When your concept is all about chicken wings, smart buying is key to profitability in a time of rising prices. A pair of operators share their strategies.
Describe your specs for chicken.
Howard: Our business is 90 percent wings. About 75 percent of that is bone-in fresh wings, sized at nine to 11 per pound. Two years ago we added boneless wings to bring in more women and kids; these account for 15 percent of our business. The boneless “wings” are actually frozen battered breast strips; we worked with Pioneer to develop the proprietary breading and they are processed by Pilgrim’s Pride, which supplies about two-thirds of all our chicken. Peco Foods is our chicken vendor in the southeast and California.
Simonds: We go with manufacturers who spec according to our size requirements—jumbo bone-in wings and boneless, battered wings. House of Raeford is our primary vendor for boneless wings, which are actually chicken tenderloins. Sanderson Farms sells us our bone-in wings, first and second joint only. Both products are purchased fresh.
What challenges do you face today?
Howard: The corn-ethanol issue is the top challenge. We saw where the market was headed when we added our boneless wings; these help control food costs because prices don’t fluctuate as much for breast meat as they do for wings.
Simonds: Prices are going through the roof. Everyone keeps blaming it on corn, but it’s not the only reason. Chicken processors were getting too low a price for their product, so they cut back on production and caused a shortage.
How are you dealing with price increases?
Howard: We locked in prices for two years. Instead of just playing the market, we set a floor and ceiling price with our vendors. This helps narrow the gap and flattens our food costs. We try to buy right and price [our menu] right so we give our customers the good value they expect.
Simonds: We also fashioned a contract with a high and a low—a cap and a bottom. The cap is set at 24 percent and we finagled the low end to be the same. Wholesale prices have stayed at the high end. We held out as long as possible, but will probably be raising menu prices about 3 percent. Customers will accept it, because they see how high chicken is in the supermarket.
Can you share some purchasing tips?
Howard: To control high food costs in this volatile market, negotiate locked-in pricing. And if your cost of business keeps getting higher, it may be time to start charging more.
Simonds: We added a dark meat product—popcorn chicken—to level the market. Prices for dark meat are more stable than for white meat. Our popcorn chicken debuted in July in two test stores.
What’s the future look like?
Howard: We’re always looking at new flavor profiles. Asian is a possibility down the road. And we’re thinking of boneless wings in a salad. Our sales have been up 16 quarters in a row, and we have about 250 more locations under development.
Simonds: Expansion is top of mind; our goal is to open one store a month, reaching 63 locations by 2010.
Executive VP of marketing, purchasing, R&D Wingstop
Dallas, Texas, 300 locations in 27 states
President, Wings Over Agawam, Massachusetts
21 locations in eight states and Washington, D.C.