Poultry: Something to cluck about

Restaurants traditionally rely on chicken and turkey to be menu profit makers. Usually in good supply and always a good buy in relation to other proteins, operators often turn to poultry to keep costs in check when red meats and seafood skyrocket. But that strategy may be dampened in the months ahead. Chicken production is down and feed costs are up, making it more expensive to buy and menu the bird. Prices are expected to remain higher over the next several months. Although turkey production has increased, supplies are expected to be relatively tight throughout 2007, predicts the USDA’s Economic Research Service.

State of the industry 

Several producers identify the top issues and challenges that will affect poultry purchasing in the months ahead.

•Fewer, more expensive birds. With corn and soybeans going into higher-profit ethanol production instead of animal feed, wholesale chicken prices have already risen 20 to 25 percent and birds may eventually cost 30 to 35 percent more. “Feed—especially corn—comprises 40 to 45 percent of the cost in producing chicken. Our biggest concern is ‘will there be enough corn,’” says Mark Hickman, chairman of the National Chicken Council. It takes seven pounds of grain to create one pound of chicken—a lower conversion ratio than beef, pork or turkey, but still significant.

•Chickens continue on the large side. Six pounds live is the industry standard, reported a panel of top chicken producers at the National Chicken Cooking Contest held in May in Birmingham, Alabama. It’s more economical to grow birds big, the panelists agreed. And big-breasted chickens help fulfill the huge demand for white meat. If smaller, portion-controlled tenders or breast fillets are key to your menu, you will probably have to work directly with a processor to get your specs.

•Natural is on the rise. “The use of antibiotics is down drastically from a few years ago [and American producers don’t use hormones], but consumers still have the perception that chickens are full or hormones and drugs,” says Jim Perdue, CEO of Perdue Farms. Newer to foodservice are poultry products labeled “all-natural”; they now account for 5 percent of the market. Tyson just began offering an all-natural line and smaller companies, like Free Bird and Murray’s sell only natural chicken. “All-natural” has no official definition but generally refers to minimally processed birds free of antibiotics, hormones, chemical preservatives and artificial colors or flavorings.

•Organic chicken is growing but from a very small base. Organic comprises only 1 percent of U.S. production. However, the USDA forecasts that organic poultry sales should grow between 23 and 38 percent through 2010. Organic processed products, such as chicken and turkey burgers, are expected to contribute to some of that surge.

•Melamine is not an issue with American birds. Recent news from China showed the presence of melamine—an industrial chemical that can be toxic to animals—in pet food and chicken feed. The large American poultry producers do not import feed from China, the industry reports. While some tainted feed did reach chicken farms in Indiana last May, the FDA assured the public that it poses a very low risk to humans. The FDA is currently investigating Chinese sources to make sure no more contaminated feed enters the United States.

•Avian flu is less of a threat. The government and industry have worked together to limit the risk of an outbreak through continuous testing and monitoring of commercial flocks and wild birds. “The risk is still not zero, but we are in a much better position than we were,” Hickman states.

Two wing men face off

When your concept is all about chicken wings, smart buying is key to profitability in a time of rising prices. A pair of operators share their strategies.

Andy Howard, executive VP of marketing, purchasing and R&D, Wingstop, Dallas, Texas
300 locations in 27 states and Mark Simonds, president, Wings Over, Agawam, Massachusetts 21 locations in eight states and Washington, D.C.

Q: Describe your specs for chicken.

A. Howard: Our business is 90 percent wings. About 75 percent of that is bone-in fresh wings, tips off and sized at nine to 11 per pound. Two years ago we added boneless wings to bring in more women and kids; these account for 15 percent of our business. The boneless “wings” are actually frozen battered breast strips; we worked with Pioneer to develop the proprietary breading and they are processed by Pilgrim’s Pride, which supplies about two-thirds of all our chicken. Peco Foods is our chicken vendor in the southeast and California.

Simonds: We go with manufacturers who spec according to our size requirements—jumbo bone-in wings and boneless, battered wings. House of Raeford is our primary vendor for boneless wings, which are actually chicken tenderloins. Sanderson Farms sells us our bone-in wings, first and second joint only. Both products are purchased fresh.

Q. What are the challenges you’re facing right now?

A. Howard: The corn-ethanol issue is the top challenge. We saw where the market was headed when we added our boneless wings; these help control food costs because price fluctuations for breast meat are not as great as for wings.

Simonds: Prices are going through the roof. Everyone keeps blaming it on corn, but it’s not the only reason. Chicken processors were getting too low a price for their product, so they cut back on production and caused a shortage.

Q. How are you dealing with price increases?

A. Howard: We locked in prices for two years. Instead of just playing the market, we set a floor and ceiling price with our vendors. This helps narrow the field in a time of fluctuating prices and flattens our food costs. We’re trying to buy right and price [our menu] right so we give our customers the good value they expect.

Simonds: We also fashioned a contract with a high and a low—a cap and a bottom. The cap is set at 24 percent and we finagled the low end to be the same. Wholesale prices have stayed at the high end. We held out as long as possible, but will probably be raising menu prices about 3½ percent. Customers will accept it, because they see how high chicken is in the supermarket.

Q. Can you share some purchasing tips?

A. Howard: To control high food costs in this volatile market, negotiate locked-in pricing. And if your cost of business keeps getting higher, it may be time to start charging more.

Simonds: We added a dark meat product—popcorn chicken—to level out the market. Prices for dark meat are more stable that for white meat. Our popcorn chicken debuted July 1 in two test stores.

Q. What will the future bring?

A. Howard: As far as the menu goes, we currently offer nine wing flavors, but we’re always looking at new profiles. Asian is a possibility down the road. And we’re thinking of the boneless wings in a salad. Our sales have been up 16 quarters in a row, and we have about 250 more locations under development.

Simonds: Expansion is top of mind; our goal is to open one store a month, reaching 63 locations by 2010.

Turkey update

The turkey industry faces most of the same challenges as chicken producers. The supply will be about the same as in prior years—farmers continue to get strong prices for turkey meat, providing incentive to keep numbers up. But 70 percent of the cost of raising a turkey comes from the feed—a factor that will eventually affect production and tighten supply, predicts Sherrie Rosenblatt, VP marketing for the National Turkey Federation in Washington, D.C. In May, her organization joined forces with the National Chicken Council and other meat, livestock and poultry associations to form the Coalition for Balanced Food and Fuel Policy. The Website, www.balancedfoodandfuel.org, informs policy makers and the public about the negative impact the government’s ethanol policy is having on the industry and end users.

Although the supply of turkey meat in pounds remains stable, a greater number of birds are being raised because a smaller size is in demand. “Producers are looking for ways to shorten the time it takes to get turkey to restaurant customers,” Rosenblatt says. Boneless turkey rolls that combine white and dark meat mimic the whole bird in taste, texture and presentation but take less time to roast. Pre-formed turkey burgers are also a boon to foodservice. And more turkey breakfast meats and value-added products with ethnic flavor profiles are on the market.

These trends are influencing menus—turkey mentions showed a double-digit increase over the past year, according to Food Beat, a menu tracking service. Turkey sandwiches—including paninis, wraps, melts and other hot selections—now account for 70 percent of those items, but the Turkey Federation is seeing lots of operator interest in soups, lasagna and Mexican entrees, gauged by the recipes downloaded from its Website, www.eatturkey.com.

 

More From FoodService Director

Sponsored Content
local produce

From WinCup.

Today’s students care deeply about sustainability—much more so than the general population. For them, sustainable practices are visit drivers. What’s more, some 57% of students are willing to pay more for sustainable foods, according to Technomic’s recent College & University Consumer Trend Report . Sustainable claims drive visits, especially for young consumers: Some 31% of Gen Zers say they’re more likely to visit restaurants that try to be sustainable.

Students are looking for foodservice operations with comprehensive sustainability programs, and...

Industry News & Opinion

Mayfield High School in Mayfield, Ohio, has opened a coffee cart in its cafeteria, The News-Herald reports .

Open throughout the day, the cart sells 12-ounce cups of coffee for $2 each. Students were able to taste-test some of the offerings and were also involved in choosing the cart’s name.

The drinks are made with low-fat milk and unsweetened flavor syrups, and soy milk is on hand for those with allergies. To encourage more breakfast participation, the school gives students 50 percent off coffee when they also buy a breakfast item. Additionally, the cart is stationed next...

Sponsored Content
boston college acai bowl

From Dannon Foodservice.

Catering to the go-go-go lifestyle of university students is a challenge, and it’s one that Boston College dining representatives wrestle with daily.

“Students don’t just want to eat dinner between 5 and 7 p.m.,” says Beth Emery, the school’s director of dining. “They may want to eat dinner at 9 o’clock. We’ve been trying to come up with creative solutions.”

Those creative solutions include everything from offering breakfast items throughout the day to providing healthier late-night choices to trolling social media for trendy new menu ideas...

Sponsored Content
savory yogurt parfait

From Dannon Foodservice.

What consumers eat and, most importantly, when they’re eating it has changed significantly in recent years, signaling opportunity for operators able to capitalize on this evolution.

For example, some 83% of consumers said they were daily snackers in 2016, according to Technomic’s Snacking Occasion Consumer Trend Report . That’s up from 76% just two years earlier. Snacking is growing across many channels from retail prepared foods to bakery and coffee cafes, fast-food locations and more.

Busy lifestyles, smaller households with greater meal...

FSD Resources