash #2. At first, the relentlessness of this regiment was infuriating, but increasingly I’ve also been grateful for the order we assign ourselves in chaos. It’s for this reason I’ve been compelled to incorporate spreadsheets — the purest form of digital regiment — into my nonprofessional life. Over the past several months, I have explored the casual, deadline-free wonders of a grid intended for my after-hours eyes only. Inspired in part by Forge’s exhaustive and inventive guide on all the ways you can improve your everyday life with Google Drive, I’ve made spreadsheets to track every single kitchen ingredient I own, to log gift ideas for friends and family so I won’t forget come time for a birthday or holiday, for tracking personal finances, for weekend to-do lists, for things I want to do and places I want to visit post-pandemic. It’s not a hobby I’m particularly proud of, nor even that passionate about, and like my mask-hanging-hand-washing routine, it’s very much a habit of circumstances. But in a time when a worldwide dearth of personal agency has stretched past the initial crisis into months on end of turmoil and powerlessness, the decisive action of controlling and containing information in a structured format has evolved beyond simply being yet another task. It’s now a dull but welcomed vacation from uncertainty — an administrative breath of fresh air.

— Jean-Luc Bouchard, Senior Editor, Marker

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Bylines in Vox, VICE, The Paris Review, BuzzFeed, and more. Contributor to The Onion. Check out my work here: jeanlucbouchard.com.