What caused the sudden interest in rotisserie-style chicken on Wall Street last week, resulting in a big jump in the stock prices of several relatively new and largely unknown companies?
“Poultrygeist,” quipped one official of Kentucky Fried Chicken in Louisville. KFC, the nation’s fried-chicken king, added rotisserie-cooked bird to its menu this year.
“It was an idea ready to be plucked,” added David Scharps, chairman and chief executive of Clucker’s Wood Roasted Chicken Inc. in Miami, a beneficiary of Tuesday’s stock-price runup even though it has only eight outlets.
Even Jim Perdue, son of chicken spokesman Frank Perdue and chairman of family-run Perdue Farms Inc. in Salisbury, Md., got into the spirit of things: “We’re broilermakers, not boilermakers,” he said.
“I think it had very little to do with chicken,” said Mark W. Stephens, chief financial officer of Boston Chicken Inc., the prime beneficiary Tuesday when its initial stock offering more than doubled in price on the first day of trading, to $48.50 from $20. On Friday, Boston Chicken closed at $40.25, down $1.75.
Company executives had just conducted a two-week roadshow to convince analysts across the country of the merits of their 175-outlet company, based in west suburban Naperville, Stephens said. Boston Chicken relocated from Boston last year after a buyout by an investment group headed by Scott Beck, a former Blockbuster Entertainment Corp. executive.
Boston Chicken’s stock offering came on the heels of a massive national advertising campaign by KFC to introduce its rotisserie chicken, raising the possibility that Madison Avenue outfoxed Wall Street.
The stock market feeding frenzy that left fast-food industry executives cackling over a new round of chicken puns is probably the result of several factors that came together at the same time, industry officials said.
These include:
– Interest in chicken as a healthy food.
– The development of vertical rotisseries that can fit in the limited kitchens of fast-food outlets.
– Increased consumer demand for non-fried chicken on a takeout basis, because it takes a long time to cook at home.
– Computer programs that enable restaurants to predict demand.
– The national rollout of rotisserie chicken by KFC this year.
“The trend includes an increase in chicken consumption, time constraints on the family because both spouses work and a market we call home meal replacement,” said Stephens. In short, it’s easier to buy a roasted chicken on the way home from work than to cook it from scratch.
Since 1974, chicken consumption in the United States has increased steadily at the expense of other meat. As late as 1960, it was outsold more than 2-1 by both beef and pork, according to U.S. Agriculture Department data.
But per capita chicken consumption passed pork in 1984 and beef in 1992.
Chicken has become such an accepted part of America’s health fetish that the debate now is over the healthiest way to cook it. And frying is a long way down that pecking order.
Roasted chicken has been around a long time, mainly in delicatessens and supermarkets, but fast-food outlets had been reluctant to serve it because it can take one to two hours to cook, depending on the process.
Harland D. Sanders, who developed the KFC pressure-frying process in his Corbin, Ky., motel and restaurant in 1939 and reduced the cooking time for fried chicken by two-thirds, was responsible for the introduction of chicken to the fast-food menu.
“In the old days, it used to take 30 minutes to fry chicken,” said Jerry Mohr, president of Beloit, Wis.-based Broaster Co., which in the 1950s developed a process similar to Sanders’ and now has 4,000 independent restaurants in the U.S. selling its “broasted” chicken. “Our process broke that barrier and got it down to 10 minutes.”
But frying adds oil. And chicken chains for years have looked for ways to latch onto America’s healthy-eating trend with roasting, baking or broiling processes.
KFC started looking for alternatives to frying in 1985. “The trend in fast food was to simplify-reduce cooking times-and make the back room (preparation) simpler,” said Mike Kern, vice president of product marketing with KFC. “But the consumer trend is running contrary to that. Consumers want home-style meals.”
Oven-roasted chicken and broiled chicken were tried, without success. “We looked at a lot of different cooking platforms, convection ovens and conventional technology,” Kern added. “But when we tested rotisserie chicken, the consumer reaction was good. People liked seeing it cooked in front of them, and the aroma helped.”
Because of the long cooking time, one of the operational problems fast-food chains face with roasting is predicting demand, to avoid wasting chicken. “We have developed algorithms that look at demand at certain times of day and on certain days,” said Boston Chicken’s Stephens. “We use lots of computers.”
Early last year, John Marsella, a KFC franchisee, noticed the trend toward roasted chicken and offered to test-market the rotisserie version in his two Trenton, N.J., outlets. Ultimately, KFC assigned a 25- to 30-member team to the project and expanded the test-marketing to 120 of its 5,000 outlets.
Later, the company announced it was going nationwide with a marketing program.
By October, KFC was at the head of the national pecking order with a projected $160 million in sales of rotisserie chicken this year. Boston Chicken, with a fraction of the KFC outlets, is projected to sell more than $100 million.
KFC’s Kern estimates that his company has only begun to tap the rotisserie chicken market.
“Fried chicken is a $7 billion market. We don’t see why non-fried chicken can’t equal that,” he said.
“At least the investors are flocking to the market,” added Clucker’s Scharps.
