Chicken shortage sends prices soaring, and restaurants can’t keep up…
After a year promoting takeout wings and crispy chicken sandwiches, restaurants including KFC, Wingstop Inc. and Buffalo Wild Wings Inc. say they are paying steep prices for scarce poultry. Some are running out of or limiting sales of tenders, filets and wings, cutting into some of their most reliable sales.
Independent eateries and bars have gone weeks without wings, owners say. Chicken breast prices have more than doubled since the beginning of the year, and wing prices have hit records, according to market-research firm Urner Barry.
“The overall supply is constrained. That affects every part of the bird,” Wingstop Chief Executive Charlie Morrison said in an interview earlier this week. Wingstop said it is paying 26% more for bone-in chicken wings this year.
Mr. Morrison said the company is speaking daily to chicken suppliers that are struggling to raise production because they are having trouble getting enough workers.
What did happen?
At the start of 2021, chicken looked like a bargain for U.S. restaurants. Closures and dining room restrictions had contributed to swollen stockpiles of chicken in cold-storage facilities. Boneless skinless chicken breast, the poultry industry’s flagship product, last year averaged around $1 a pound, according to Urner Barry. Now boneless chicken breast is trading at $2.04 a pound, the firm said. Over the past decade, the price averaged about $1.32 a pound.
One reason for the higher prices is the chicken sandwich wars of recent years. Fast-food chains including McDonald’s Corp., Popeyes Louisiana Kitchen Inc. and Wendy’s Co. have introduced new crispy and spicy offerings. More chains plan to introduce new chicken sandwiches in the coming months, including a hand-breaded version that Burger King plans to sell nationally by this summer.
Boneless chicken breasts
Chris Testa, president of United Natural Foods Inc., said this week the supermarket distributor is seeing chicken prices increase partly because of higher demand from restaurants. Consumers paid about $3.29 a pound for boneless chicken breasts in March, up 3 cents since January and 11% higher than a year earlier, according to the U.S. Bureau of Labor Statistics.
KFC, owned by Yum Brands Inc., developed a sandwich earlier this year that is selling more than twice as quickly in the U.S. as an older version, the company said. “Our main challenge has been keeping up with that demand,” Yum CEO David Gibbs said last week.
KFC late last month told U.S. restaurant owners to remove chicken tenders and Nashville Hot chicken items from online menus because of tight supplies, according to a company message.
KFC’s suppliers aren’t always delivering full orders of chicken, and restaurants are also limiting sales of the new KFC Chicken Sandwich, according to people familiar with the matter. The company asked owners to remove in-store promotions for the chain’s $30 fill-up bucket, a multipiece chicken deal that generated a surge in sales during the pandemic, the people said.
“We look forward to getting back to business as usual, once we get past this period of industry supply constraints,” a KFC spokeswoman said.
Chicken-wing prices have gotten a pandemic boost, too. Prices for jumbo wings have risen to a record $2.92 a pound, Urner Barry said. Chili’s owner Brinker International Inc., Applebee’s and other sit-down chains introduced online-only wing brands during the pandemic, in part because they are easier to package and deliver than other entrées.
Fast-food restaurants’ servings of wings grew 33% in the 12 months ended in March compared with the same year-earlier period, according to market-research firm NPD Group Inc.
Surging grain prices
For chicken producers, restaurants’ growing poultry appetite is driving a windfall and helping offset surging grain prices, which inflates companies’ cost to raise chickens. Pilgrim’s Pride Corp. , the second-largest U.S. chicken company by sales, last week reported $100 million in quarterly profit, a nearly 50% increase on year and surpassing expectations. Analysts surveyed by FactSet also anticipate strong profits for Tyson Foods Inc. and Sanderson Farms Inc. when they report quarterly results over the next several weeks.
“Demand for wings is more than we can currently fill,” said Mike Cockrell, chief financial officer for Sanderson, which supplies chicken to chains, including Buffalo Wild Wings and TGI Fridays, and food service distributor Sysco Corp.
Chicken producers had about 4% more broiler chicken eggs in incubation facilities on April 1 versus a year earlier, according to U.S. Department of Agriculture data, though total chicks hatched over the first three months of the year trailed 2020’s first-quarter total. Commercial chicken breeds are raised for about seven weeks before they are slaughtered.
Pilgrim’s CEO Fabio Sandri said last week staffing shortages have affected which products Pilgrim’s plants can produce.
Pilgrim’s expects chicken’s strong run to continue, he said. “Grilling season is just around the corner, when chicken demand is seasonally the strongest historically.”
But do you think we will be able to have a nice chicken breat on the grill this summer? [Wall Street Journal]
Or maybe you want to grow chicken by yourself?
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