Winner, Winner, Chicken Dinner!

And if you're an American, you're most likely having chicken for dinner.

Every year in February and March, grocery shopping becomes a little bit more expensive if you’re putting chicken wings in your basket. Even in the midst of a pandemic, Americans still managed to drive up the price of chicken wings despite a surplus of chicken wings in 2020. It’s not that shoppers can’t find chicken wings in the store, but rather that they can’t find it at that price they’re used to seeing. An increase in demand around the Super Bowl and March Madness usually drives up wing prices, but this year is a little different.

This week we’re going to go down two very different paths when looking at your chicken (wing) dinner. The first may be the more obvious, but the second may be a surprise. Let’s start by looking at how the pandemic has impacted my favorite Mahogany Wings. If you have a favorite wing recipe, use this button to let me know!

Leave a comment

Remember how we said demand increases right before big sporting events, like March Madness? Something else happened right before March Madness last year, too. In order to meet the typical increase in demand before the NCAA tournament, chicken suppliers also have to increase the quantity of chicken they provide. The pandemic hit the United States at the beginning of March, right before the tournament started, and eventually canceled the NCAA basketball tournament (and my trip to Switzerland!). The result? A surplus of chicken wings in 2020 and lower chicken prices at the grocery store. Prices dropped almost 30% during that time period. The Washington Post put together a great set of graphs on the 2020 chicken wing market. Here’s one that caught my eye the most:

Don’t worry, there will be more graphs below! Fast forward to 2021 and let’s figure out why wing prices are 19% higher than they were at the same time last year. It’s easy to say “the pandemic,” but we need to figure out how the pandemic is actually impacting this particular market. As we saw last week, the market for roses collapsed at the start of the pandemic and resulted in a lot of wasted resources. Unlike flowers, chicken can be frozen and sold later. Shouldn’t the chicken surplus of 2020 have helped keep those 2021 prices in check?

The price for products isn’t just based on the previous costs the firm incurred to make that particular unit. Sellers may increase the price of previously produced products in order to offset upcoming expenses as well. Labor costs have increased in the meat and poultry industry because of the pandemic, which will impact the final price of chicken. At the same time, corn and soy prices are at the highest they’ve been in the past 7 years, and those are two key ingredients used to feed chickens. Both are significant contributing factors to the price of chicken, and increased demand just makes that final price even higher. Let’s take a quick break and look at how much hot sauce sales have grown since 2000:

Let’s get back to those chickens. There’s a final factor to consider, but this is more of a natural issue that has a nice economic application. As Americans hunt and peck for good deals on chicken wings, there’s only so much chicken suppliers can actually do to make sure there are enough wings for them to sell. Chickens will always only have just 2 wings. It’s easier to grow a chicken to be meatier, but farmers haven’t started growing chickens with more wings. If Americans continue to demand more chicken wings, what happens to the rest of the birds?

This is actually my go-to example for the concept of “complements in production.” The more chicken wings that people want to buy, the more that sellers have to also provide chicken thighs and breasts at the supermarket. If chicken suppliers are increasing the number of chicken wings they sell (remember, they only have two wings!) then there also has to be an increase in the supply of all those “other parts” of the chicken. If the demand for chicken breasts and thighs isn’t really changing, this increase in supply should decrease the price of those “other parts” and that will induce some people to eat more chicken and less of other meats. Conveniently, that’s where we go next!

I downloaded data for meat availability in the US from the USDA to see how our meat consumption has changed over time. While this data is technically based on meat availability, it is a close estimate of the amount of meat an average American consumes in a given year. The Economic Research Services division of the USDA calculates this value by taking the per capita supply of food for human consumption and adjusts those values to account for potential spoilage and waste in grocery stores, restaurants, and homes. Now let’s look at how meat-eating patterns have changed over the past 100 years!

Americans currently eat an average of 196 pounds of meat per person per year, which is just slightly down from the peak in the mid-2000s. Beef consumption peaked in 1976 at about 89 pounds per person per year and today we’re at about 54 pounds. This is great news if you’re concerned about the consumption of beef and its impact on the environment. It’s less good if you’re concerned about animal welfare given how most chickens are raised.

Where did this burst of chicken consumption from? In the 1940s, chicken consumption increased because of beef and pork rationing during World War II. But what kept this trend growing after the war ended? Until the 1950s, fried chicken was eaten during special occasions, like Sunday dinners. The 1950s saw a ten-fold increase in the number of television sets, and along with the television came the TV tray. Americans could now sit in front of their TVs while eating dinner. The TV and the TV tray would spawn another famous American delicacy. In the early 1950s, C.A. Swanson and Sons had severely overestimated how much turkey people would eat for Thanksgiving. Their solution to their abundance of birds was the invention of the TV dinner.

The 1950s were also the decade that Harlan Sanders developed a way to mass-produce fried chicken and the first Kentucky Fried Chicken (KFC) franchise would open in 1952 in Salt Lake City, Utah. The success of KFC would spawn other chicken-themed fast-food restaurants like Popeyes and Chick-fil-a. Burgers have always been the top category for American fast food, but chicken chains raked in $27 billion in 2019 and finished in third:

We started this article with two of the US’s biggest sporting events that millions watch on TV each year. Chicken wings are almost always at the top of the list for favorite snacks to consume while watching the game. Despite higher prices compared to last year, Americans are still expected to consume more chicken wings. That extra chicken has kept chicken prices low, which has allowed Americans to continually increase their consumption of chicken. There are few things that may be more American than fried chicken and TV. Football and college sports may be close runner-ups.

Facts and Figures You Didn’t Know You Wanted

  • Americans were estimated to consume 1.42 billion wings and drumsticks during the 2021 Super Bowl. [National Chicken Council]

  • The average Super Bowl view will eat 22.4 wings [USDA]

  • There are approximately 21,380 fast-food chicken franchise stores in the United States [IBIS World]

  • In 2019, Chick-Fil-A ranked #3 in system-wide sales among quick-service restaurants, behind only McDonald’s and Starbucks [QSR Magazine]

  • There are an estimated 25 million chickens in the world, more than any other bird [Smithsonian]

  • In 2017, there were 164,099 farms that produced and sold poultry and eggs [USDA]