Lucas Delgado
There have been reports of a chicken shortage in the United States, with restaurants being forced to increase prices or cancel special pricing on chicken wings. The shortage is a result of various factors, including supply chain issues, labour shortages, and increased demand for fried chicken. The COVID-19 pandemic has also played a role, with outbreaks in meatpacking plants affecting production and the Omicron variant causing worker absences. While the situation is improving, it is difficult to predict when the chicken supply will be fully restored.
| Characteristics | Values |
|---|---|
| Reason for shortage | Supply chain issues, labour shortages, lack of truck drivers, bad weather, COVID-19 outbreaks, and rooster-related issues |
| Impact | Increased prices for customers, frustration and restaurants struggling to meet demand |
| Resolution | Suppliers predict the situation will improve in the second half of the year |
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What You'll Learn
Supply chain issues
The United States faced a chicken shortage in 2021 due to supply chain issues. There was no single cause of the problem, but rather a perfect storm of multiple issues. One major chicken supplier took a gamble on a new type of rooster, hoping to improve meat quality. However, this risk backfired as the new rooster produced fewer fertilized eggs, resulting in fewer chickens. This issue alone could be responsible for half of the chicken supply problem.
The COVID-19 pandemic also exacerbated pre-existing problems, with outbreaks in meatpacking plants affecting production due to worker quarantines and resignations. The increase in unemployment benefits during this time also contributed to the labor shortage, as some workers earned more from unemployment than they did at the plant. The highly contagious Omicron variant further impacted the situation, causing worker absences in US plants.
In addition to labor issues, there were also transportation challenges. A shortage of truck drivers and rising fuel costs impacted the supply chain. Bottlenecks at the processing point of the supply chain also drove up prices. The four conglomerates controlling most of the poultry and meat processing in the US increased prices while generating record profits during the pandemic.
The demand for fried chicken, particularly sandwiches, nuggets, and tenders, has also increased, fueled by the "sandwich wars" ignited by Popeyes' introduction of a new sandwich in 2019. KFC, Bojangles, and other fast-food chains have struggled to meet this soaring demand, with some reporting system-wide shortages.
The chicken shortage has had noticeable effects on both restaurants and consumers. Restaurants have been forced to raise prices on chicken dishes, with independent restaurants facing particular challenges in absorbing the increased costs. Customers have had to pay more for chicken at grocery stores, and some have struggled to find chicken on shelves at all.
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Labour shortages
In addition to labour shortages, the chicken industry in the United States has also faced challenges due to supply chain issues. Bottlenecks at the processing point of the supply chain have resulted in increased prices for consumers. The White House acknowledged that the four conglomerates controlling meat processing in the country increased prices while generating record profits during the pandemic. These price increases have been passed on to consumers, with prices for meats, poultry, fish, and eggs up 10.5% as of September 2021.
The labour and supply chain issues have been further compounded by issues in chicken production. One major supplier experimented with a new type of rooster to improve meat quality, but this backfired as the rooster produced fewer fertilized eggs, resulting in a decrease in chicken supply. Bad weather in the South also contributed to delays and problems in the industry.
Restaurants have been particularly affected by the chicken shortage, with independent restaurants struggling to absorb the increased costs of chicken. Many have been forced to raise prices or encourage customers to order other foods. Fast-food chains, such as KFC, Bojangles, and Popeyes, have also reported shortages and outages of fried chicken due to soaring demand.
While it is difficult to predict how long the labour shortages and chicken supply issues will persist, industry professionals are optimistic that the situation will improve. Suppliers have begun replacing underperforming roosters, and the number of chickens slaughtered has started to rise. However, labour issues remain unpredictable, and the impact of the Omicron variant on the workforce is still being assessed.
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Increased demand
The United States has seen an increase in the demand for chicken, with fried chicken sandwiches, nuggets, and tenders becoming increasingly popular. Fast-food chains such as KFC, Bojangles, and Popeyes have struggled to keep up with the soaring demand, with some even reporting shortages and outages of fried chicken. This demand for fried chicken was ignited by the "sandwich wars" in 2019, when Popeyes introduced a new sandwich, prompting competitors like Yum! Brands Inc. and McDonald's Corp. to offer their own creations. The demand for chicken was also evident during the Super Bowl, where Americans consumed nearly 2 billion chicken wings.
The increased demand has put pressure on suppliers, who have faced challenges in keeping up with the demand. This has resulted in higher prices for consumers, with restaurants and grocery stores passing on the increased costs. Some restaurants have been forced to cancel special pricing on chicken wings and raise prices on other chicken dishes. The shortage has also led to storage challenges as restaurants try to buy up supply when it is available.
The demand has also impacted the labor market, with meatpacking plants facing labor shortages due to COVID-19 outbreaks and workers leaving the industry due to concerns over the virus. The increase in unemployment benefits has also contributed to the labor shortage, as some workers are earning more through unemployment than they did while working in the plants. The Omicron variant has further exacerbated the labor shortage, with absences due to illness slowing down US plants.
To address the increased demand and resulting shortages, retailers and consumers have had to adjust their strategies. Retailers are maximizing profits through allocation, replenishment, pricing, and streamlined planning. Consumers, on the other hand, are opting for less processed poultry products, purchasing whole chickens, and even buying directly from local farmers to bypass the labor shortages in the supply chain.
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Processing bottlenecks
Labor shortages have been a persistent issue for the industry. Even before the pandemic, recruiting and retaining staff at processing plants had been challenging for large companies. The pandemic only worsened this situation, as COVID-19 outbreaks in meatpacking plants resulted in workers having to quarantine or leaving the industry due to health concerns. This led to a decrease in overall production and contributed to the processing bottlenecks.
In addition to labor shortages, the chicken industry has also faced challenges in obtaining packaging materials, such as plastic, paper, and aluminum. Delays in receiving these materials have further slowed down the processing and distribution of chicken products. The pandemic has also impacted the availability of feed for chickens, particularly for smaller and organic farms, making it difficult for farmers to source enough feed to grow their chickens.
The bottlenecks at the processing point of the supply chain have had significant ramifications. With reduced production and distribution capabilities, suppliers have struggled to keep up with the demand for chicken, particularly from fast-food restaurants. As a result, restaurants and grocers have been forced to raise their prices, remove popular chicken items from their menus, or rely on frozen chicken and different cuts to manage costs.
To address these processing bottlenecks and improve the resilience of the chicken supply chain, industry groups and the USDA have proposed various solutions. These include discussions about emergency aid, such as loans and grants for farmers, boosting local feed production, and investing in alternatives to shield farms from global price swings. There is also a push for smarter logistics, including better tracking, more automation in plants, and the use of AI to predict and mitigate future bottlenecks.
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Impact on restaurants
The chicken shortage in the United States has had a significant impact on restaurants, with many forced to increase prices or change their menus. This has been challenging for independent restaurants that are not part of a chain, as they cannot absorb the increased cost of chicken as easily as larger establishments. Some restaurants have had to cancel special pricing on chicken wings and other chicken dishes, and customers have expressed frustration when their favorite chicken items are not available.
Fast-food chains have taken to social media to inform customers about shortages, and some restaurants known for serving chicken have encouraged customers to order other foods as they work to increase their supply. Restaurants have also tried to buy up supply when it is available, which has led to storage challenges. The shortage has also resulted from a perfect storm of problems, including supply chain issues, labor shortages, and increased demand for fried chicken.
One major factor contributing to the chicken shortage is labor issues. Many plants across the country have faced labor shortages since the pandemic began, with COVID-19 outbreaks affecting production. Workers have had to quarantine or leave the industry due to concerns over contracting the virus. In addition, suppliers claim that the increase in unemployment benefits has contributed to the labor shortage, as some workers are earning more through unemployment than they did while working in the plants. The Omicron variant has further exacerbated labor shortages, with its high contagiousness posing a particular risk to people working in close quarters, such as those in meatpacking plants.
Another issue is the bottleneck at the processing point of the supply chain. While the pandemic has undoubtedly impacted the supply chain, some industry professionals argue that the bottleneck is another critical factor driving up poultry prices. Data shows that the four conglomerates controlling most poultry and meat processing in the United States increased prices while generating record profits during the pandemic.
Additionally, there have been specific issues with chicken suppliers. One major supplier took a gamble on a new type of rooster that was supposed to improve meat quality, but this risk backfired as the rooster produced fewer fertilized eggs, resulting in fewer chickens. However, this issue appears to be under control, as the supplier has begun replacing the underperforming roosters, and the number of chickens slaughtered is starting to rise.
The chicken shortage has also been influenced by increased demand for fried chicken sandwiches, nuggets, and tenders. This demand ramped up in 2019 when Popeyes introduced a new sandwich, igniting "the sandwich wars." Other fast-food chains quickly followed suit, and their fried chicken sandwiches exceeded revenue forecasts.
While it is challenging to predict precisely when the chicken shortage will end, suppliers and industry analysts provide some optimism. Many suppliers believe they have passed the most challenging period and anticipate improvements in the second half of 2022. Analysts also report that overall demand for small and large whole birds has decreased slightly, and pricing for jumbo and medium breast meat has declined. However, labor shortages, high fuel costs, and transportation issues continue to challenge processors.
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Frequently asked questions
Yes, the United States is currently facing a chicken shortage.
There is no single cause of the chicken shortage in the United States. It is a result of various factors, including supply chain issues, labour shortages, and increased demand for fried chicken. The pandemic has also compounded these problems, with COVID-19 outbreaks in meatpacking plants affecting production.
The chicken shortage has forced restaurants to raise prices on chicken dishes, cancel special pricing, and encourage customers to order non-chicken items. Consumers are paying a premium for chicken and are finding it difficult to find chicken in stores.
