At the start of 2014, commodity prices for traditional chicken wings are trending down from 2013, and certainly much lower than the record highs of 2012 — but industry watchers and operators warn that price deflation is fleeting and that wing chains need to keep their menus as dynamic as possible.
“If we look at the past five years and the trends against wings, it’s a roller coaster, and what’s moving the needle is supply and demand,” said DeWayne Dove, vice president of purchasing for SpenDifference, a Denver-based supply chain consulting firm. “A lot of concepts will jump in and get good deals on spot buys, and when those are gone, you’ll see pressure on the market.”
SpenDifference’s initial projections for the commodities market in 2014 for traditional chicken wings were for inflation between 0 percent and 5 percent, Dove said. However, several favorable events have occurred since those calculations. Prices for corn have hit record lows, which likely will cause an increase in poultry production. Also, McDonald’s USA purchased far more wings than it could sell in last year’s limited-time promotion for Mighty Wings, leading to much higher freezer stocks of traditional wings available to other operators, Dove noted.
SpenDifference now projects decreases between 10 percent and 15 percent for breast meat prices, as well as a range between flat to negative 5 percent for chicken wing prices.
“We’ll see that in the first quarter of this year, when the Super Bowl and March Madness drive demand,” Dove said. “There are large levels of freezer stocks out there right now, and that’s where guys are getting great spot buys.”
But the oversupply and low prices will not last forever, he added, so rather than just try to make high with chicken wings, brands should keep pursuing diversified menu strategies that grow sales of wings and other less volatile items.
“If I were a restaurant, I would say let’s maintain our menu mix for wings and still look for other opportunities,” Dove said.