Tyson Foods Looks to Convenience Stores to Sell More Chicken

Tyson Foods is the largest U.S. commodity beef and chicken supplier, with slaughterhouses that process an average of 132,000 head of cattle and 41.4 million chickens weekly. But the company is seeking fortune beyond the supermarket meat department. That’s why it’s rushing to sell piping-hot Buffalo chicken bites near the cash register at many of the gas stations and 149,000 convenience stores across the U.S. Such locales may not be sexy or even particularly appetizing, but their sales are growing while revenue at traditional food stores is falling. The profit margins of prepared foods—even those sold alongside cigarettes and condoms—can be bigger and more stable than those for raw meat.

Springdale (Ark.)-based Tyson, which had $33.3 billion in sales in its last fiscal year, is building up its line of prepared foods to go head-to-head with Hormel Foods and Hillshire Brands. They’re all fighting for customers who increasingly buy meals from shops better known for selling gasoline, lottery tickets, or toilet paper during the twilight hours. The chicken king wants to be more like rivals that sell more processed foods, which have higher profit margins. “Tyson wants to increase their value-added and prepared-foods business to become more like Hormel, to get to the higher [stock] multiple,” says Bryan Agbabian, a portfolio manager for Allianz Global Investors.