(CNN) – Wingstop aims to reduce its food supply costs. So it considers raising its own chickens.
Restaurant brands like Wingstop have struggled with their supply chains in recent years as the Covid-19 pandemic, extreme weather conditions and the war in Ukraine, among other things, have tightened food supplies and pushed up prices. That pain was particularly important for a chain like Wingstop, which specializes in one type of food.
During an investor day on Tuesday, the company discussed its efforts to strengthen its supply chain. One tactic already exists: using more parts of a chicken, a move it’s been experimenting with via Thighstop, a virtual brand serving crispy thighs Customers who ordered on a dedicated Thighstop website or through DoorDash. These items have since been added to Wingstop’s regular menu.
Other possible solutions are now on the table, including the possibility of becoming its own chicken supplier.
“There are … scenarios that could involve acquiring a small poultry complex or building our own poultry complex,” Wingstop CFO Alex Kaleida said during 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 the feeder through the grower to the processing stage.”
Grand piano prices are volatile: In June of last year, when the company launched Thighstop, wholesale grand piano prices had increased dramatically compared to the previous year. Although securing supplies by investing in a poultry farm wouldn’t come cheap, Kaleida believes it would help Wingstop avoid sudden spikes in the price of its chickens.
Wingstop estimates that one poultry complex could cover around 20% of their total wing purchases.
Securing its chicken supply chain could be “potentially game-changing” for the company, Wedbush restaurant analyst Nick Setyan said in a note on Tuesday. That’s because better clarity on food costs could encourage more operators to open Wingstop franchises, which would spur growth.
In the first quarter, Wingstop added 60 restaurants, a record. Sales in stores open for at least a year increased by 1.2% over the period.
If Wingstop goes ahead with its plan to open a poultry factory, it will follow in the footsteps of big department stores like Walmart and Costco.
A few years ago, Walmart opened a meatpacking facility in Georgia to slice, wrap and label its own brand of steaks and roasts for local stores. Costco has also developed its own farm-to-store poultry manufacturing operation in Nebraska to supply its popular fried chicken offering.
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