Wingstop CEO touts falling chicken wing prices, company profits from deflation
Chicken wing fanatics can rejoice.
Wingstop CEO Michael Skipworth told analysts on an earnings call Thursday that the company is experiencing deflation as bone-in chicken wing costs normalize from unusually high levels in 2021.
In fact, the multinational chain of aviation-themed restaurants reported that the cost of bone-in chicken wings fell 18.8% last quarter compared to the same period a year ago.
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Skipworth says the company is one of the only brands to benefit from “significant commodity deflation” while the rest of the industry struggles with record inflation, which hit 9.1% in June.
Wingstop reported that its total revenue rose 13.2% to $83.8 million in the three months ending June 25. System-wide sales increased 7.5% to $633.6 million during the same period. Earnings rose 17.6% to $13.3 million, or 44 cents per diluted share, from $11.3 million, or 38 cents, in the year-ago quarter.
“We navigated record wing inflation in 2021 and our brand partners embraced the appropriate pricing level that year to manage that inflation and manage margins,” Skipworth said.
Wingstop says he’s encouraged by the deflation he’s seeing with the chicken wings. Still, industry-wide prices for chicken have risen, like most other goods, according to the Consumer Price Index (CPI).
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The index, which is a broad measure of the price of daily consumer goods, indicates that poultry rose 17.3% in June compared to a year ago. Chicken, in particular, rose 18.6%.
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Earlier this week, the United States Department of Agriculture (USDA) even raised its forecast for wholesale poultry prices after noting a spike in prices between May and June due to high energy costs, animal feed and labour.
The USDA expects prices to rise between 26% and 29% in 2022.
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Tyson Foods – the world’s second-largest processor and marketer of chicken, beef and pork – even raised its fiscal 2022 revenue outlook as customer demand for its chicken, beef and port continues to outpace the supply and prices increase due to inflation.
To combat this pressure, Tyson has passed some of the burden on to consumers in the form of price increases.
Lucas Manfredi of FOX Business contributed to this report.