Wingstop CEO brags about falling chicken wing prices, company benefits from deflation

Wingstop CEO brags about falling chicken wing prices, company benefits from deflation

Chicken wing fanatics may have something to rejoice about.

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

In fact, the multinational chain of aviation-themed restaurants reported that the cost of boneless chicken wings fell 18.8% last quarter compared to the same period a year ago.

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Skipworth claims the company is one of the only brands to benefit from “meaningful commodity deflation”, while the rest of the industry is battling record inflation, which rose to 9.1% in June.

Wingstop reported total revenue rose 13.2% to $83.8 million in the three-month period ended June 25. Systemwide sales increased 7.5% to $633.6 million in the same period. Earnings rose 17.6% to $13.3 million, or 44 cents per diluted share, from $11.3 million, or 38 cents, in the prior quarter.

Chicken wings

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 inflation in 2021, and our brand partners took the appropriate price level that year to navigate inflation and manage margins,” Skipworth said.

Wingstop says it is encouraged by the deflation it is seeing in chicken wings. Nevertheless, chicken prices across the industry have increased, as have most other commodities, according to the Consumer Price Index (CPI).

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The index, which is a broad measure of the price of groceries, indicated that poultry rose 17.3% in June compared to a year ago. Chicken in particular rose 18.6%.

Ticker Safety Last Change Change %
WING WINGSTOP INC 125.02 +5.22 +4.36%
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 a rise in prices between May and June due to high energy, feed and labor costs.

The USDA predicts that prices will increase 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 — even raised its 2022 earnings outlook as customer demand for chicken, beef and port continues to outstrip supply and prices rise due to inflation.

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

FOX Business’ Lucas Manfredi contributed to this report.

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