Wingstop may soon be raising its own chickens

Restaurant brands like Wingstop have struggled with their supply chains in recent years as the Covid-19 pandemic, extreme weather and war in Ukraine, among other factors, have tightened food supplies and caused skyrocket prices. This pain has been particularly significant for a chain like Wingstop, which specializes in one type of food.
At an investor day on Tuesday, the company discussed its efforts to strengthen its supply chain. One tactic is already in place: using more parts of a chicken, a move he experimented with via “Thighstop”, a virtual brand that served crispy thighs to customers who ordered from a dedicated Thighstop website or through DoorDash. These items have since been added to the regular Wingstop menu.

Other potential solutions are now on the table, including becoming his own chicken supplier.

“There are … scenarios that could include acquiring a small poultry complex or building our own poultry complex,” Wingstop CFO Alex Kaleida said at Tuesday’s event. “We also worked with a third party to really understand the end-to-end cost structure of a poultry complex and what it takes to run a facility from feed to producer to processing. .

Wing prices are volatile: In June last year, when the company launched Thighstop, wholesale prices for wings had risen significantly from the previous year. Although securing supply by investing in a poultry farm would not be cheap, Kaleida believes it would help Wingstop avoid sudden spikes in its chicken costs.

Wingstop estimates that a poultry complex could supply about 20% of its overall wing purchases.

Securing its chicken supply chain could be “potentially a game-changer” for the company, Wedbush restaurant analyst Nick Setyan said in a note on Tuesday. Indeed, greater clarity on food costs could encourage more operators to open Wingstop franchises, fueling growth.

In the first quarter, Wingstop added 60 restaurants, a record. Sales at stores open for at least a year increased 1.2% during this period.

Yes wing stop (WING) is moving forward with plans to open a poultry plant, it will follow in the footsteps of big-box stores, including walmart (WMT) and Costco (COST).
A few years ago, Walmart opened a meatpacking plant in Georgia to cut, package and label its own brand of steaks and roasts for regional stores. Costco has also developed its own farm-to-store poultry production operation in Nebraska to supply its popular rotisserie chicken offering.

— Nathaniel Meyersohn of CNN Business contributed to this report.

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