2015 Top 100: Chicken segment analysis2015 Top 100: Chicken segment analysis

Though typically served as strips, wings or in sandwiches, any way chicken is plated these days is succeeding.

U.S. systemwide sales among the Top 100 brands in the Chicken segment totaled $17.9 billion in the Latest Year, up from $16.3 billion in the Preceding Year — a 9.5-percent increase. It was the second-largest increase among all Top 100 segments, just behind the 11.4-percent growth from LSR/Mexican.

Significantly contributing to that growth was the fact that seven of ten chains in the segment experienced double-digit, or very nearly double-digit, sales growth. In
contrast to the fast-growing brands, Church’s Chicken, Boston Market and KFC each had sales growth of less than 1 percent, drawing a distinct line between the segment’s steadfast and struggling chains.

The 14.5-percent sales growth at Chick-fil-A helped it maintain its ranking as the largest chicken chain in the U.S. in terms of systemwide sales, a position it has held since 2013 when it first surpassed KFC. Chick-fil-A also posted just over an 8-percent growth in estimated sales per unit in the Latest Year.

Industry experts credit some of Chick-fil-A’s success with its ability to make moves that align with consumers’ changing needs. For example, the brand has aimed to make its menu more healthful with the addition fruit cups and the elimination of trans fats. It has added custom-made specialty coffee, mobile payments and mobile order-ahead options. And finally, the addition of grilled chicken to its menu also has been credited with increasing sales.

Meanwhile, KFC posted 2.8-percent growth in its Latest Year ESPU, and closed 121 units. The chain, which is owned by Yum! Brands Inc., has grappled with weak sales for some time — in the Prior Year it posted a 3.7-percent decline in ESPU. Operating difficulties and conflict with franchisees have also challenged the brand.

Top 100 Chicken segment newcomer Raising Cane’s Chicken Fingers had the largest sales growth in the segment, with a 23.5-percent U.S. systemwide sales increase. The double-digit growth catapulted the Baton Rouge, La.-based chain from NRN’s Second 100 report in 2014, to this year’s fourth fastest-growing chain in the full Top 100 universe. Unit-level trends were also strong, with an ESPU growth rate of 3.6 percent. In addition, Raising Cain’s added 31 locations in the Latest Year. Other fast-growing chains include Wingstop and Zaxby’s.

Together, these three brands are not only growth leaders in the Chicken segment, but also were among the top 10 fastest-growing chains in the entire Top 100.

Dallas-based Wingstop, which specializes in wings and chicken strips, held the segment’s second place ranking in terms of sales growth, with a nearly 23-percent U.S.

systemwide sales increase, mostly driven by a 9.5-percent jump in ESPU and the opening of 82 new locations.  

Zaxby’s came in as the third place growth brand in the Chicken segment with a 17.2-percent  sales increase, aided by an 8.5-percent increase in ESPU and the addition of 65 new locations in the Latest Year.

Blake Bailey, chief financial officer for Zaxby’s, attributes the chain’s continued growth to a number of factors, including an ongoing focus on speed of service, an LTO-centric marketing strategy and the recruiting of franchisees that have more people skills than restaurant skills.

“We focused on continual improvement at first, [then] 10-to-12 years ago we became very fast,” Bailey said. “Now it’s more about building a cultural infrastructure that will sustain this brand for a generation or two. The culture piece is one of the things that has allowed up to get where we are.”

As for competing with the industry’s more seasoned and far larger chicken chains, Bailey said he isn’t concerned.

“[Many of our competitors] are up against generational changes in consumers’ palates. They have to change their consumers’ minds,” Bailey said. “We’re starting with a blank slate. We’re keyed into customers where they are today.”

The Athens, Ga.-based chain, which celebrates its 25th anniversary this year, has plans to open about 75 new locations in 2015.