I love this quote from SAFM’s senior management regarding the week leading into Labor Day “we came in Monday, and it was soft everywhere, very low demand for anything. You’d think they’d be hollering for wings, wings and chicken tenders for what we call the watering holes, where they serve beer and hot wings and chicken tenders…not much at retail and just kind of a blah week.”
In 1H08, fresh chicken wings accounted for 21.5% of BWLD’s restaurant cost of sales. In 2Q08, fresh wings were 20.4% of cost of sales. Despite SAFM’s macro comments, BWLD’s same-store sales have remained above industry trends. Above average sales trends and favorable wing pricing should fuel better margins in the near term. Over time, I would still expect chicken prices to move higher as chicken producers are forced to further cut production.