Wingstop CEO on why prices remain low—and his company's sales high.

Wingstop (WING) stock leapt 7.7% percent to $179 per share on Wednesday after fourth quarter earnings exceeded analysts’ expectations and enthusiasm mounted for the company's new chicken sandwich line.

Though the stock has since slid down to $171 per share, Wingstop CEO Michael Skipworth attributes the company's recent success to a steep drop in the cost of chicken wings.

“There's been some different issues that impact the egg-laying birds, which you're seeing show up in the grocery stores and translate to meaningful inflation there,” Skipworth recently told Yahoo Finance. (video above) “But when it comes to the birds that serve the food service industry or a restaurant like Wingstop, there's a lot of supply.”

Avian flu, otherwise known as “bird flu,” has wreaked havoc on the poultry industry, killing 58 million farm-raised birds in the U.S., according to the U.S. Centers for Disease Control and Prevention. Consequently, there's been a shortage of egg-laying birds and prices have dramatically increased: The price of a dozen eggs was up 150% in January from a year prior, to $4.80 a dozen, according to data from the Bureau of Labor Statistics.

But the poultry farms that produce wings in restaurants have not suffered the same affliction. In fact, supply has reached its highest point since 2019, according to a recent Wells Fargo Report.

“You haven't seen that really impact any of those farms or grow houses, which is a good thing for Wingstop, obviously.” Skipworth said.

A good thing for wing fans too. For instance, chicken wings at supermarkets cost roughly $2.62 per pound, down from $3.22 a year ago, according to the U.S. Department of Agriculture’s recent price report.

Wingstop, based in Garland, Texas, is reaping the benefits. The company saw sales growth of 45.6% year-on-year to $104.87 million in the fourth quarter of 2022, beating Wall Street estimates of $100.90 million. It also saw 8.7% same store sales growth.

In addition to lower chicken wing prices, Skipworth also credits the company's chicken sandwich, launched in August, for recent success. The company offers 12 different flavors of the sandwiches at all of its 1,959 restaurants across the globe.

More good news? Skipworth also noted that while poultry farms struggled with labor shortages through the COVID-19 pandemic, they've now returned to regular staffing levels, and production is up.

“And so it's led to a favorable environment for poultry in general but particularly for wings, which I think for Wingstop led to a really exciting year in 2022 with record deflation,” Skipworth said.

Editor's note: New numbers were released today from the USDA. The piece has been updated to reflect the most recent recent chicken wing prices.

Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.

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