Popeyes’ new chicken sandwich went viral in August and prompted the “Chicken Wars.” This battle was fought between the fast food purveyor of fried chicken. Popeyes, and its competitors in the chicken sandwich space, Chick-fil-A and perpetual Twitter heavyweight-champion Wendy’s (Nasdaq: WEN). The viral sensation can offer some powerful investing lessons for the savvy stock trader.
Contrarian investing is the investment strategy that involves going against the Wall Street herd mentality. When everyone else zigs, the contrarian investor zags. When the crowd goes left, the contrarian goes right. And when the masses are buying like it’s a Macy’s “One Day Sale” the week before Christmas, the contrarian sells like a hot dog and beer vendor at the last baseball park on Earth.
Why do contrarian investors behave this way? Because, quite simply, the “wisdom of the crowd” can be very wrong. If conventional Wall Street wisdom were correct all of the time, most people would be millionaires and no one would lose their shirts in stock market crashes.
So what does all of this have to do with a viral chicken sandwich from Popeyes? Let’s take a step back and look at what actually happened recently in the Chicken Sandwich Wars for a clue.
Popeyes and The Chicken Sandwich Wars
It all started when Popeyes introduced its new chicken sandwiches in direct competition with already established poultry heavyweights like Chick-fil-A and Wendy’s. Then came the chicken-tweet heard around the world.
Chick-fil-A’s original tweet posted on August 19th at 8:15 am. It simply said:
Bun + Chicken + Pickles = all the for the original.
And it could have been left at that, but no. Popeye’s decided to respond in kind, realizing the dig was meant for them:
… y’all good? https://t.co/lPaTFXfnyP
— Popeyes Chicken (@PopeyesChicken) August 19, 2019
As you can see, the Twitter clapback generated a tasty 86,447 retweets, 323k,334 likes and more than 5,000 comments. The virality of this one response suddenly led to the kind of problem a fast food restaurant might like to have: Popeyes’ chicken sandwich was in such high demand that they ran out of their supply of chicken breasts.
Chicken was already America’s most popular meat, but the popularity of this particular sandwich was unprecedented. Popeyes was only able to restock the sandwich this past Sunday. Of course, Chick-fil-A is famously closed on Sundays, so Popeyes resumed selling their prized item with this accompanying advertisement:
And true story: two of my colleagues attempted to bring back Popeyes chicken sandwiches for the Investment U team yesterday at lunch. I asked them to bring me back a spicy sandwich. I was super excited for this.
My colleagues failed me and the team.
After seeing a line that would have them waiting about an hour, making the total travel time an hour and forty-five minutes, My colleagues aborted mission. Like Darth Vader fleeing a rebel advance while seeking a Kyber crystal on the two-sunned planet of Tatooine.
I was hungry. I was sad. I ate a soggy …read more
Source:: Investment You