Latest Sign of the Restaurant Rebound Is a Boom for Big Chickens

(Bloomberg) -- Big birds are making a comeback.

That’s the view of Pilgrim’s Pride Corp., the second-biggest U.S. chicken producer. The company on Wednesday reported first-quarter profit and sales that beat analyst estimates thanks to recovering demand for hefty chickens, or those that typically weigh in around 9 pounds (4 kilograms). The sizeable birds are mostly used by restaurants and other food-service outlets.

As vaccination-rates accelerate, restaurants across the U.S. are seeing a surge in revenue, with chains like Darden Restaurants Inc.’s Olive Garden and Brinker International Inc.’s Chili’s benefiting from the recovery. That’s an improvement for Pilgrim’s and other poultry producers, which last year switched to focusing on the smaller birds that satisfy grocery-store demand. Now, prices are rising rapidly for the process of deboning the big chickens.

“With gradual loosening of restrictions, as a result of the increase in vaccinations, the market has been incrementally improving, especially in foodservice,” Chief Executive Officer Fabio Sandri said in a statement.

The gains for big chickens have helped to temper the impact of higher grain prices, which make it more expensive to feed livestock. The recovery has also helped offset “significant” labor shortages and production disruptions during a severe cold snap in February, according to the company, a unit of Brazilian meat giant JBS SA.

Key Insights

• Adjusted earnings per share of 42 cents topped consensus average estimate for 35 cents and the year-earlier performance of 12 cents.
• Net sales rose 6.5% to $3.27 billion, beating the forecast for $3.24 billion.
• European operations continue to see “operational improvements, offsetting high feed costs, not yet reflected in prices, lower year-over-year foodservice volume due to lockdowns, and Covid-19 mitigation costs.”
• Mexico “maintained the strength from the second half” of last year, aided by improved overall economic conditions.

Get More

• Click here for the earnings statement
• The Colorado-based company plans to host a conference call Thursday at 9 a.m. New York time

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