The good news for chicken wing chains is that wing prices are at seven-year lows.
The bad news for chicken wing chains is that chicken wing prices are at seven-year lows.
“They’re the least expensive they’ve been at this time of year since 2011,” said David Maloni, executive vice president of analytics for Chicago-based ArrowStream.
Whole wing prices were $1.40 a pound last month, according to federal data. They were $2.06 per pound a year ago. That’s a decline of 32%.
That’s low, given that this is typically the time of the year when wing prices begin their annual, demand-fueled seasonal increase. Wing prices begin climbing as football fans flock to sports bars to draft their fantasy teams, apparently while gorging themselves on wings.
Those prices generally keep climbing until the Super Bowl, after which they decline and the cycle begins again.
Falling chicken wing prices
I’ll admit that the chicken wing is my favorite commodity, because in additional to its seasonal fluctuations, it is also prone to massive swings in prices because of supply and demand issues.
For instance, chicken wing prices spiked in 2013 when McDonald’s got into the market and suppliers hoarded wings out of fear. That led to a glut and subsequent plunge in those prices after McDonald’s wings didn’t sell much.
Wing prices increased the past couple of years largely because of an increase in demand. Wing chains like Buffalo Wild Wings and Wingstop sold more bone-in wings, often at low prices. Consumers gobbled them up, and that led to the increase.
Unlike other commodities, chicken wings are severely limited by production. A chicken only has two wings, after all. And it doesn’t appear likely that anybody would develop an eight-winged bird.
Which brings us to the current situation. Last year’s high prices led chains to raise their menu prices. Buffalo Wild Wings went away from its bone-in wing promotions on Tuesdays toward a boneless wing promotion.
Consumers reacted by ordering less bone-in chicken wings.
The result: Demand plunged and prices went with it.
“The cure for high prices is always high prices,” Maloni said. “We had sustained high prices the past couple of years. That curbed some feature activity.”
At the same time, he said, chicken breast prices have fallen. That has enabled offers of boneless chicken and has helped fuel expansion of chicken products at major chains such as McDonald’s, which is putting a major effort behind chicken products, including its new Sweet N’ Spicy Honey BBQ Glazed Tenders.
And, boneless-centric chains such as Chick-fil-A and Raising Cane’s our flourishing.
All of that is shifting some would-be bone-in wing customers to boneless wings and sandwiches, hurting demand further.
Wingstop has done fine in generating sales of its bone-in wings. But according to Technomic Transaction Insights data, Buffalo Wild Wings sales are down 9.5% this year. Sales at Hooters are down 1.9% year to date, according to Technomic.
Wing chains have this tendency to panic when prices spike: Buffalo Wild Wings was facing an investor uprising last year when it ended its Tuesday wing promotion in a bid to preserve margins.
But in 2013 the chain started selling its chicken wings by weight in part to protect the company in case of a spike in prices.
Wing prices have long been volatile, swinging wildly from one year to the next. Chicken wing chains should be prepared for these shifts in prices and margins.