The chicken sandwich competition between top quick-serve restaurants is helping lift demand for boneless, skinless breast meat.
In a WATT Poultry Chat interview, Mark Jordan, executive director of LEAP Market Analytics, said quick-serve restaurants (QSRs) saw an opportunity both in elevated attention brought to chicken sandwiches by the chicken sandwich wars and the lower-than-normal prices for boneless, skinless breast meat. This is a positive for the broiler industry as a whole.
Austin Alonzo: I understand today that you want to talk about the chicken sandwich wars and the impact that it's had on demand for boneless skinless breasts.
Mark Jordan: This has been quite the storyline here in recent weeks, maybe recent months. I want to jump right in, first off, and take a little bit of a brief historical tour of the boneless skinless breast market looking over the past couple of decades. Some interesting things, I've got a chart here: I put boneless skinless breast meat and I paired it with boneless skinless thigh meat. I was maybe gonna throw in wings and tenders as well. But I didn't want to clutter up the chart. This makes the point. Boneless, skinless breasts meat, if you go back far enough, was kind of the value leader of the of the broiler cut out. And you can see over time, there was a steady premium over thigh meat, boneless skinless breast meat and most years would average $1.20 a pound or better, certainly some upcycles firmly above that. And if you look at the last few years, and really the only way I can describe this is that breast meat has just became an unloved cut of the bird. Average annual price is trending lower, barely holding above $1 a pound last year and spending a lot of time obviously below that for stretches.
So going here to the next chart. And this gives us a little more, you know, still a little perspective of the last couple years but what we've done so far here in 2021. And what I think might happen here then in the next couple of months, but out of the gate here, this year, the market was still trading below $1 a pound and then has shot you know pretty sharply higher. To, it was first around $1.30 a pound, then a little more slowly appreciating from there, but we've seen spot prices above $1.40 a pound here recently appeared to be on track for $1.50. And even, I think, we'll get to $1.60, maybe $1.70 a pound as we heat demand up seasonally for the late spring, early summer time period.
So yeah, I think the storyline here is you know, we've got a lot of fast food companies that saw this and looked at breast meat in the context of a lot of other cuts I mentioned. Some of the other chicken cuts that have gained value relative to breast meat and you even look at breast meat's attractiveness relative to other proteins. And I think it, just made a lot of sense. This is a cut that has a lot of utility historically and has just been used for a lot of good things in that space and has maybe just been forgotten about a little bit. And they said, "Hey, let's jump on." And these things tend to feed on one another, somebody gets a great idea, others jump on and so we've seen that some of your big your big chains, McDonald's, Wendy's, KFC, Taco Bell has jumped in. A lot of these are chicken sandwiches or other products kind of in a similar vein using boneless white meat and a very, good tasty and attractive way and they're, they're pushing them heavily.
I just want to look at one last chart here before we wrap up and this is taking this price action and kind of taking it relative to historical performance and adjusting for quantity so we're trying to measure demand at the wholesale level. You can see, of course, the last few years some very sluggish demand for breast meat and here in the early going, this price action really implies a sharp, rightward move in the demand curve. We haven't seen a flare up like this since maybe 2014, 2015. And I think as this plays out, we're going to see even better demand this spring and summer, so not completely unprecedented but you've got to go back to maybe like 2003 and 2004 to see a similar surge in demand for breast meat, so certainly a positive trajectory for the broiler industry, what's happening from this marketing push from the fast food industry.
This transcript is edited for length and clarity.
