Have you noticed that restaurants are crazy for chicken lately? It’s not just in your head: The return of Taco Bell’s crispy chicken nuggets saved Yum Brands last quarter, while McDonald’s highlighted how the Snack Wrap helped turn its quarter around. Even grilled-chicken chain El Pollo Loco is giving in and rolling out fried chicken tenders later this year to arrest its sales slowdown.
The chicken bonanza has a lot less to do with a love of all things wings, and a lot more to do with economics. The price of poultry has remained stable lately, rising just 4.5% in the last 12 months, according to the latest CPI report. Beef prices, however, have soared 17.5% in the same period. The problem is shrinking herds: Barron’s reports that US cattle inventory has fallen to its lowest level since 1951.
The result is falling profit margins for burger-focused restaurants in the fast-food industry, as well as steak-centric sit-down chains like Texas Roadhouse. Many restaurants have turned to low-margin poultry offerings to help boost the bottom line, while others are focusing on premium offerings, like Shake Shack, which is rolling out a french onion soup burger that sounds kind of great, actually.
The point is, as beef prices continue to climb, we have yet to reach peak poultry—leaving major chicken suppliers like Tyson Foods and Pilgrim’s Pride sitting pretty.—MR
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