U.S. Football Snacks Double With Drought Withering Crops
A six-minute drive from Ralph Wilson Stadium, home of the National Football League’s Buffalo Bills, Duff’s Famous Wings partner Phil Kinecki is worried by two things: The team’s performance and the price of chicken.
An eighth straight losing season for the Bills, who haven’t made the playoffs since 1999, would hurt the restaurant’s sales, and the cost of chicken wings, a game-day staple, has almost doubled in the past year. Bars in Buffalo, New York, popularized deep-fried wings in the 1960s, and Duff’s sells about 1,200 pounds of them when the Bills play, 50 percent more than most days. Americans eat about 25 billion wings annually, industry data show.
Food items popular during the U.S. football season, from corn chips and burgers to nachos and wings, are rising after the worst drought since 1956 damaged crops and increased the cost of feeding livestock. Tyson Foods Inc. (TSN) and other poultry producers have cut output, boosting prices for buyers including chicken- and-beer dining chain Buffalo Wild Wings Inc. (BWLD) as the NFL starts its first full weekend of games on Sept. 9.
“Chicken-wing prices are high, but they’re going to get worse,” Kinecki said by telephone from his Buffalo-area restaurant. The Bills play their first regular-season game on Sept. 9 against the New York Jets. “A bunch of our vendors said they’re expecting rises in chicken and beef prices. We’re pretty worried about it.”
Wholesale wings in the U.S. were at $1.855 a pound yesterday, up from 90 cents a year earlier, and in March reached $1.90, the highest on record at the U.S. Department of Agriculture. At Duff’s, Kinecki said he is paying $2.12 a pound compared with $1.09 a year ago. Ingredients for nachos are up 20 percent in the year through July and near an all-time high reached in March, according to an index compiled by Bloomberg of monthly prices for corn chips, beef, processed cheese and pinto beans tracked by the Bureau of Labor Statistics.
Corn and soybeans reached records in the past month, and global food costs tracked by the United Nations jumped 6.2 percent in July, the most since November 2009. Food prices were little changed in August, UN data show. The USDA said July 25 that domestic food costs will rise 3 percent to 4 percent next year, from 2.5 percent to 3.5 percent this year. Beef may gain as much as 5 percent, the agency said.
Rising food prices may slow demand from consumers, said John Davie, the president of Boston-based Dining Alliance, which represents about 10,000 U.S. restaurant companies.
“You’re not going to see the 99-cent wing promotions like you used to,” Davie said by telephone from Boston. “People are still out and restaurants are still busy, but revenues still may go down because people are more conservative about how much they’re spending and how much they’re going out.”
The price of wings sold at restaurants and supermarkets usually falls after the NFL Super Bowl in February and the National Collegiate Athletic Association’s Division I Men’s Basketball Championship Tournament in March, said Tom Super, a spokesman for the Washington-based National Chicken Council. That didn’t happen this year because producers cut output to limit losses from surging feed costs.
Buffalo Wild Wings, based in Minneapolis, said July 24 that the cost of its wings in the quarter starting July 1 will be 68 percent higher than a year earlier. That compares with 3 percent for all other commodity costs.
While the U.S. chicken industry returned to profit in January after months of losses amid a supply glut, production declined in the first half of 2012 and rising feed costs threaten to erode profit margins, according to Stephens Inc., an investment bank in Little Rock, Arkansas.
The industry may be unprofitable in the fourth quarter, Joseph Grendys, the chief executive officer of Koch Foods Inc., the fourth-largest U.S. producer, said by phone from Park Ridge, Illinois. Costs will rise 10 percent to 15 percent “across all product lines” next year, he said. The closely held company is discussing prices with customers and expects one-year supply contracts to include clauses allowing for quarterly adjustments based on grain costs, he said.
Deep-fried chicken wings were dubbed Buffalo wings because they were first served in 1964 at the Anchor Bar in the city, according to the National Chicken Council. Teressa Bellissimo, the bar’s owner, would fry leftover chicken wings in hot sauce for her son and his friends and they were so popular she put them on the menu.
The price of wings will probably reach $2 a pound this year because of the drought, said Davie of the Dining Alliance, which works with smaller restaurants and chains to procure bulk pricing.
Kinecki, who co-owns Duff’s Famous Wings with Nick and George Pittas, said suppliers haven’t told him what it will cost to buy wings for the rest of the year.
“You know everything’s going up, but the problem is how do you plan for it if you don’t know how much,” Kinecki said. “In this economy, you’re trying to keep the customer happy, but you have to stay in business.”
Another unknown is how the Bills will fare, a key to Duff’s business, Kinecki said. The success of the team, which has never won an NFL championship, will determine how many people visit the restaurant for wings, nachos and beer, he said. The Bills lost all four of their preseason games this year, after winning six of 16 games last year. They tied for last in the American Football Conference-East.
“The better the Bills do, the more people want hang out with fellow fans,” Kinecki said. “You’d like to be optimistic, but then the preseason comes and they look crummy.”
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