“Thank God I sold that.”
That was the comment from a now-former operator of a chicken wing concept, to me, not long after he sold it a couple of years ago. The reason for his comment was relatively simple: Chicken wing wholesale prices are volatile, making it difficult to manage.
I bring this up because we are in the midst of a boom in the number of virtual chicken wing concepts. Numerous national brands have decided to take chicken wings and make virtual brands out of them, using excess capacity inside their kitchens to ride a wave of wing popularity.
Companies such as Brinker International and Applebee’s are pushing virtual wing concepts, as has Smokey Bones and the pasta concept Fazoli’s, which is now offering them as a menu item for in-restaurant customers, too.
The reason is relatively simple: Wingstop, the takeout wing chain, has soared through the pandemic, generating 22.5% year-to-date same-store sales.
Some of these chains are offering wings, anyway, so it doesn’t take much to simply slap a brand name on them and put them on a few third-party delivery apps.
The problem gets back to that operator’s above comment: Chicken wings, far more than any other commodity, are highly volatile. A surge in demand can lead to a spike in prices.
Indeed, chicken-wing price spikes come every few years, almost like clockwork. A 2017 price spike hammered wing chains. Buffalo Wild Wings was so concerned about it the company ended a popular Wing Tuesday promotion, sales plunged and shareholders revolted and defeated company-backed directors in a proxy contest. CEO Sally Smith resigned, the company was sold to for millions less than it might have received otherwise. So don’t think that wing prices can’t have drastic consequences.
In 2011, wing suppliers stockpiled chicken wings as McDonald’s decided to enter the market with “Mighty Wings,” which sent the price soaring. McDonald’s promotion didn’t work, and all of those wings flooded the market, which led to steep price declines.
The prices are volatile for a simple reason: There are only so many wings to a bird, and producers will not raise more chickens simply to satisfy Americans’ wing craving. That naturally limits demand. Whenever there are major increases in demand, the prices for wings increase as a result. It’s why wings typically increase in price during football season, peak at the Super Bowl, and then decline the rest of the year.
Wing chains over the years have shifted their attention to “boneless wings,” generating public complaints from residents in Lincoln, Neb., in the process. They have also shifted pricing and menu structures to price wings by the pound, rather than by the number of wings. These efforts work for a time but ultimately the bone-in wing demand returns and prices spike.
Theoretically, a virtual wing concept can withstand these sorts of spikes because, after all, they are using existing capacity rather than building a restaurant and employing staff devoted to wing production. But they are still establishing a brand that every so often will have less-profitable years because of that demand. The creation of so many wing concepts, coupled with Wingstop’s success, is probably already doing that.
Wholesale wing prices are 11% higher than they were last year, according to USDA pricing data.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.