How Noodles & Company Dealt With Rising Chicken Costs
Notice your favorite fast food sandwich missing from the discounted menu? Perhaps your regular meal at a restaurant now costs suspiciously more than you remember it to? Well, you're not the only one. The U.S. is dealing with its worst 12-month inflation crisis since 1981 (via The U.S. Bureau of Labor Statistics). The cost of food has increased by 10.4% this year and meals eaten away from home, in particular, have risen by 7.7%.
Of all the food items, chicken seems to have taken an especially hard hit. According to data collected by the USDA, prices of poultry have risen by 17.3% since June 2021 and are predicted to rise even further this year. While this no doubt affects the price of chicken at grocery stores, the effects of the rising costs of food can also be seen on restaurant and fast food menus. Chipotle has already hiked its prices twice this year, Wingstop increased its prices following the rising costs of chicken wings, and Burger King has taken the Whopper off its discount menu (via Eat This, Not That!).
The chain restaurant Noodles & Company is immune to the inflating costs of food. The rising cost of chicken seemed to be a particularly worrisome problem for CFO Carl Lukach, who announced in April that the chain was even implementing a temporary $1 surcharge on all its items featuring chicken (via Restaurant Business).
The $1 chicken surcharge has been rolled off
Noodles & Company was one of several restaurants and fast food chains struggling to keep up with the rising costs of food. According to Restaurant Business, Noodles & Company was paying 70% more for chicken in the first quarter of 2022 as compared to last year and its chicken costs were projected to rise even further in the following quarter.
Considering that 50% of all diners wanted chicken in their Noodle & Co. orders, the margins were staggeringly low compared to the previous year (via QSR Magazine). As a result, customers ordering any item with chicken in it were charged an additional dollar which, according to CFO Carl Lukach, was a temporary surcharge that was viewed as "one-time and fairly short-lived as the market is expected to normalize reasonably soon" (via Restaurant Business).
As it turns out, the chicken surcharge that was rolled out in April has indeed been discontinued. Not only has chicken become less costly than it was, but Noodle & Co. is also said to have been working on ways to optimize its use of chicken in a way that reduces wastage and makes the meat more financially lucrative for the chain. Although the inflating cost of chicken did indeed impact margins, things are looking up for Noodle & Company as executives are confident that 2023 is going to be the strongest year for the chain to date (via Restaurant Business).