October was a record-high salesvolume month for the restaurant industry indicating the environment is improving, but it’s not yet robust, cautions Hudson Riehle, head of NRA research. “The 2008/2009/2010 time-frame was the most challenging period for the US restaurant industry in recent history, but sales this October compared to last October are up 4 percent and restaurant industry employment has advanced by 143,000 jobs,” he adds. “The trend is definitely encouraging.”
Some call chicken a food platform because it allows a host of different preparation techniques and additional add-ons that fuel customized offerings, Riehle says. “Chicken is a signature item at certain concepts and it remains extremely popular with restaurant patrons,” he adds. “A much greater emphasis is currently being placed on grilled chicken.”
Each year the restaurant industry conducts a survey of more than 1,600 chefs covering more than 200 food and beverage items. Poultry plays an important role on menus. Comparing current menus ranging from quick-service to family dining to casual dining to fine dining compared to menus offered 10 years ago, there is a substantial increase in the number of chicken items and ethnic cuisines that incorporate chicken, Riehle says.
“A large portion of restaurant industry growth has been driven by offpremises traffic – or takeout delivery and drive-thru,” he adds. “Chicken lends itself well to off-premise uses.”
Chicken prices on the wholesale level are keeping pace with overall wholesale food-price inflation, which is running about 5 percent this year, Riehle says. “When you look at processed poultry at the wholesale level, it’s at about a 5 percent rate,” he adds. “That isn’t true with many other commodity groups. Pork is up 31 percent and beef is up 14 percent this October compared to last October. Processed poultry is matching the rate of the overall wholesale food-price inflation. Chicken remains competitively priced to ensure operators will incorporate it into their menus.”
Making a foodservice flap
Most recently, supply may be playing a larger hand in moving chicken forward at the foodservice level. Chicken supplies have been more abundant this year with 3.1 percent (1.1 billion lbs.) more production. And an additional 1.3 percent, or 470 million lbs., remain as surplus in the US market this year because chicken exports are down from 2009, says William Roenigk, senior vice president of the National Chicken Council.
“Together, 4.4 percent [1.6 billion] more lbs. of chicken are available to the US consumer,” he adds. “Chicken has benefited from at least three areas of new or expanded menu offerings. These are spicy versions of breast filet sandwiches and nuggets, a wider variety of chicken-topped salads, especially at quick-service and fast-casual operations, plus more chains and mom-and-pops are offering chicken biscuits for breakfast.”
Chicken sausages for breakfast at foodservice are making more inroads, especially at full-service restaurants, but less so at the more value-oriented concepts, Roenigk says. “Consumer demand for Buffalo-style chicken wings has not slowed during the economic rough-patch as the wing chains continue to add stores at a fairly good pace,” he says.
Buffalo Wild Wings, Minneapolis, has grown by 81 restaurants over the last 12 months, 20 of these in the third quarter, for a year-over-year unit increase of 13 percent, says Sally Smith, president and CEO. “We plan to open 15 company-owned and 17 franchised restaurants in the fourth quarter, on track to meet our 13 percent unit growth goal for 2010,” she adds.
The company sells an average of 496 million wings each year and 9.6 million wings each week. It sold more than 5.5 million wings on Super Bowl Sunday 2010 alone.
One of the more chicken-centric trends are wings – wing players like Buffalo Wild Wings Grill & Bar (sales up 21.7 percent) and Buffalo Wings & Rings (sales up 40 percent) experienced impressive sales growth in 2009, agrees Kelly Weikel, consumer research manager, Technomic Inc., Chicago.
“We’re also seeing wings trending for retail foodservice – several retailers, including Winn-Dixie and Wegman’s, are offering wing bars,” she says. “Wings appeal to consumers on many levels – they relate to the small-plate trend and can be eaten as a snack. They also provide a great way for consumers to be able to customize their meals [by mixing and matching the sauces both on the wings and those used to dip] and are typically affordable.”
Because chicken is so versatile, it can be used to leverage a good number of overall industry trends, Weikel says. “With health becoming more important to consumers, it could result in more chicken positioned as healthy/ humane/sustainable,” she adds. “However, consumers are also telling us they want more simplicity on food labels, so these practices may be conveyed through the overall marketing message rather than on a label of menu.”
When asked if more chicken items are being added to menus, Weikel replies, “It certainly is more affordable for consumers than beef entrées or steak. I think the overall perception of chicken as a healthier protein option will play a greater role in this. In terms of variety of menus, that may have more to do with the fact it can be used in so many ways – a lot of concepts are expanding their menus by adding new items like sandwiches, tacos and burritos. Chicken is the go-to protein as an ingredient in these and other types of main dishes because it appeals to consumers more broadly.”
Chicken’s versatility is a huge plus for operators because it lends itself particularly well to many leading menu and flavor trends, she says. “It is well received by consumers as a main entrée and is a leading ingredient in other items including sandwiches, salads, soups and even pizza and breakfast offerings. Also, operators can really play up the flavor of chicken in a lot of ways, through prep style, marinades, glazes, seasonings and sauces,” Weikel adds.
One primary benefit chicken offers foodservice operators is a continued abundant supply at favorable cost points, NCC’s Roenigk says. “Despite higher corn prices, chicken companies are planning at least another 3-plus percent increase in marketing in 2011,” he adds. “Unlike other meats that are pulling back on production or planning little growth in production, foodservice operators are recognizing chicken has the ability to help stabilize food costs in 2011.”
New product proliferation
New chicken products continue feeding the foodservice pipeline, especially in the quick-service segment. KFC’s new Double Down did so well after launching earlier this year it was extended past its May 2010 promotion deadline. The bunless Double Down has become the most successful sandwich in KFC history. More than 10 million were sold in the US in less than one month.
The product includes two boneless white meat chicken filets (Original Recipe or Grilled), two pieces of bacon, two melted slices of Monterey Jack and pepper jack cheese and Colonel’s Sauce. It packs 540 calories. It is also available in a grilled version, which contains 460 calories.
Since debuting nationally in Canada on Oct. 18, the Double Down became an instant best-seller at KFC restaurants throughout the Great White North. “By Oct. 31, we [expected to sell] more than 350,000 Double Down sandwiches in Canada – making Double Down our most successful new menu blockbuster ever,” said Dan Howe, chief marketing officer of Yum! Restaurants Canada, after the launch.
KFC also launched its Doublicious sandwich this year. The Original Recipe Doublicious includes an Original Recipe filet topped with bacon, Monterey Jack cheese and Colonel’s Sauce. The Grilled Doublicious is a grilled filet topped with Monterey Jack cheese, lettuce and honey mustard BBQ sauce. The Doublicious is available nationwide.
McDonald’s USA has long been a major player in offering chicken items. “We buy approximately 700 million lbs. of chicken a year,” says Ashlee Yingling with McDonald’s USA’s media relations division. “We have more variety and choices in our menu than ever before and chicken is a part of that mix.”
McDonald’s most recent chicken product introduction is its Southwest Chicken Salad launched in 2007 at a suggested retail price in the $4 range. “We also introduced our line of Chicken Snack Wraps in 2006 and 2007, in both grilled and crispy options for $1.49,” she adds. Its famed Chicken Foodservice turkey takes flight Turkey, which is no longer “holidays-only” fare, lends itself to numerous value-added menu items. The 2009 National Turkey Federation’s Marketplace Survey, which reveals turkey product distribution information, relays the foodservice sector received about 18 percent of 6 billion lbs. of turkey volume represented. AgriStats Inc., a statistical research and analysis firm, conducts the survey for NTF every two years.
The top-three products distributed in the foodservice industry are cooked white meat (30.5 percent), sliced deli meat (21.7 percent) and other raw turkey meat, such as breast cutlets, and mignons (14.6 percent), says Sherrie Rosenblatt, NTF vice president of marketing and communications.
“Chefs appreciate turkey’s low food cost as much as its consumer appeal and versatility,” she says. “Whole turkeys offer a great opportunity for savings due to the variety of menu applications for both light and dark meat. Turkey breasts provide an endless supply of healthy entrées when sliced into cutlets, steaks, chops, tenderloins, medallions and scaloppini.
“Turkey thighs, legs and wings offer versatility and economy,” she adds. “Thighs yield a depth of flavor to traditional favorites, such as cacciatore and osso buco. Thighs and legs may be skinned and cut into boneless pieces for chili, stews and soups. Turkey legs may be smoked. Turkey wings may be introduced on the appetizer menu as a fun and bountiful presentation of popular Buffalo Wings.” Dark turkey meat is ideal for making signature sausages, she continues. “With a rising focus on healthy diets, diners are more apt to try homemade turkey sausages that have full flavor yet lower fat content,” she says.
“Turkey has an excellent nutritional profile – 3 oz. of skinless turkey breast has 0 percent saturated fat – that will provide consumers with the benefits of protein while sparing additional fat grams and cholesterol,” Rosenblatt says.
In April, NTF unveiled its new online tool – the Meal Upgrade Calculator (www.mealupgrade.com). Developed in collaboration with Shape Up America!, the healthy weight campaign spearheaded by former US Surgeon General C. Everett Koop, the calculator shows consumers how to “upgrade” some of their favorite meals by changing the type of meat and poultry, the sides and even the condiments so families can reap the benefits of consuming less fat and calories.
“Having introduced the ‘upgrade’ concept in 2010, NTF plans to work with Shape Up American! in 2011 to build momentum for the campaign by incorporating physical activity ‘upgrades’ and an upgraded restaurant menu component,” Rosenblatt says. “NTF will create more news by commissioning a survey of moms examining their challenges in getting kids to eat healthier meals, especially when dining out.”
In the past 10 years, McDonald’s USA has seen the popularity of chicken increase. “We’re testing some other chicken options now,” Yingling says, “Chicken Flatbread and a Fresh Garden Wrap. We always have a robust pipeline of menu items we’re testing. We are always looking at chicken options.”
What lies ahead
Already the leading protein, chicken might see continued growth as consumers continue to focus on healthy diets, Technomic’s Weikel predicts. She also predicts “continued expansion of it on breakfast menus.”
NCC’s Roenigk anticipates the foodservice market will remain a boneless/skinless breast-meat market. “If foodservice is to continue to expand, the chicken industry will need to find a better market for the back-of-the-bird,” he adds. “Exports have solved this imbalance for the past 12 years or more but will exports continue to be the solution in the future?”
Several processor CEOs are hopeful regarding chicken’s future role in foodservice. While participating in a National Chicken Council Annual Conference panel discussion in Washington in October, Don Jackson, president of Pilgrim’s Pride Corporation, Greeley, Colo., said he is already seeing feature activity and value pricing by foodservice customers and expects a good year for foodservice in 201l. “I’m optimistic,” he added.
Donnie Smith, president and CEO of Tyson Foods, Springdale, Ark., said he expects growth in foodservice in 2011 after a slowdown in that segment of 2.5 percent in 2010.
When asked what kind of a year it has been for Tyson chicken at the US foodservice level, Smith tellsMeat&Poultry, “The good news is we feel like foodservice has stopped going down in terms of sales. We have also noticed a remarkable correlation between real growth in foodservice and real growth in jobs.”
Tyson breaks foodservice into three categories. Limited-service restaurants, quick-service restaurants and similar venues make up about onethird of foodservice; full-service restaurants make up another third; and all other foodservice beyond restaurants, which includes supermarket delis, convenience stores, travel and leisure, business and industry, education, health care, etc., makes up one-third.
“In the first two-thirds, we’re calling for real growth to be down about .5 percent,” Smith says. “In the nonrestaurant part of foodservice, our call is for flat real growth. So, if you combine all of that, we think foodservice is going to be down in terms of real growth from 2010 to 2011 by about three-tenths of a percent. But if we’re lucky and get some help from the economy, it may go up 1 percent or higher.
“As you look inside of that growth, we feel like poultry demand at foodservice [will be] up 1 percent and a lot of that comes from beef and pork prices being higher in 2011 than they were in 2010 and a little bit in shift of promotional volume from beef and pork and chicken. I hasten to say we have not seen a meaningful shift in that foodservice chicken volume yet.”
Consumers will need to have their over-all comfort level raised and stabilized before the foodservice industry can truly feel it has gotten over the sustained sluggishness in the economy, NCC’s Roenigk says. “Products like chicken that can offer value, variety and an assurance of a good eating experience at foodservice will continue to benefit during the US economy’s transition to better times,” he adds.
“Roughly half of all spending on food in America today is allocated towards the restaurant community,” NRA’s Riehle says. “Chicken consumption in restaurants has been an important component of that sales growth and will continue to be so over the next decade.”