Chicken Is a Winner With Diners. What Poultry Stocks Are Serving Up.

Chicken has become a more affordable source of protein as cattle supplies have tightened and beef prices have soared. (APU GOMES/AFP via Getty Images)

Key Points

About This Summary

• Chicken consumption is rising due to protein enthusiasm and high beef prices, benefiting meatpackers and restaurants.
• Chicken demand may decline as consumers shift to holiday meats; oversupply could squeeze producers’ profit margins.
• Wingstop faces sales challenges and has a high valuation.

Americans are eating more chicken as enthusiasm for protein picks up and beef price stays high. The trend has boosted companies that range from meatpackers to chicken restaurants. But investors should be cautious in the near term because an oversupply during the holiday season has the potential to squeeze margins.

Protein is the nutrient of the moment, especially as more people use GLP-1 drugs that suppress appetite and lead to muscle loss. In the grocery aisles, protein is added to all kinds of food from milkshake to pasta to chocolate. And chicken, a natural form of protein, is on the rise as well.

Wingstop, a chicken-centric fast-casual chain, added nearly 500 new restaurants in the past four quarters, with systemwide sales growing 14% in the June quarter. Privately held chicken chains—from Krispy Krunchy Chicken to Raising Cane’s to Dave’s Hot Chicken—are also expanding their footprint quickly to become leading fast-food brands across the nation.

Fast-food heavyweights are also upping their game. McDonald’s brought back its popular chicken wraps and added chicken tenders as a permanent menu item. Wendy’s is relaunching a new version of its tenders later this year; while Yum! Brands’ Taco Bell is developing a whole menu of crispy chicken tacos, burritos and nuggets.

To be sure, Americans’ chicken consumption has increased almost every year since the 1960s, steadily outpacing red meat. In 2012, chicken consumption was 80.4 pounds per person, accounting for 40% of red meat and poultry combined. In 2024, the number had grown to 101.1 pounds, and the share had increased to 45%.

Tightening cattle supplies in recent years further fueled the trend: As beef prices soared to record levels, chicken has become a more affordable choice of protein. For 2025, the U.S. Department of Agriculture expects the nation’s chicken consumption to reach a record high of 102.7 pounds per capita.

Cheaper feed costs added more tailwinds, helping meat producers make more profit on each pound of chicken sold. Meat processors are also leaning more toward prepared foods like fully cooked and flavored chicken nuggets, wings, and sandwiches that can be heated up in a few minutes. These products often come with higher added value and better profit margins.

In the first quarter of 2025, the operating income of Tyson Foods’ chicken business jumped 66% from a year ago, while Pilgrim’s Pride, the largest pure chicken play in the U.S., saw its operating income increase 62%.

Tyson is expanding and modernizing its Robards, Kentucky facility, increasing capacity and product diversity via new equipment and upgrades. Pilgrim’s is spending $400 million to build a new processing facility in Georgia to produce fully cooked products.

Demand for chicken will likely stay elevated for some time as beef supplies aren’t expected to build back until 2027 or 2028, said Pooran Sharma, an agricultural commodity analyst at Stephens. Hog production remains tight as pork producers enjoy high margins; and if the avian flu hits egg farms again, egg supplies could come under pressure as well.

Chicken farms are at near maximum level of hatchery capacity right now, which means it’s hard to increase supply further from here, said Sharma. And it has been hard for chicken producers to build new hatching and slaughtering facilities due to high costs and strong pushback from communities that don’t want chicken plants in their backyards.

“It’s honestly low protein supplies across the board,” said Sharma. “So chicken has a long runway for margins to stay at high levels.”

Still, for the near term, investors should watch for a potential overheating. Chicken demand tends to decline in the fall and winter as consumers turn to ham, turkeys, and other holiday meats. Chicken producers typically start cutting production from mid-September to defend their margins. But if they don’t, margins could deteriorate significantly due to oversupply, said Sharma.

Last month, USDA raised its projection for broiler production—chicken bred for meat consumption—in 2025, citing strong hatch data and lower feed costs in recent months. Prices are already showing weakness. Across the nation, average broiler prices declined each week through July and into early August, pushing the USDA to lower its pricing forecast for the rest of the year.

Investors should be cautious about chicken-related stocks as well.

Pilgrim’s Pride shares have nearly doubled over the past two years on the back of strong chicken demand and profit margins, but the market has priced in most of the upside already, said Sharma. Among the analysts polled by FactSet, 80% have a Hold rating for the stock, with an average target price 12% higher than the current level.

Tyson shares, on the other hand, have been dragged down by its beef business, which saw nearly $500 million operating loss in the latest quarter, offsetting all profit from the chicken segment. The stock has fallen 11% year to date, and is down by nearly half from its 2022 peak. Over 70% analysts have a Hold rating, with an 11% expected upside.

As for restaurants, Wingstop is the only publicly traded pure chicken play, but the chain has recently hit a speed bump. Although systemwide sales continue to grow at a solid pace on the back of new restaurant openings, domestic same-store sales fell 1.9% in the second quarter—the first time after many quarters of gains.

CEO Michael Skipworth said strong growth over the past two years has created a high bar, and sales softness was only in selected areas with lower-income or Hispanic consumers. The company is rolling out a Smart Kitchen system to improve efficiency, relaunching its popular chicken tenders, and piloting a new loyalty program to drive visitor frequency.

Wingstop stock is down 30% from its 2025 peak three months ago. Wall Street still expects shares to bounce back due to the chain’s expansion plans. But the stock is expensive—at 67 times forward earnings. If same-store sales don’t reaccelerate, shares could stay under pressure.

Write to Evie Liu at evie.liu@barrons.com