Last summer, Wingstop 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 CEO, had ever seen, and the largest since McDonald's reintroduced wings to its menu a few years ago.
The higher wing prices weighed on profits. Then 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, VP of the poultry division at food commodity research firm Urner Barry.
With the boneless menu offerings diverting some of the demand, wing prices fell, says Tom Elam, president of Carmel, Indiana-based market researcher FarmEcon.
ow, 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, which are expected to sell almost 30 million wings on Sunday.
"It was purely supply and demand," Wingstop's Morrison says.
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 VP 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."
-- Bloomberg News