July 15, 2017

For the 52-week period ending 5/27/17 we see both dollar and volume for deli prepared chicken at 2.5%. For a category with a history of strong year over year performance, this may seem somewhat lackluster performance. Let's look at some of the drivers of that 2.5%:

Rotisserie chicken, making up 38% of category sales and 48% category volume, is always going to have a major impact on category performance. In this case, sales were stable, with volume up 1.8% vs volume increase of 0.8%. This indicates some increases being gained because of lower pricing or increased price promotion. A similar dynamic is at play in other categories as well, where minor decreases in average selling price have been associated with modest growth in volume. There are two notable outliers in these results: Fried chicken stands out as the only sub-category with negative growth and meals/combos have shown strong growth. Chicken appetizers has also shown strong growth of 5.5% and 8.8% in volume.

Share of Super-Category Dollars
Total U.S.
Deli Prepared Chicken, 52 Weeks Ending 5/27/17

 

 

Share of Super-Category Dollars 
Total U.S.
Deli Prepared Chicken, 52 Weeks Ending 5/27/17

 

 

What the numbers tell us 

Reviewing the last quarter, results are somewhat sobering. The category is down as a whole—only 0.6%, to be sure, but this category generally performs in positive territory. Volume was off a total of 1.2%, so that represents a real softening in demand over the prior year. Rotisserie chicken led the loss with a sales decrease of 3.3% and volume decrease of 2.7%. Fried chicken likewise showed a significant decrease in sales, and more dramatically, in volume. As in the full year numbers, appetizers and combo/meals stand out as the real winners, and because they carry a higher average ring, their 20% share of sales helped to prop up the sagging fortunes of the rest of the category.

What do these numbers represent? Has foodservice started taking a bite out of supermarket prepared foods? Have we reached a high-water mark for volume in rotisserie and fried chicken? I don't think the data will tell us that yet. As an industry, we will need to watch sales results to see if this is a plateau or the start of a trend. But here are a few thoughts to consider:

  • It is not clear from these numbers that changes in average selling price are responsible for significant changes in volume. The price game is not the power tool we have sometimes believed it is.

  • Rotisserie sales are down—why? We know that retailers are out of stock roughly 10% of the time and there are consistent product quality issues. That depresses sales today and reduces demand tomorrow.

  • Appetizers and combos are having an impact. We can't afford to give up on core categories (like rotisserie chicken), but there is a future in different products and different meal occasions that we shouldn't ignore. We've been talking about snacking for years and now snacking has come to deli. That's a good thing.

Share of Super-Category Dollars
Total U.S.
Deli Prepared Chicken, 52 Weeks Ending 5/27/17

 

 

 

Share of Super-Category Dollars
Total U.S.
Deli Prepared Chicken, 52 Weeks Ending 5/27/17

 

 

West has Strongest Overall Sales Growth 

Looking at the regions of the country, we see that the Central region represents a significant drag on the industry, being the only region to show negative sales in the prepared chicken category. The loss in the Central region was driven by a significant loss (4.5%) in fried chicken. Rotisserie chicken, on the other hand, struggled on the coasts (East down 0.9% and West down 0.7%).

The West had the strongest overall prepared foods sales growth (5.3%) but third highest prepared chicken growth. The lesson in the West seems to be that prepared foods growth is happening as a result of a broadening of their offering, offsetting losses at the core (rotisserie and fried).

The South enjoyed the second highest prepared foods sales growth but the LARGEST prepared chicken sales growth. The South showed strength in every category EXCEPT wings.

The East showed its commitment to prepared chicken growth with lower growth in prepared foods. Chicken growth was driven by very strong performance in wings and appetizers.

 

 

52 Week Dollar Growth by Region