Popeyes, Wingstop, Others Step Up Chicken Offerings as Poultry Prices Drop

Chicken’s rapid price drop has brought relief to restaurant chains as crispy chicken sandwiches and wings have been key to restaurants’ efforts to generate buzz and draw diners.

Wingstop Inc.

WING -1.79%

and

Restaurant Brands International Inc.’s

QSR -1.05%

Popeyes Louisiana Kitchen are promoting new chicken sandwiches and wing deals as they seek to keep customers coming to their restaurants during a potential economic downturn. Applebee’s recently offered an order of free wings when diners made a $30 online purchase on Halloween.

“It’s leaning into chicken,” said

John Peyton,

chief executive of Applebee’s parent

Dine Brands Global Inc.,

DIN -0.78%

in an interview.

Chipotle Mexican Grill Inc.

CMG 0.82%

and other chains have told investors that they believe chicken prices have plateaued, and companies such as

Brinker International Inc.

EAT -0.72%

and Wingstop have said they expect prices to decline further next year. That could improve restaurants’ profits after many reported double-digit increases in food and ingredient costs this year compared with 2021, industry analysts said, though restaurant operators said it may take time for wholesale price declines to flow through to buyers.

Wingstop, where poultry sits at the menu’s core, told investors last month that its wing costs decreased 42.7% in the three months ended Sept. 24, compared with the same period last year. The company increased its earnings guidance for the current fiscal year and reduced its cost expectations.

Last spring,

Noodles

NDLS -4.05%

& Co. imposed a $1 surcharge on chicken menu items after its poultry costs had risen around three times the typical average, the company said. Now the chain has dropped the surcharge and is negotiating new long-term contracts with vendors, executives said, given the decline in costs and increased competition among chicken suppliers.

“By waiting, we’re getting more optimal pricing,” said Noodles Chief Financial Officer

Carl Lukach.

Boneless, skinless breast-meat prices reached over $3.50 a pound earlier this year, tripling since the start of 2021, according to Urner Barry data. Labor shortages in meat plants reaching back to the Covid-19 pandemic, along with poultry producers’ troubles hatching chicks, constrained chicken supplies, according to meat industry executives. Demand from buyers remained strong, they said, propelling chicken prices to record levels.

While prices surged, major chicken suppliers worked to boost supplies.

Tyson Foods Inc.,

TSN -2.67%

the largest U.S. chicken supplier by volume, has been revamping its chicken operations, improving its supply chain and expanding its production capabilities after struggling to meet demand in recent years in its plants and hatcheries.

Tyson executives said those efforts were showing results. “We’re no longer having daily conversations about what our hatch rates are,” said David Bray, poultry unit president for Tyson, on an analyst call in November.

Tony Neal, executive vice president of sales and marketing at Delaware-based chicken processor Allen Harim Foods LLC, said chicken companies thought high chicken prices and robust demand were here to stay and began processing as many birds as they could. Now, he said, chicken prices are dropping while grain, transportation and labor costs remain elevated for processors.

“It’s been a whole collapse of the market,” Mr. Neal said.

Despite the lower commodity prices, chicken suppliers including

Pilgrim’s Pride Corp.

PPC 0.69%

and Tyson have said they have contracts with some of their grocery store and restaurant customers, which helps keep the chicken companies’ business insulated from day-to-day fluctuations of the commodity market.

“I think it’s all about the portfolio of contracts that we have,” said Pilgrim’s CEO

Fabio Sandri

on a call with analysts in October.

Analysts said the market could be challenging for some of the sector’s biggest players, including Pilgrim’s, and weigh on retail prices. “They [Pilgrim’s] will definitely face earnings pressure as we move through the next two quarters,” said

Ben Bienvenu,

a food and agribusiness analyst at Stephens Inc.

Sami Siddiqui,

president of Popeyes’s U.S. business, said that the chain maintains certain specifications for the chicken it uses, and that the general drop in poultry prices doesn’t necessarily translate into savings for Popeyes’s supply.

Chicken’s higher cost this year hasn’t stopped restaurants from promoting chicken entrees, broadening what analysts and executives have in recent years dubbed the “chicken sandwich wars” among fast-food chains. Promotions of chicken value meal deals were up 160% in the three months ended September compared with the same period last year, according to restaurant-industry research firm Technomic Inc., while chains promoted 10% fewer burger value meal deals during the same period.

McDonald’s Corp.

MCD -0.77%

last month said chicken offerings helped drive higher sales in all of its major markets in its most recent quarter, and poultry remains a focus for the burger giant. The company said it plans to bring its McCrispy Chicken Sandwich to new markets, including Canada, Germany and the U.K.

Popeyes this month rolled out a new blackened chicken sandwich nationwide to try to keep up excitement about its menu as competition increases and Americans tighten their spending, Mr. Siddiqui said.

“Those are the types of things that are going to get guests back to quick-service restaurants,” he said.

Write to Heather Haddon at [email protected] and Patrick Thomas at [email protected]

Chicken’s rapid price drop has brought relief to restaurant chains as crispy chicken sandwiches and wings have been key to restaurants’ efforts to generate buzz and draw diners.

Wingstop Inc.

WING -1.79%

and

Restaurant Brands International Inc.’s

QSR -1.05%

Popeyes Louisiana Kitchen are promoting new chicken sandwiches and wing deals as they seek to keep customers coming to their restaurants during a potential economic downturn. Applebee’s recently offered an order of free wings when diners made a $30 online purchase on Halloween.

“It’s leaning into chicken,” said

John Peyton,

chief executive of Applebee’s parent

Dine Brands Global Inc.,

DIN -0.78%

in an interview.

Chipotle Mexican Grill Inc.

CMG 0.82%

and other chains have told investors that they believe chicken prices have plateaued, and companies such as

Brinker International Inc.

EAT -0.72%

and Wingstop have said they expect prices to decline further next year. That could improve restaurants’ profits after many reported double-digit increases in food and ingredient costs this year compared with 2021, industry analysts said, though restaurant operators said it may take time for wholesale price declines to flow through to buyers.

Wingstop, where poultry sits at the menu’s core, told investors last month that its wing costs decreased 42.7% in the three months ended Sept. 24, compared with the same period last year. The company increased its earnings guidance for the current fiscal year and reduced its cost expectations.

Last spring,

Noodles

NDLS -4.05%

& Co. imposed a $1 surcharge on chicken menu items after its poultry costs had risen around three times the typical average, the company said. Now the chain has dropped the surcharge and is negotiating new long-term contracts with vendors, executives said, given the decline in costs and increased competition among chicken suppliers.

“By waiting, we’re getting more optimal pricing,” said Noodles Chief Financial Officer

Carl Lukach.

Boneless, skinless breast-meat prices reached over $3.50 a pound earlier this year, tripling since the start of 2021, according to Urner Barry data. Labor shortages in meat plants reaching back to the Covid-19 pandemic, along with poultry producers’ troubles hatching chicks, constrained chicken supplies, according to meat industry executives. Demand from buyers remained strong, they said, propelling chicken prices to record levels.

While prices surged, major chicken suppliers worked to boost supplies.

Tyson Foods Inc.,

TSN -2.67%

the largest U.S. chicken supplier by volume, has been revamping its chicken operations, improving its supply chain and expanding its production capabilities after struggling to meet demand in recent years in its plants and hatcheries.

Tyson executives said those efforts were showing results. “We’re no longer having daily conversations about what our hatch rates are,” said David Bray, poultry unit president for Tyson, on an analyst call in November.

Tony Neal, executive vice president of sales and marketing at Delaware-based chicken processor Allen Harim Foods LLC, said chicken companies thought high chicken prices and robust demand were here to stay and began processing as many birds as they could. Now, he said, chicken prices are dropping while grain, transportation and labor costs remain elevated for processors.

“It’s been a whole collapse of the market,” Mr. Neal said.

Despite the lower commodity prices, chicken suppliers including

Pilgrim’s Pride Corp.

PPC 0.69%

and Tyson have said they have contracts with some of their grocery store and restaurant customers, which helps keep the chicken companies’ business insulated from day-to-day fluctuations of the commodity market.

“I think it’s all about the portfolio of contracts that we have,” said Pilgrim’s CEO

Fabio Sandri

on a call with analysts in October.

Analysts said the market could be challenging for some of the sector’s biggest players, including Pilgrim’s, and weigh on retail prices. “They [Pilgrim’s] will definitely face earnings pressure as we move through the next two quarters,” said

Ben Bienvenu,

a food and agribusiness analyst at Stephens Inc.

Sami Siddiqui,

president of Popeyes’s U.S. business, said that the chain maintains certain specifications for the chicken it uses, and that the general drop in poultry prices doesn’t necessarily translate into savings for Popeyes’s supply.

Chicken’s higher cost this year hasn’t stopped restaurants from promoting chicken entrees, broadening what analysts and executives have in recent years dubbed the “chicken sandwich wars” among fast-food chains. Promotions of chicken value meal deals were up 160% in the three months ended September compared with the same period last year, according to restaurant-industry research firm Technomic Inc., while chains promoted 10% fewer burger value meal deals during the same period.

McDonald’s Corp.

MCD -0.77%

last month said chicken offerings helped drive higher sales in all of its major markets in its most recent quarter, and poultry remains a focus for the burger giant. The company said it plans to bring its McCrispy Chicken Sandwich to new markets, including Canada, Germany and the U.K.

Popeyes this month rolled out a new blackened chicken sandwich nationwide to try to keep up excitement about its menu as competition increases and Americans tighten their spending, Mr. Siddiqui said.

“Those are the types of things that are going to get guests back to quick-service restaurants,” he said.

Write to Heather Haddon at [email protected] and Patrick Thomas at [email protected]