Wingstop CEO Touts Falling Chicken Wing Prices, Company Benefits From Deflation

Wingstop CEO Touts Falling Chicken Wing Prices, Company Benefits From Deflation

Chicken wing fanatics can rejoice.

Wingstop CEO Michael Skipworth told analysts during a earnings call on Thursday that the company is experiencing deflation as the cost of bone-in chicken wings normalizes from unusually high levels in 2021.

In fact, the multinational airline restaurant chain reported that the cost of bone-in chicken wings fell 18.8% in the most recent quarter compared to the same period last year.

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Skipworth claims the company is one of the few brands to benefit from “significant commodity deflation,” while the rest of the industry grapples with record-high inflation, which rose to 9.1% in June.

Wingstop reported that its total revenue increased 13.2% to $83.8 million in the three months ended June 25. Systemwide revenue increased 7.5% to $633.6 million over the same period. Earnings increased 17.6% to $13.3 million, or 44 cents per diluted share, from $11.3 million, or 38 cents, in the year-ago quarter.

chicken wing

A plate of buffalo style chicken wings with celery and blue cheese with a beer on a bar or restaurant table. (iStock / iStock)

“We navigated record wing inflation in 2021 and our brand partners have priced appropriately this year to manage that inflation and manage margins,” Skipworth said.

Wingstop says it’s heartened by the deflation it’s seeing in chicken wings. Still, chicken prices have risen industry-wide, like most other commodities, according to the Consumer Price Index (CPI).

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The index, which is a broad measure of prices for basic necessities, showed that poultry was up 17.3% year-on-year in June. Chicken meat in particular rose by 18.6%.

ticker security Last change change %
WING WINGSTOP INC 124.80 +5.00 +4.17%
TSN Tyson Foods Inc. 87.20 +1.52 +1.77%

Earlier this week, the US Department of Agriculture (USDA) even raised its forecast for wholesale poultry prices after seeing prices rise between May and June due to high energy, feed and labor costs.

The USDA forecasts a price increase of 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 — has even raised its sales forecast for fiscal 2022 as customer demand for chicken, beef and port continues to outstrip supply and prices rise due to inflation.

To counteract this pressure, Tyson has passed some burdens on to consumers in the form of price increases.

Lucas Manfredi of FOX Business contributed to this report.

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