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Operations

The pandemic fuels a (virtual) wing explosion

As more brands launch delivery-only wing concepts, there’s one big question: Can anybody beat Wingstop?
Wingstop wings
Photo courtesy of Wingstop

When historians write about the U.S. response to the pandemic, they will surely note one curious development:

Americans consumed a lot more chicken wings.

Few other foods have seen the recent explosion of interest that wings have. And enterprising restaurant operators are responding, launching new wing concepts and improving their wing recipes, all while trying to make a run at competing with the country’s current wing king, Wingstop.

Here are just some of the recent entrants into the wing arena:

  • Fast-casual pasta slinger Fazoli’s plans to have 60 locations of its new WingOn virtual concept by the end of next month and is re-branding the delivery-only operation under the name Wingville.
  • Domino’s recently unveiled the work of three years’ of R&D on an upgraded wing product, marketing the wings at a lower price point than most major chains as it seeks to narrow its growing same-store sales gap with Wingstop.
  • Chili’s parent company Brinker International has rolled out It’s Just Wings as its first virtual concept, offering delivery-only wings from more than 1,000 Chili’s and Maggiano’s kitchens.
  • Casual-dining stalwart Applebee’s launched Neighborhood Wings by Applebee’s in the spring for order via GrubHub.
  • Barbecue chain Smokey Bones opened The Wing Experience virtual concept at all of its 61 locations earlier this month.

Even though the new wing concepts are virtual, the fact major operators such as Brinker and Dine Brands are launching them means these delivery-only wing players have an almost-instant national presence and are quickly ready to compete on a big stage. Whether any of them are positioned to overtake Wingstop, however, remains unseen.

“Everybody is looking at Wingstop and the success they’ve had,” said David Maloni, executive vice president of analytics for foodservice supply chain tech firm ArrowStream. “They’re looking at ways to capitalize on that success.”

Gunning for Wingstop

Wingstop’s meteoric success amid the pandemic leaves little guesswork about why so many brands are hopping on the chicken wing bandwagon.

The Dallas-based chain’s Q2 same-store sales grew nearly 32% and the brand added 23 net new units during the quarter.

Wingstop, embracing its current status as the Michael Jordan of chicken wings, said it does not fear the added competition and, in fact, said it sees increased competition as “historically beneficial to Wingstop,” CEO Charlie Morrison told analysts during a recent earnings call.

“We’ve always felt as if we are in a category all by ourselves,” Morrison said. “Chicken wings are on the menus of almost every restaurant in America. What sets us apart is the focus on quality and the authenticity of our product.”

Competition, he added, “does bring attention to the category.”

“It’s not having a meaningful impact on our current growth,” he said of the 1,436-unit chain. “We’re not worried about it. We’re going to continue to play our playbook as we’ve designed it. We’re going to continue to focus on unit development, to expand this brand into Top 10 status.”

 

Everybody is looking at Wingstop and the success they’ve had. They're looking at ways to capitalize on that success.” -David Maloni,  executive vice president of analytics for foodservice supply chain tech firm ArrowStream. 

Wingstop’s swagger certainly isn’t stopping other brands from getting in on the action.

Earlier this month, Brinker reported It’s Just Wings was generating sales at an annual rate exceeding $150 million, with more than $3 million a week in sales, most of them incremental. Brinker CEO Wyman Roberts said, while the company is not ready yet, the virtual wings concept could eventually be franchised.

“We created this business overnight,” he told analysts. “Over the years, casual dining has been dinged for being overbuilt. We believe this is our opportunity to prove that maybe it isn’t overbuilt, it’s just underutilized.”

Pre-pandemic, Brinker had been testing a different virtual brand. But it shifted its focus to its delivery-only wings concept when the coronavirus hit, testing at seven restaurants in Dallas for two months before the nationwide rollout, Roberts said.

“It’s proven out to be exactly what we thought it would do,” he said. “And then some.”

Fazoli’s said it has seen so much success with its delivery-only wings offshoot that it plans to add wings as a permanent menu item at all company locations by the end of September and at franchised units by next spring.

“Its slightly off-brand,” CEO Carl Howard said. “But, yeah, I’m real happy with the product. If no one knows who you are and you take your brand into a new market, you better have a product that’s in high demand and really compelling.”

For Fazoli’s, wing sales have been largely incremental, with the ROI on adding wings coming in at four months. Restaurants offerings wings are generating higher sales than those that are wing-less.

“The decision to launch the wings is a no-brainer,” Howard said.

Why wings?

As a pandemic-perfect food, wings have a lot going for them.

They’re an established way of feeding a crowd. They can be sold as an entree or as a side. They’re easily customizable with sauces and dips.

For operators, the addition of wings does not require a massive investment in equipment or a complete SKU reworking, said Robert Byrne, director of consumer and industry insights for Restaurant Business sister company Technomic.

What’s more, diners consider wings to be a “craveable” dish, Byrne said. “A growing number of consumers are saying craveability is important or very important when selecting a restaurant,” he said.

Perhaps most importantly for these virtual concepts, though, is  chicken wings travel well. And, as with pizza, many diners are so accustomed to eating wings delivered to their homes, they’re fine with accepting them at a “less-the-fresh-out-of-the-oven temperature,” he said.

Some 45% of consumers surveyed said that “food tastes just as good as when dining in” is one of the most important factors in deciding where to purchase food for carryout or delivery, according to a recent Technomic consumer trend report.

Chicken wing boom

What’s the impact of the wing boom?

Chicken wings are a notoriously volatile commodity. With wing consumption rising, operators can expect to see their prices rise, ArrowStream’s Maloni said.

On the commodity market, jumbo wings preferred by most chains typically trend around $1.50 to $2 per pound. Increased demand could inch those prices up to $1.65 to $2.15 per pound, he speculated.

“You’re going to see higher lows and higher highs,” he said.

But, much like gas prices, it takes a fairly significant jump in wing pricing to see an alteration of consumer behavior, he said, giving operators potential leeway to raise their wing prices as needed to adjust.

After dipping in the spring, demand for wings has risen and was up 7.2% in June, the latest month for which figures are available, he said.

“Chicken wings are capitalizing on the delivery process,” he said. “Wings were well-established for off-premise consumption before COVID.”

While wings can be a big-money item for restaurants, they are not a major profit center for chicken producers, he said.

Early in the pandemic, chicken producers decided to curb production, with the assumption that restaurants wouldn’t be selling as much chicken.

“They’ve got to grow the whole bird just to produce the wings,” Maloni said. “What you have is some mediocre breast prices and multi-year lows in dark meat prices. When you add all that together, even with cheap feed costs right now … the profitability is not there. It’s really about the profitability for the producer. If they’re profitable, they’re going to expand … which can help drive wing prices lower.”

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