Flexibility Fuels Chicken

TOP FIVE U.S. Chicken producers

Average Weekly Production (in million pounds)   Market  
Share %  
Pilgrim’s Pride14620.30%
Tyson Foods14420.00%
Perdue Farms557.60%
Sanderson Farms425.80%
Wayne Farms344.70%

 

Investing in foodservice is a big step for any c-store chain, but if it’s done right, the category can evolve into the quintessential profit center in 2010 and beyond.

“Having a product that tastes great, represents a good value and is readily available hot for grab-and-go displays is the key to our success with foodservice and chicken is a core part of this offering,” said Tom Terlecky, senior category manager for BP America Inc.’s ampm chain.

Operationally the product must be easy to execute and be consistent from store to store. “Our product is freezer-to-oven and involves limited handling and preparation. We do not need deep fryers; all of our chicken is heated in the convection oven. In addition, our chicken is fully cooked, which when heated to a proper temperature of 165 degrees addresses food safety concerns,” Terlecky said.

Pricing and value are relative to the quality and size of the product. Ampm’s chicken sandwich is strategically priced below competitive QSR sandwiches of equal quality, Terlecky said. In fact, he noted, “a similar sandwich sold by Burger King is at least $1 higher at retail than an ampm chicken sandwich.”

This pricing strategy is a sign of the times, Terlecky said. Customers expect value without sacrificing quality in these difficult economic times. This aggressive strategy is expected to continue throughout 2010.

Jim Bressi, director of food research and development for Kwik Trip in La Crosse, Wis., said his chain sells a pressure-cooked, deep-fried broasted chicken by the piece, from $2.69 for a breast to 79 cents for a wing.

Easier to handle is a chicken sandwich carried systemwide that comes prepared from vendor Brakebush Brothers Inc. in Westfield, Wis. Said Bressi, “We put some cheese on it, slip it into a bun and sell it every day for $1.79.”

Similarly, every Wednesday is a Dollar Day at ampm, with a different item priced at $1.

A game of chicken

According to the National Chicken Council, the U.S. chicken industry consists of vertically integrated companies that produce, process and market chickens and chicken products, with a total estimated retail value of $58 billion. Approximately 57% of the chicken produced in the U.S. is sold through retail grocery shops and 43% is sold prepared at restaurants and convenience stores. Other key facts include:
• Production in pounds ready to cook: 35.2 billion
• Annual U.S. consumption per capita: 85 pounds
• Wholesale value of shipments of broiler products: $45 billion

“One of the things that is important to us is to be grab-and-go,” Bressi said. “If it’s a crispy chicken breast and you’ve got to put it in a package, it doesn’t always get to the customer as a crispy chicken breast. It can get a little soggy, so we have all those challenges as well. You have to have a box that vents moisture, but retains heat otherwise you’ll have some angry customers.”

Bressi concurred with Terlecky that finding a vendor that understands customer demographics is extremely important for delivering quality and value. “Chicken has a lot of flexibility to meet customers’ needs, but people are demanding so you have to have flexibility with your vendors to get the products you need when you need them,” he said. “Once you’ve got the right partner, keep it simple and keep it fresh.”

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