Hungry for a hit, McDonald's adds McWraps

McDonald's (MCD) today unveiled the McWrap, the newest permanent addition to its menu. According to Advertising Age, the Golden Arches considers the new lunch item a "Subway buster." Whether it will live up to the hype remains to be seen.

The chicken wrap sandwich comes in three varieties, Chicken & Bacon, Sweet Chili Chicken and Chicken & Ranch, and will be available starting April 1. Customers can choose to have their chicken fried or grilled, and the wraps are expected to sell for $3.99.

Wall Street doesn't seem too impressed with the offering. Shares of the Oakbrook, Ill., fast-food colossus were little changed in morning trading on Thursday. Nonetheless, expectations are high for the McWrap.

"McDonald's is hoping the McWrap, a chicken wrap that includes romaine lettuce, cucumbers and three sauces customers can choose from, will appeal to young people and those who have a health-conscious mindset and appreciate customizable products," says Ad Age.

If Subway is the target, the McWrap may not be an easy sell given that Subway is a formidable competitor. It eclipsed McDonald's in 2011 as the world's largest restaurant chain when measured by locations, with 37,000 franchises in 99 countries. Subway co-founder Fred DeLuca has a fortune estimated by Forbes at $2.6 billion. Although the Milford, Conn., company is privately held and doesn't report earnings, its profits are probably nowhere near what McDonald's earns. 

Burger King (BKW) and Wendy's (WEN) have gotten better by copying McDonald's and adding more healthy items to their menus. Another strong competitor is Chick-fil-A, a privately held chain that emphasizes service, a rarity in the fast-food industry. Chick-fil-A reported that sales rose 12% last year to $4.6 billion even though it endured a maelstrom of negative publicity over its opposition to gay marriage.

Investors are hoping the McWrap gives McDonald's a much-needed shot of favorable publicity, given that consumers haven't shown much enthusiasm for Fish McBites, another new product. McDonald's reported a 1.5% decline in February global same-store sales, a key metric of revenue of stores open at least a year. The drop-off in the U.S. was 3.3% in 2012, though when a calendar shift is excluded, sales were flat.

Last year, McDonald's stunned Wall Street when it posted its first decline in monthly sales in nine years and replaced the head of its U.S. operations as a result. So, a lot is riding on the new McWrap.

Jonathan Berr owns a small stake in McDonald's. Follow him on Twitter @jdberr.

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