Two areas of concern: supply chain issues and labor shortages.
Some like it hot.
Others prefer it more mild or even completely sauceless.
It can be grilled, baked or fried and served as strips, nuggets or wings, among other varieties.
Whatever the customer’s preference for partaking of poultry, chicken continues to prove to be very popular across all foodservice segments. How popular?
“Chicken is easily the most menued protein overall, appearing on 95% of menus,” says trendologist Mike Kostyo of Chicago-based Datassential. “In fact, chicken is the single most menued ingredient overall on non-beverage menus. Chicken appears on 90% of QSR menus. Chicken is America’s most-loved protein, with 87% of consumers saying they love or like it.”
Shawn Lalehzarian is the CEO and co-founder of The Red Chickz, a Los Angeles-based Nashville hot chicken concept that opened downtown in December 2018. Lalehzarian’s company will open a second location in Culver City, Calif., in the first part of this year. “The chicken segment has had great growth in the past five years, and I believe this is just the beginning,” Lalehzarian says. “Chicken consumption has doubled in the last 10 years, and this is just the start for the chicken segment.”
Several factors continue to contribute to chicken sales flying the coop, so to speak. “You see more red meat consumption going down, and those prices have gone up. That’s part of it,” Lalehzarian adds. “There’s creativity with different concepts coming in. South African concepts and Nashville hot chicken concepts will help the growth of the chicken segment. It’s time for this to explode.”
Before this explosion takes place however, operators in the chicken segment need to navigate several integral issues, the most prominent of which appears to be supply-chain challenges and the paucity of poultry. “I never thought I would have to hire a logistics coordinator,” says Jonathan Almanzar, the CEO and co-founder of Chick’nCone, which is based in Easton, Pa., and has grown to 30 stores across the United States and internationally since its founding in 2014. “We have to be creative and handle this as best we can. We try to get the products we need in a timely fashion. It’s been tough spending time on eBay trying to find things. I would say supply chain has been the biggest issue. It may drive some companies to make some changes.
“Somebody might take advantage of this time that could revolutionize how we’ve been doing things,” Almanzar adds. “This is a system that has been in place for a long time and has needed to be updated for a while. I don’t know what that [solution] is and what it would look like. I just know it could be better.”
If obtaining product weren’t difficult enough for the restaurant operators, there’s also the issue of less availability driving up the prices from suppliers. According to a July 2021 Datassential study, chicken wings and breasts came right after to-go packaging as the most out-of-stock options, with more than 55% of operators who purchase chicken wings saying they had run into supply-chain issues. In terms of responding to that shortage, 34% of operators indicated they swapped in something else for chicken wings, 36% found a different supplier, and 30% just dropped wings from the menu completely.
“For the chicken segment in the recent one-and-a-half years, the main challenges have been shortages of tenders, breasts and wings,” Lalehzarian says. “And prices have increased. I used to purchase tenders for $57 a case, and now it’s up to $160 a case. Frying oil was $17 a case, and that went up to $57 a case about four or five months ago. The price increases have been drastic in the recent 18 months. These have been the main challenges in that segment.”
While Lalehzarian’s company is based on the West Coast, the supply chain and rising cost issues aren’t limited to just one specific region of the country.
Samir Wattar is the chief operating officer of Texas-based Layne’s Chicken Fingers, which has been in existence since 1994. Layne’s has eight restaurants spread across College Station, Dallas-Fort Worth and Houston and plans to add two-to-four more in 2022. “I always believed that the supply chain is more about relationships than contracts,” Wattar says. “It’s been very, very challenging, and we have to pivot and adapt. We have two restaurants that were supposed to open in 2021, but we could not because we didn’t have everything we need. We have equipment and takeout packaging that are stuck in a port somewhere. We have to wait until it’s unloaded, and you see an increase in prices. We have to build relationships with suppliers and have to have plan A, plan B and plan C. If we don’t plan ahead, we can’t grow.
“The biggest thing that has evolved is being more adaptable with all the supply chain issues we’re facing on a daily basis and being able to pivot immediately if faced with an issue. Our menu is simple,” says Wattar. “We sell chicken tenders and french fries. We have to be more adaptable.”
That adaptability is also required when dealing with supply chain issues impacting new equipment purchases. “The lead time for some equipment is now three or four months,” Lalehzarian says. “Before you could purchase something and have it delivered to you from any equipment store or online and have it within four or five days. But now the majority of equipment has at least four to six weeks of lead time.”
As for nonequipment necessities such as cups and other paper products, Wattar says that proper planning and foresight has proven beneficial for the most part. “Luckily, we were ahead of the curve and we had some products locked in,” Wattar says. “We have shortages of some items like straws and napkins, but we were able to pivot and use something else.
“We had some delays in product arriving, but we’re not out,” Wattar says. “We were able to anticipate and lock in on some things before everything hit the fan. This has taught us to be more proactive and be ready for anything. You always plan for the worst and hope it doesn’t happen, but you have to plan and be ready.”
Along with supply chain issues, another of the main obstacles for the fast-casual chicken restaurants is labor. “They are both very challenging. The supply chain issues and staffing issues,” Wattar says. “They both go hand in hand. They’re both important for business. We don’t have chicken, we’re not open. And if we don’t have people to make the chicken, we’re not open.
“But I see light at the end of the tunnel,” Wattar adds. “We’re still facing labor challenges, but we have flexible hours and people want to work for us. They see an opportunity for the future.”
As great as the opportunity may be, however, exactly when more employees will return to work remains an issue the entire foodservice industry is trying to address. “I have no idea. It’s across the globe. That is baffling to me,” Almanzar says. “We’re a great place for high school and college kids to get their first jobs. It’s not designed to make a career out of it. But it’s difficult to find anyone who is out there and available.”
If locating potential employees weren’t enough of a challenge for the operators, retaining what staff the business already has remains a big challenge too. “It’s a combination of a lot of things. The restaurant industry kind of did this to ourselves,” Wattar says. “We didn’t appreciate some of our employees, then the pandemic hit and people saw what was out there. For us to survive this, we have to look in the mirror and create culture.”
Indeed, operators need to invest more to retain the staff they have. “I didn’t get here without mentors, and we have to be mentors for our employees,” Wattar says. “We have monthly classes, and we have a career path for our managers and general managers. And as we grow, we would love for them to grow with us.”
And the competition for labor has never been steeper. “A lot of people left the restaurants and opened their own businesses, and we also lost employees to Amazon and Walmart,” Wattar says. “We can’t afford $17 to $18 an hour without passing that [cost] on to customers. You look at the labor stats, but where are these people? People are becoming Uber or Lyft drivers and setting their own hours and they get paid.”
So with there being a shortage of new or returning employees, how will restaurants remain open and provide their delicious product to hungry consumers? Automation appears to provide a solution.
“Self-ordering kiosks were getting to the market prior to COVID-19. The pandemic expedited that,” Lalehzarian says. He believes with consumers’ continued heavy use of kiosks, a concept like his no longer needs three people in the front of the house.
Technology promises to help operators get the most from their existing talent pool but doing so requires some resourcefulness. “Everyone has to get creative in how they keep the doors open. These kiosks will be the first choice for a lot of people out there,” Lalehzarian notes. “Before, you would need one or two people to take orders, to bag the food and all that. With kiosks, you just need one person to bag the food, act as an expeditor and they can also help customers with placing the order.” Lalehzarian projects that using kiosks could potentially reduce the front-of-the-house labor needed by 50% to 70%.
While automation has become more prevalent in dealing with customers in the front of the house, Wattar says that there hasn’t been much of an impact in the back of the house at his company at least not presently. “I don’t think automation has caught up with what we do,” he says. “We cook fresh to order, and we don’t hold anything back. It hasn’t caught up yet, but eventually it will. We are using fryer oil filter systems, but that technology has been there for a while.”
Other than technology, another way in which the companies can make life easier for their employees is by updating their kitchen layouts. With two new restaurants slated to open in 2022, Wattar says this is something that Layne’s has considered.
“Right now, we’re in the process of redesigning our prototype so we can streamline our kitchens,” Wattar says. “Our goal is to not have employees take too many steps to perform one function. We would rather them pivot than take extra steps. We are meeting with the designers right now so we can have people take one step instead of two.”
After the customer decides what they want to eat from which restaurant they choose to give their business, one question still remains: Is that for here or to go?
“Even after dining-in was back open, picking up and delivery have been the first choices for a lot of customers. People now care more about convenience than customer service,” Lalehzarian says. “They can just order food in, and it gave that a different value.”
And from all indications it appears customers’ preferences to dine off-premises has considerable staying power. “People are used to the comfort and convenience of not leaving the house or just picking it up on the way home and they can stay home and watch their favorite movie,” Lalehzarian adds. “That trend is here to stay and is not going anywhere.”
Says Almanzar: “People will interact through a screen rather than across the counter. The indoor dining experience is dying for QSRs, and people will be moving to smaller dining experiences. We are moving from 2,600-square-foot units to 800-square-foot units and more drive-up and drive-thru instead of dine-in.
“Before the pandemic, we looked for larger units and dine-in seating,” says Almanzar, “but the pandemic reminded us of who we were and that we wanted to remain in a small footprint.”