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The surging cost of chicken wings is putting more pressure on restaurants – especially chains like Wingstop, whose executives have noted a record surge in expenses.
Wingstop CEO Charlie Morrison told analysts Wednesday the company has dealt with more inflationary pressure than the broader economy, with bone-in chicken wings accounting for about 65% of purchases at its restaurants.
Expenses from bone-in chicken wings rose 40.9% in fiscal 2021 compared to one year earlier – a figure that represented “record-high wing inflation,” according to the company. Morrison said Wingstop has explored expanded use of other cuts of chicken, such as thighs and drumsticks.
“Overall, we’re going to continue to look at other ways to use the bird and expand the whole bird concept that we’ve talked about, which should ladder up to our supply chain strategies and how we can control more of the supply,” Morrison told analysts on the company’s earnings call.
The price surge had a noticeable impact on Wingstop’s operating expenses. The company’s cost of sales rose to $56.9 million in fiscal 2021, up from $48.6 million. Wingstop said menu price hikes helped to “partially offset” the higher cost of sales.
Wingstop is just one of many restaurant and fast-food chains who have hiked prices in recent months to account for greater inflation, which hit a four-decade high of 7.5% in January. Supply chain disruptions, higher labor and shipping costs and a tight jobs market have contributed to the problem.
The cost of meats, poultry, fish, and eggs increased more than 12% over the last 12 months, according to the latest Consumer Price Index data.
Despite the recent uptick, Wingstop executives except chicken wing costs to show signs of improvement in the coming months.
Wingstop CFO Alex Kaleida said “price mitigation strategies” helped to limit the impact of higher food costs, adding the company is “actively exploring a variety of strategic options to gain more control of our supply chain.”
“With regards to wing inflation, we believe the worst is behind us,” Kaleida added.
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