Restoring predictability to their supply chain is critical to Wingstop if they want to reign in their food costs. Per Restaurant Dive, the chain is looking to pay about $1.60 to $1.80 for every pound of wings it sources, which company CFO Alex Kaleida says is equivalent to 30% of the amount it spends on ingredients. Apparently, the only way to do that at this stage is to go to chicken suppliers for a deal that allows Wingstop to negotate a deal at the prices it wants or to buy a chicken processing plant outright.
It could even consider a co-op deal that sees Wingstop buying a processor, and then getting its franchisees to organize into a co-op. Wingstop CEO and company president Michael Skipworth said, “We would then put that asset within that co-op and put some sort of debt, obviously, the cash flows of that poultry processing complex would largely be guaranteed by our existing franchisees, and then use that to pay ourselves back” (per Restaurant Business).
