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According to the National Chicken Council’s 2013 Wing Report, "more than 1.23 billion wing portions will be consumed during Super Bowl weekend in 2013." (It seems important to point out here that, per a new poll conducted by the NCC and Harris Interactive, bleu cheese has been handed a stunning defeat by ranch dressing as Americans’ favorite wing dip.)

The wholesale price of wings is at a historical high -- and wings have, in recent years, become the most expensive part of the chicken. Right now, the wholesale price of wings in the Northeast is hovering around $2.11 a pound, up 14% from last year. Ten years ago, wings were wholesaling for $0.68 a pound.

"Demand for wings is proving more and more to be inelastic," Bill Roenigk, chief economist and market analyst at the Chicken Council said in a statement. "With the rising number of restaurants with menus dedicated to wings, the return of the NHL hockey season, the NCAA March Madness basketball tournament, and then the start of grilling season, wing demand should remain hot."

Here's what Buffalo Wild Wings (NASDAQ:BWLD) had to say about the issue in its most recent 10-Q:

The cost of goods sold is difficult to predict, as it has ranged from 27.2% to 31.6% of restaurant sales per quarter in our 2011 fiscal year and year-to-date in 2012, mostly due to price and yield fluctuations in chicken wings. We work to counteract the volatility of chicken wing prices with the introduction of new menu items, marketing promotions, focused efforts on food costs and waste, and menu price increases. We will continue to monitor the cost of chicken wings, as it can significantly change our cost of sales and cash flow from company-owned restaurants. We continue to explore purchasing strategies to lessen the severity of cost increases and fluctuations, and are reviewing menu additions and other strategies that may decrease the volatility of our cost of sales percentage and decrease the percentage that chicken wings represent in terms of total restaurant sales.

An Industry Pivots to Breast Meat

As Dick Lobb, former VP of Communications at the NCC told me back in 2010, "You really want each part of the bird to carry its share of the burden, but a chicken only has two wings."

This sentiment proved especially relevant in 2009, when the price of chicken breasts and the price of chicken wings -- which used to be literally thrown away or used to make soup -- switched places.

And lo, the "boneless" wing was born.

Not actually wings at all, Lobb described the boneless variety as "pieces of breast meat that are breaded and battered and cooked in the same way as the wings, and served with the same sauce."

Chains like Applebee’s and Pizza Hut enjoy the higher margins associated with the boneless wing. And processors like Tyson Foods, Inc. (NYSE:TSN) and Sanderson Farms, Inc. (NASDAQ:SAFM) eagerly supply them. However, boneless wings cannot shoulder the entire burden of rising wholesale prices, and certain investment techniques are not an option for restaurant operators.

"A hedge is impossible -- there’s no such thing as chicken wing futures," Houston money manager Ryan Krueger told me.

No Shortages Expected

Bill Roenigk would like to assure Americans that they won’t want for wings this Sunday.

"The good news for consumers is that restaurants plan well in advance to ensure they have plenty of wings for the big game," he said. "And some restaurants are promoting boneless wings and some are offering flexible serving sizes. But if you’re planning to cook your own wings, I wouldn’t advise being in line at the supermarket two hours before kickoff."

This article by Justin Rohrlich was previously published on Minyanville.

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Twitter: @minyanville

Disclaimer: The views represented on this blog are those of the individual authors only, and do not necessarily represent the views of Schaeffer's Investment Research.


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