McDonald’s is focusing on expanding its presence in the chicken and beverage markets as part of its growth strategy, aiming to capture an additional 1.5 percentage points of global market share in both categories by 2030. CEO Chris Kempczinski highlighted the large opportunity these segments present, with chicken representing a $130 billion market where McDonald’s holds a 20% share, and beverages a $230 billion market with a 10% share. The company sees greater potential in these areas compared to beef, a $50 billion market where McDonald’s already commands about 40%.

However, new spending data from Consumer Edge suggests McDonald’s faces stiff competition from chains that specialize in chicken and coffee. Chick-fil-A has notably increased its share of spending among McDonald’s customers by 0.58 percentage points in the third quarter compared to the prior year. Coffee retailers like Starbucks, Dutch Bros., Dunkin’, and 7 Brew have also gained ground, collectively adding 0.88 percentage points in share, highlighting the challenge McDonald’s faces in winning over consumers in these categories.

While McDonald’s remains the largest limited-service restaurant chain in terms of overall spending, its share has declined recently. Competitors such as Burger King, which gained 0.24 percentage points, and other niche chains are carving out more spending from customers who are increasingly selective about their restaurant choices. Consumer Edge’s Michael Gunther noted the competitive dynamic is intense, although McDonald’s could succeed if it attracts diners with appealing new menu options like its hand-breaded and grilled chicken items.

Despite these headwinds, McDonald’s has reported signs of sales improvement late in the third quarter, expecting positive comparable sales growth in September after slight declines in July and August. Analysts remain cautious, with Bernstein’s Danilo Gargiulo noting that McDonald’s beverage launches have not sufficiently boosted sales yet, and the rollout of the next chicken platform is slower than anticipated. The scale of McDonald’s growth investments also puts pressure on near-term earnings, resulting in a market perform rating and a $295 price target for the stock, which recently traded near $235.