Chicken wing joints certainly find it difficult to explain price fluctuations to their clientele. They dodged a bullet this weekend.
— Jason Clampet
Last summer, Wingstop Inc. worried about the Super Bowl.
Demand for chicken wings typically ebbs during the summer months, pushing prices down. That lets the restaurant chain, with more than 1,000 U.S. locations, stock up on its key product for the busy football season, which culminates on Sunday with the Super Bowl.
But something was off in 2017. Chicken wings, growing in popularity for years, were everywhere. That included the convenience store chain 7-Eleven Inc., whose promotion helped drain supply and send prices surging as much as 34 percent to a record $2.16 a pound in September from a year earlier.
It was the biggest price spike that Charlie Morrison, Wingstop’s chief executive officer, had ever seen, and the largest since McDonald’s Corp. reintroduced wings to its menu a few years ago.
Now, some five months later, jumbo wing prices have dropped about 25 percent from their peak and are at the lowest level for this time of year since 2014, according to data compiled by research firm Urner Barry. That’s good news for Wingstop and competitor Buffalo Wild Wings Inc., which are expected to sell almost 30 million wings on Sunday.
“It was purely supply and demand,” Morrison said in an interview.
The surge in prices came as wing restaurants expanded and pizzerias and grocery stores sold more of the popular finger food. At times, that left little inventory that wasn’t spoken for last year.
The higher wing prices weighed on profit at Buffalo Wild Wings, which, like Wingstop, began promoting the boneless variety. That “tactical switch” enabled national chains to benefit from lower-cost white meat, said Russ Whitman, vice president of the poultry division at food commodity research firm Urner Barry.
With the boneless menu offerings diverting some of the demand, wing prices fell, said Tom Elam, president of Carmel, Indiana-based market researcher FarmEcon LLC.
Buffalo Wild Wings, which has about 1,230 U.S. locations, starts its Super Bowl preparations roughly six weeks before the game, according to Ben Nelsen, the company’s vice president of operations. That means making sure the restaurants will be fully stocked and staffed, and preparing for the slew of takeout orders that stream in during the hours before the game.
A typical restaurant can make about 1,100 traditional wings in an hour or about 2,400 boneless wings, which cook faster. Last year, Buffalo Wild Wings sold about 13.5 million wings for the Super Bowl and expects to beat that number this year, Nelsen said.
“The supply side has been a challenge,” he said. “We’re really pleased that the price has come down.”
©2018 Bloomberg L.P.
This article was written by Shruti Date Singh and Craig Giammona from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].