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Chicken Wings in Evanston
Economics 349: Market Analysis
Daniel Baker, Brendan Connelly, Rashad Laher, Sophie Truscott, Yuliya Yukhvidin
Section 1: The Product
Chicken Wings..................................................................................................................4

Substitutes........................................................................................................................6

Broad Market Trends........................................................................................................8

Supply Chain: Inputs, Costs & Production.....................................................................11

Regulatory Environment.................................................................................................16

Section 2: Local Sellers
Product Differentiation....................................................................................................22

Location..........................................................................................................................25

Pricing.............................................................................................................................29

Capacity..........................................................................................................................32

Section 3: The Customers, a Market Model, and Entry Prospects
Demand & Elasticity........................................................................................................36

Modeling Rivalry.............................................................................................................39

Market Shares................................................................................................................41

Prospects for Entry.........................................................................................................43

Section 4: Appendix
Classroom Slide..............................................................................................................50

Experts............................................................................................................................51

Pricing Data....................................................................................................................53

Works Cited....................................................................................................................55

Table of Contents


3
Section 1: The Product
Section 1: The Product


In 1964, chicken wings were served for the first time at a diner in Buffalo, New York. For the
next two decades, chicken wings remained relatively unknown; wings were generally
considered a scrap part of the chicken and were most often used to make chicken stock.
However, in the 1980s, chicken wings began to be added to menus nationally as enterprising
restaurants realized that wings were incredibly inexpensive to produce and could therefore be
sold with high profit margins. In 1982, the first major national wing chain, Buffalo Wild Wings,
was founded. Chicken wings continued to gain popularity throughout the early 1990s and
became associated with American football as the Buffalo Bills made four consecutive Super
Bowl appearances. Today, chicken wings are a staple of American sports food, and have
grown into a multiple billion dollar
industry (Stromberg). “People are very
passionate about their wings, about how
they’re cooked, and what flavors they
are,” says Matt Friedman, co-founder
and CEO of Atlanta-based Wing Zone.
Since wings first gained popularity,
multiple variations of chicken wings have
emerged, including the development of
numerous sauces, rubs, and flavors, and
the introduction of the increasingly
popular boneless variety.

Today, wings can be found in a variety of
food establishments. Beyond restaurants that specialize in chicken wings, customers can enjoy
chicken wings at various casual dining restaurants (such as Applebee’s, Chili’s, and Ruby
Tuesday’s), traditional American restaurants, BBQ restaurants, Chinese restaurants, sports
bars, and takeaway pizza restaurants (such as Domino’s and Papa John’s), to name a few.
Given the rise in popularity of chicken wings over the past three decades and the relative ease
and low cost of producing chicken wings, many restaurants have found it desirable to add
chicken wings to their existing menus, thus contributing to the increasing availability of chicken
4
Chicken Wings
Anchor Bar (Buffalo, NY): Home of the Original Buffalo Chicken Wings
Section 1: The Product
wings. Depending on the restaurant, wings can be enjoyed as a snack, appetizer, or entrée;
some restaurants offer wings in multiple of these forms.

Typical wings customers include bar-goers and sports party hosts. As mentioned previously,
chicken wings are often associated with popular American spectator sports such as football
and basketball, thus customer demand for wings spikes around major sporting events
including the Super Bowl and the NCAA March Madness Tournament. In 2016, approximately
1.3 billion wings were consumed nationally on Super Bowl Sunday, a rough 190% increase
from typical Sunday chicken wing sales (Williams). Seasonal demand for wings reaches its
peak in the fall and winter months, when popular sports are in season, remains
strong throughout the summer, when barbecues and cook-outs featuring chicken
wings are common, and falls somewhat in the spring (Wikinvest). After their initial
introduction to the public in upstate New York, buffalo wings established
popularity amongst customers in the Northeastern United States but quickly
expanded to the rest of the country; today, hungry customers can find chicken
wings in restaurants and grocery stores all across the United States.

In the Chicagoland area, there is an incredible range of restaurants and stores which sell
chicken wings in various combinations of quality and presentation. In order to effectively
analyze the chicken wing market in Evanston, we chose to study restaurants within walking
distance from Northwestern University. Specifically, this range includes all establishments
south of Lincoln Street, east of Ridge Avenue and Emerson Street, and north of Lake Street.
This range excludes some well known lower-end wing franchises, such as the nearest KFC in
Rogers Park, as well as the Buffalo Wild Wings located at Old Orchard Mall. Further, we chose
to only study restaurants that specialize in the production of wings, as they directly compete
with each other; thus we excluded pubs, sports bars and restaurants like Bar Louie and Bat 17
which only offer chicken wings as an appetizer, as well as store-bought wings. Lastly, while a
variety of products can be classified as a chicken wings, including both bone-in and boneless
wings, we chose to limit our focus to bone-in wings to provide the most accurate possible
analysis of the market.

Currently, the restaurants within the Evanston market offering our defined product are Buffalo
Joe’s, Chicken Shack, and Domino’s. However, over the last 2 years several other Evanston
restaurants with wings as a primary offering closed down. We chose to include these three
restaurants—Arlen’s, Buffalo Wild Wings, and Wings Over Evanston—in our study, as their
product offerings and shut-down decisions provide significant insights into the Evanston wings
market and the viability of opening a new wings business in Evanston.

5
Section 1: The Product
Chicken Wing Entrée
Chicken wings are served for a variety of different purposes and audiences, and have
different substitutes based on the occasion. For our project, we focus mainly on bone-in wings
served as a meal entrée at quick-service restaurants (as well as Buffalo Wild Wings, which is
full-service yet otherwise offers a very similar product). Within this classification, the closest
substitute for chicken wings is boneless wings served at quick service restaurants. The next
closest substitutes are other less-healthy entrées served at quick-service restaurants, such as
pizza from Blaze Pizza and burgers from Five Guys.  Beyond this “less-healthy quick-service”
category, the next two closest substitutes are entrées offered at other fast casual restaurants
(including Chipotle and Panera) and meals served at fast food restaurants (such as Burger
King, KFC, and Taco Bell). These entrées from other fast casual restaurants, such as Chipotle
and Panera, compete with chicken wing restaurants in terms of price and service, but tend to
be slightly healthier or of higher quality. Entrées from fast food restaurants are of lower quality
and price than wing entrées but are offered with similarly quick service. Finally, the two least
similar but still viable substitutes for chicken wings entrées at quick service restaurants are
meals served at restaurants (priced higher than quick-service wings) followed by home-cooked
meals. Each of these last options could conceivably be eaten instead of quick-service wings,
yet differ enough in quality and service to not directly price compete with
wing entrées.

6
Substitutes
Section 1: The Product
Chicken Wing Appetizer
Chicken wings are also often eaten as an appetizer or served as a buffet option at large social
gatherings. In this wings-as-appetizer classification, the closest substitutes are other
appetizers and finger foods offered at sports bars or catered, such as nachos, mozzarella
sticks, and chicken fingers. In addition, frozen chicken wings, nuggets, and tenders sold at
grocery stores are also close substitutes to bulk purchases of chicken wings. Finally, the
grocery store versions of appetizers such as chips and salsa or the
ingredients for nachos can also be considered substitutes for large
orders of chicken wings. 



7
Section 1: The Product
Over the last 10 years, the chicken wing market has grown into a multi-billion-dollar industry.
From 2008 to 2013, the number of wings franchises grew by 4.1% a year and in 2015, the
largest 20 chicken wing franchises surpassed 2,000 individual restaurants nationwide (Max).
Buffalo Wild Wings, the largest wings chain in the country, currently operates more than 1200
stores nationally, a 600% increase in stores from 2003 when the company went public.
Similarly, Wingstop, the second largest wings franchise, has grown from 90 stores in 2003 to
over 800 stores today (Pagliany). Despite this rapid expansion amongst national wing chains,
experts expect the number of wings restaurants to plateau in the next few years, as wings
chains will soon be established in most major metropolitan and suburban areas across the
country (Sheppard).

National wing chains have seen steady revenue growth over the last 10 years as the number of
their respective locations has increased, but profitability has contemporaneously declined as a
result of increasing costs. Over the last five years, Buffalo Wild Wings’ revenues have increased
by an average of 23% per year, primarily due to the opening of new locations each year.
However, profit margins for individual wings restaurants have fallen on average, due to the
increase price of bulk wings (Max). From 2013 to 2014, the cost per pound of chicken wings
increased by 63%, from $1.17 per pound in March 2013 to $1.91 per pound in March 2015. In
addition, the cost of wings is extremely volatile, as prices are much lower in the spring and
summer than in the fall, coinciding with demand (Maze). Despite this recent steep cost
increase, restaurants that primarily serve chicken wings have remained profitable, in part due
to an increase in popularity of cheaper-to-produce boneless wings (discussed further below).

While the majority of chicken farmers have moved towards raising larger birds—which are most
profitable for farmers—wings restaurants have maintained their demand for the smallest wings
possible to satisfy customer preferences. Thus, perhaps counterintuitively, the price of small-
and mid-sized wings has eclipsed the price of less desirable larger wings, which further
contributes to rising costs for wings restaurants (Maze). 

8
Broad Market Trends
Section 1: The Product
The Rise of Boneless Wings
Over the past 10 years, the conception of boneless wings has significantly changed the
chicken wing market. Boneless wings are now incredibly popular: in 2013, boneless wings
sales accounted for 81 percent of the 10.7 percent growth in total chicken wings sales and
made up 14 percent of all chicken wings sales (Bhasin). Due to their shape and size, boneless
wings’ breading holds sauces well, making boneless wings an ideal choice for customers who
want maximum flavor with their chicken. Wing Zone CEO Matt Friedman told QSR Magazine,
“What we found is that there were people who loved our sauces, but didn’t eat our traditional
wings. So the boneless wing has given us another customer base” (Frei). According to Marie,
the manager of Buffalo Wild Wings’s Village Crossing location, Buffalo Wild Wings encourages
its servers to sell boneless wings since boneless wings have lower production costs and higher
consumer prices than bone-in wings. In fact, Buffalo Wild Wings recently changed its national
menu to show its boneless options to the left of bone-in options in the middle panel. This
change was made in order to encourage the purchase of boneless wings, since Marie
explained consumers tend to read paneled menus starting from the middle, from left to right
within the panel.

9
Buffalo Wild Wings’s menu with middle black panel, with boneless wing options listed to the left (most visible) of traditional wing options to encourage
customers to order the more profitable boneless wings.
Section 1: The Product
Growing Health Concerns
Industry experts also cite growing consumer preferences for healthy options as a potential
concern for the long term viability of the chicken wing industry (Ray). In the face of such health
concerns, demand for chicken wings could very reasonably fall, since chicken are deep fried,
and high in calories, cholesterol, and fat. Many fast food chains including McDonald’s and
Burger King have responded to these concerns by adjusting their menus to include healthier,
lower-calorie offerings while still maintaining their classic dishes. Chicken wings restaurants
may elect to add similar items to their menus to maintain or even attract health-conscious
customers, but if health concerns around chicken wings become too severe, some restaurants
may reevaluate the profitability of chicken wings and remove the product from their menus
altogether.



10
McDonald’s has added more healthy options to its menus as the chain has faced serious accusations about the unhealthiness of
its food. Wings restaurants need to include healthy options to remain competitive.
Section 1: The Product


There are many different inputs necessary for producing chicken wings, with various
associated costs, both fixed and variable, as illustrated in the above diagram. The primary
component of chicken wings are the wings themselves. Therefore, we first examined the
poultry industry in the United States.

Chicken
Chickens raised in order to be consumed, known as broilers, are raised on large production
complexes and are bred for meatiness and quick weight growth. A small portion of these
11
Supply Chain
Section 1: The Product
broilers are designated to be breeder hens and live for around 45 weeks after which time they
are slaughtered for inferior meat purposes such as dog food or soups. The rest of the chickens
are raised until they are large enough to slaughter: the chicks take around 20 days to hatch,
and a few days after hatching are taken to large grow-out houses where they are fed as much
as possible for about six weeks, at which point they are ready to be slaughtered. 

Chicken feed is one of many inputs which is necessary for the production of chicken, and
which affect’s the final price for chicken. Roughly 70% of chicken feed is corn based (with
~20% being soy and ~10% antibiotics and other ingredients), so the supply of chicken (or
more specifically for our purposes, chicken wings), is sensitive to shocks in the national corn
market (“Chicken”). In recent years, the corn market has been affected by increasing EPA
ethanol requirements: the EPA has been steadily raising the mandatory amount
of ethanol in gasoline, causing more corn to be shifted to energy production,
leaving a decreased stock of corn for livestock. As a result, corn prices have
increased substantially, causing the cost of raising chicken to increase, and
thereby causing poultry prices to increase (Turbide). This resulting increased
price of livestock feed, as well as many old cars not running well on biofuels,
caused some to object to these higher ethanol requirements. However, many
argue that this effect on food supply is minimal and that increasing ethanol
production is good for corn producers and gives consumers more of a choice
at the pump (Doering). Regardless, the supply chain for chicken wings is
intertwined with a variety of unexpectedly connected markets.

After reaching full size, the chickens are slaughtered, de-feathered and prepared for the
distributor. Separate parts of the bird could be sold to the distributor or the entire chicken,
depending on demand. Distributors strongly prefer to sell all parts of the chicken so none go to
waste, although the breast and, recently, wings are most demanded. All of the meat usually
ends up being processed in some way besides the feet, which are not considered edible in the
United States (aside: though some suppliers may send chicken feet to Asia where they are
considered a delicacy.)

In the United States, around 9 billion chickens are slaughtered for meat every year. An obvious
potential substitute of production for chickens is egg-laying. However, this alternative is clearly
only available for hens and only around 305 million are currently used for this purpose in the US
annually - a relatively small number compared to the number of birds used for their flesh
(PETA).

12
Section 1: The Product
Variable Costs
The largest variable cost in production are the wings themselves. The supply of wings and
ensuing cost varies by individual restaurant: most restaurants have contracts with a particular
supplier, especially national chains such as Buffalo Wild Wings and Domino’s. Some negotiate
a fixed price for a given year in order to hedge possible volatile upward swings in prices;
however, most firms that we interviewed paid a different price for each daily order of wings. As
explained in the market trends section of our report, an average of daily prices for wings comes
out to $1.80 per pound. 

Besides the cost of the wings themselves, there are many other variable costs that go into
operating a wings restaurant and cooking wings. One important variable cost is the cost of
sauces and seasonings for the wings. Buffalo sauce is primarily made from hot sauce, melted
butter, vinegar, garlic, pepper, and a few other ingredients. The exact supply chain of how a
firm obtains sauce and seasoning depends on whether they make their own in house or if they
buy in bulk from a distributor. Buffalo Wild Wings sells bottles of their custom sauces and
seasoning at $4.99 per 12 fluid ounce bottle online, as well as at their in-person stores. While
this doesn’t likely reflect the true cost to Buffalo Wild Wings of producing their sauce, since
they have likely marked it up a fair amount, the website does state that one bottle is good for
around 75-100 wings, or 7.5-10 pounds of wings. They also sell seasoning for $4.99 per 4.1
ounce bottle which covers approximately 300 wings, or 30 pounds. From using these
benchmarks and looking at a few wholesale vendors of wing sauce, where they sell a gallon of
sauce for around $40 we’ve ascertained that the cost of sauce/seasoning for wings is roughly
$0.45/pound of wings.

Many firms have gone to lengths to try to protect their signature flavors. Buffalo Joe’s prides
itself on having a secret recipe for its sauce which only the owner knows the dry ingredients for,
(the manager knows the wet ingredients.) Buffalo Wild Wings sued Procter & Gamble in
2009 over the use of the world “blazin’” in one of their new flavors of Pringles since
Buffalo Wild Wings has trademarked many of the names of their sauce flavors,
which includes “Blazin Sauce” and they are also known for their Blazin’ Challenge
where customers attempt to eat twelve “blazin” wings in under six minutes. While it
can be tough to protect the recipe for the sauce itself, Buffalo Wild Wings instead
focuses on going after companies who seemingly use BWW’s branding to promote
themselves (Allison).

13
Section 1: The Product
Frank’s Hot Sauce has been able to market itself extremely successfully as the original secret
ingredient for the first serving of buffalo wings at Anchor Bar in Buffalo, New York and is used
in many homemade sauces. 

Another major variable cost in the production of wings is labor. Marie, the manager of Buffalo
Wild Wings in Skokie, told us that roughly 14% of their daily costs goes to paying labor.
Assuming a brand new firm would sell roughly 700 pounds of wings per week, or 100 pounds
per day, as the firms with lower market shares like Domino’s and Chicken Shack do, we
estimate that this would require an average total of four employees working at a time,
accounting for both food production and delivery. Assuming the wage for these workers is a
little higher than minimum wage, say $9 per hour, then for a firm that has employees working
12 hours (open 11:00 am to 10:00 pm with an extra hour for setting up/cleaning), the cost of
labor per pound of wing of this new firm is roughly $4.30 per pound. While this is a high cost,
we expect that eventually a firm that specializes in wings would be able to take up a higher
market share and sell somewhere around 300 pounds of wings per day, which is still small
relative to Buffalo Joe’s, and after hiring more employees in order to offset the additional
demand, the long run variable cost of labor would be closer to $1.75 per pound of wings.

There are also variable utility costs that go into the production and sale of wings such as
electricity and water, but some others to account for include frying oil and gasoline. The costs
of water, electricity, and oil are likely very minimal per pound of wings, a conservative estimate
being around $0.15 per pound. Also if a firm has one delivery car using two tanks of gas per
week, with a gas tank of roughly 12 gallons and gas costs of $2.25 per gallon, this would lead
to a cost of $0.03 per pound of wings if roughly 2000 pounds of wings are being sold per
week. When also taking into account the low packaging costs for delivery and dine-in
customers, in total these costs would lead to a variable cost of approximately $0.25 per pound.

When a new firm enters the market, they probably have to spend heavily on advertising in order
to get a customer base, maybe somewhere around a quarter of the price they charge for a
pound of wings if 25% of the customers are drawn in by the advertisement. However, since we
are more concerned with the long run costs, marketing costs will end up being lowered
because they won’t be able to draw more customers. They may still want a small amount of
advertising however, we’ll say roughly $0.10 per pound of wings for our model.

In summary, the total (long run) Variable Cost = $4.35/pound of wings

( $1.80 (wings) + $0.45 (preparation) + $1.75 (labor) + $0.25 (utility costs) + $0.10 (advertising))

14
Section 1: The Product
Fixed Costs
In addition to all the variable costs, there are many fixed costs also associated with running a
wings restaurant. The largest fixed cost for firms in our market is rent. Given at least 2500
square feet needed for a restaurant, at a price of $30 per square foot for commercial rent in
Evanston in a desirable location, the yearly fixed cost for rent is at least $75,000/year.

In addition, Evanston requires food establishments under 5000 square feet to pay an annual
fee of $617 to the health department, which should also be considered a fixed cost. 

A new business would also probably want to insure their property and possessions inside the
restaurant in order to be protected from fire, theft, or other damages. They may buy liability
insurance or worker’s compensation insurance. In total, these insurances could total the
business around $5000 per year.

The wings restaurant also has to be stocked with seating for customers, fryers for cooking
wings, refrigerators/freezers for storing supplies, shelves, and other equipment. These costs
are likely just incurred once when the restaurant opens, so they are thought of mostly as a sunk
fixed cost. The firm may have some of these things previously from another venture or could be
able to sell this equipment should the restaurant fold. Therefore, we won’t include these costs
in our function directly, however, depreciation and maintenance of this equipment would likely
cost around $5000 per year.

If the restaurant offers delivery, we’ll regard delivery cars in the same way as the
aforementioned equipment, that they can be resold and shouldn’t be thought in the same way
as other fixed costs like rent. However, the restaurant would have to pay insurance yearly on
the car and a $50 food delivery vehicle fee, so the yearly fixed cost of a car accounting for
insurance, maintenance, and this fee is around $1500 per year.

In total, the yearly fixed costs of running a wings restaurant would run in the ballpark of
$90,000 per year for a conservative estimate.

This brings our total cost function to being: C=90,000+4.35x where x is the number of pounds
of wings produced.
15
Section 1: The Product


Federal Regulations
Restaurants must adhere to regulations set by national agencies including
the U.S. Food and Drug Administration (FDA) and U.S. Department of
Agriculture (USDA), as well as local health departments. While the FDA
establishes mandatory regulations for restaurants, local health
departments are responsible for enforcing these regulations. In Evanston,
establishments are inspected a certain number of times each year, as
determined by their assessed risk category. Restaurants in Category 1, the
highest risk designation, prepare fresh ingredients and generally have
extensive menus, and are inspected three times a year; Buffalo Joe’s and
Chicken Shack are both in this category (as were Buffalo Wild Wings,
Arlen’s, and Wings Over Evanston.) Domino’s is considered a Category 2
business since its food is delivered frozen, thus Domino’s only receives an
inspected twice a year. Food establishments can be shut down at any time
due to pest infestation, loss of electricity, raw sewage, or fire. In addition,
Illinois state law mandates that all employees who handle food must
receive certificates in sanitary practices from the American National
Standards Institute.

Evanston New Business Process
In Evanston, new restaurants must go through a fairly lengthy process in order to begin
operations. First, all new businesses must complete a New Business Interest Form, and
schedule a consultation with an Economic Development Specialist. If a business wishes to
remodel or rebuild their space, it must apply for and receive a building permit from the Building,
Health, and Fire offices; these building plans must adhere to local, state, and national zoning
restrictions and regulations.

In addition, restaurants must obtain a Food Establishment License from the City of Evanston to
legally sell consumable goods. The price of these licenses vary based off of the category of risk
as well as the physical size of the establishment. Finally, before beginning operations
16
Regulatory Environment
Section 1: The Product
restaurants must pass a final inspection by the Health Department. If a restaurant wishes to sell
beer and wine, they must acquire a class D liquor license, which must be renewed annually.

Food Safety: Salmonella
As a food industry that involves raw meat, there are a number of regulations that wings
restaurants must follow in order to sell USDA-approved wings. “Over the past seven years,
USDA has put in place tighter and more strategic food safety measures than ever before for
meat and poultry products,” (Boghani). The USDA believes that toughening restrictions on
poultry will greatly reduce the danger of food-borne illnesses like Salmonella. Some of these
regulations may impede profitability. From our interview with Marie at Buffalo Wild Wings, we
learned that Buffalo Wild Wings is required to keep the same wing vendor in order to streamline
accountability in the case that something goes wrong with the chicken. With rising wing prices,
this makes it more difficult to balance wing prices since businesses cannot use their right to
competition to pressure lower prices.

17
18
Chipotle: A Lesson in Food Safety
Recent food poisoning outbreaks have highlighted
the costs to restaurants associated with serving food
that does not meet national food safety regulations.
With a recent E. Coli outbreak in at least 14 states in
late 2015, Chipotle scrambled to address public
health concerns and minimize the impact of faltering
consumer confidence on the company’s sales
(Stearns). Tech Times reports that Chipotle saw
fourth-quarter earnings of $68 million in 2015, a 44%
decrease in sales from 2014 as a result of the food-
borne illness. In an effort to salvage profits and save
face for shareholders, Chipotle announced that it
would suspend end-of-year bonuses for its
executives for 2015 (Navarro, 2016). Furthermore, in
February 2016, Chipotle held a national meeting to
improve distribution and food preparation practices
to improve its food safety and also to announce a
massive to its restaurants. Chipotle subsequently ran
a free burrito marketing campaign throughout the
month of February. Chipotle acknowledged that this
promotion would likely result in decreased revenues
in the current quarter but would generate renewed
confidence amongst customers that would payoff in
the long run (Wieczner).

Evidently, there can be enormous costs associated
with serving food that does not meet food safety
standards. Particularly for wings restaurants that deal
with raw meat, the repercussions of skirting around
health codes could have disastrous effects on profits.
While powerful chain restaurants such as Chipotle
may have the resources and customer loyalty to
recover from a food-borne illness scandal, smaller,
independent restaurants must be particularly careful
to follow food standards and best practices for food
preparation to avoid an expensive health scandal.


19
Section 2: The Players
Section 2: The Players








20
Buffalo Joe’s
Open since: 1984

Known for: First wings shop in Evanston, only remaining
“traditional wings joint” serving great standard wings in no-
frills shop, beloved by townies

Insights: While Northwestern students contribute to
significant portion of customer base, sales are actually
highest over summer breaks when local kids return home
to Evanston. Relies on long-established reputation for
serving quality food to maintain popularity and sales.
Open since: 1990

Other popular items: Fried chicken, crinkle-cut fries,
biscuits
Known for: Delicious fried chicken, various meal
combination options, catering, regularly listed as one of the
best fried chicken restaurants in Chicago

Insights: Make up for unexceptional interior and minimal
customer service with excellent food. Many patrons and
potential buyers may not be aware that the restaurant
offers delivery.
Chicken Shack
Domino’s
Open since: December 2014

Other popular items: Pizza, Cinna Stix
Known for: Pizza takeaway and delivery, late night hours,
poor management

Insights: Late night hours, delivery option, and location on
Foster Street make it a particularly desirable choice for
Northwestern students living in the residential area west of
campus. Wings sell well but many potential buyers may not
be aware that Domino’s sells (and delivers) chicken wings.
Section 2: The Players




21
Open: November 2015 - March 2016 (4 months)

Reasons for closing*: Low projected annual revenue (approximately
$700,000), lack of foot traffic on Noyes Street, new DMK concept (DMK was
trying out a fried chicken model in this Evanston location -- may have been
more inclined to shut down when the restaurant wasn’t immediately
succeeding than a long-term restaurant would be)

Known for: High-end fried chicken and milkshakes; offshoot of previous
DMK Burger Bar (reputation for high quality and high prices).

Insights: Spent money on big student advertising campaign (Golden Egg
Hunt) and branding (i.e. logo and menu, interior decoration), but students
complained about steep prices and small servings. High-end concept was interesting attempt to differentiate itself
from other chicken/wings restaurants in Evanston. Ultimately closed due to location, low revenues, and perceived
failure of new restaurant concept for DMK Restaurants.

*learned this information from speaking briefly with Arlen’s employees on closing day (3/7/2016)
Arlen’s Chicken
Open: November 2009 - November 2014 (5 years)

Reasons for closing: Lack of parking, departure of Northwestern students over summer breaks

Known for: Wide variety of sauces & seasonings, sports bar atmosphere, full service restaurant with wings focus

Insights: Worked to integrate itself within the Northwestern community by sponsoring Northwestern Athletics
(notably hosting halftime events at Northwestern football games) and
hosting weekly Dance Marathon Trivia events, but mass departure of
Northwestern students over school holidays left the restaurant without a
sustainable customer base. Location was unusual for Buffalo Wild Wings
(most of its franchises are located in malls with large parking lots, major
foot traffic, and many other comparable dining options), thus Buffalo
Wild Wings decided that a location in Old Orchard Mall in Skokie would
allow the chain to perform better in the Evanston/Skokie market.

Buffalo Wild Wings
Open: January 2011 - July 2015 (4.5 years)

Reasons for closing: Not sure! Rumored to have failed health inspection. In
doing our industry analysis, we noticed that Wings Over had many of the
characteristics demanded in our Evanston market (including delivery, relatively low
prices, numerous flavors), thus we cannot say with certainty why Wings Over closed. We
guess that Wings Over’s closure was most likely due to its location (off the beaten track for many Northwestern
students) or perhaps the restaurant’s revenues did not meet its corporate office’s performance expectations.

Known for: No frills chain offering delivery

Insights: Delivery model would seem to yield high sales for the restaurant, especially amongst Northwestern
students, yet restaurant was not able to stay in business (for unknown reason).

Wings Over Evanston
Section 2: The Players
Beyond the differences between firms shown in the above chart, firms in the chicken wing
market differentiate themselves through the taste and quality of their product. These variations
in taste arise from differing quality of chicken, preparation methods, and the provision of
various flavors, sauces, and rubs.

Flavor Varieties
The most easily quantifiable difference between firms is the number and types of sauces they
offer. Each firm we are studying offers at least four different types of sauces. Wings Over
Evanston’s menu offers the most variety with 24 different sauces and rubs, and Buffalo Wild
Comparison of Evanston Wings Restaurants
Restaurant Nearest
Intersection
Weekly Hours Price
per 10
wings
Ownership Serves
alcohol?
Delivery? Wildcard
Discount?
Buffalo
Joe's
Clark &
Sherman
Daily:
11am-12am
$8.49 Independent Beer & Wine No No
Chicken
Shack
Ridge &
Emerson
Mon-Sat:
10am-12:30am
Sun: 12pm-8pm
$14.64 Independent No Yes
Buy one
chicken
dinner, get
second 15%
off
Domino's
Foster &
Maple
Sun-Thurs:
10am-1am

Fri-Sat:
10am-3am
$8.74 Chain No Yes No
Arlen's
Chicken
Noyes &
Sherman
[CLOSED]
Sun-Thurs:
11am-9pm

Fri-Sat:
11am-10pm
$9.00 Independent No 3rd party 10% off
Buffalo
Wild
Wings
Maple &
Clark
[CLOSED]
Sun: 11am-12am
Mon-Thurs:
11am-1am

Fri-Sat:
11am-2am
$11.99 Chain Full Bar No
10% off
food
Wings
Over
Evanston
Emerson &
Ridge
[CLOSED]
Mon-Wed:
4pm-1am

Thurs-Sun:
11am-1am
$8.49 Chain No Yes 10% off
22
Product Differentiation
Section 2: The Players
Wings follows closely with 21 varieties. Arlen’s, Buffalo Joe’s, Chicken Shack, and Domino’s
each offer ten or fewer flavors. This discrepancy amongst firms could be attributed to the menu
focus and ownership of each establishment; Wings Over and Buffalo Wild Wings are the only
national chicken wing specialty chains that we are studying, thus they may have more
resources to develop and produce a wider array of flavored sauces.

Only two of our firms, Buffalo Wild Wings and Wings Over Evanston, offer dry-rub seasoning.
Dry-rub seasonings act as an alternative to traditional sauces; rather than cooking the wings in
a liquid sauce, the fried chicken wing is coated with a powdered seasoning such as Old Bay.
Dry-rubs are not nearly as popular as traditional wing sauces, however some customers do
prefer them. The mere presence of these dry-rubs on a wings menu can indicate that a
restaurant is dedicated to providing its customers with as many choices as possible.

Intuitively, it seems that a wider selection of flavors would appeal to a larger consumer base
and thus bring in more business for a firm. However, both national wings chains with many
flavors, Buffalo Wild Wings and Wings Over Evanston, have recently exited the Evanston
market. Furthermore, Evanston’s long-standing major player, Buffalo Joe’s, only offers four
varieties of wings. The manager of Buffalo Joe’s prides himself on the simplicity of its menu
and few flavor varieties; in the 34 years Buffalo Joe’s has been operating, very few
changes have been made to the menu and store. He claims that this
consistency contributes to customer loyalty, and is part of the reason why
Buffalo Joe’s has so many long-term customers. While we would not say
that Buffalo Wild Wings and Wings Over Evanston failed in the Evanston
market as a result of their impressive flavor options, the success of Buffalo
Joe’s’ simple menu challenges the association of wide flavor variety and
market success.

Advertising
We also observed a varying level of interest in advertising from our firms. Even since leaving its
downtown Evanston spot for the Old Orchard Mall, Buffalo Wild Wings continues to sponsor
halftime events at Northwestern football and basketball games, presumably to maintain brand
awareness amongst sports-going Northwestern students and Evanstonians. In its downtown
Evanston location, Buffalo Wild Wings hosted more than 100 students each week for Dance
Marathon-sponsored trivia events. Beyond benefitting from the obvious revenue surges from
trivia-going customers, hosting trivia helped to keep Buffalo Wild Wings relevant and popular
on campus. Additionally, Arlen’s Chicken hosted a Golden Egg Hunt competition for
23
Section 2: The Players
Northwestern students in anticipation of its grand opening to stimulate Arlen’s brand
awareness and excitement on
campus, which involved students
searching around campus for
hidden golden eggs and posting
pictures of discovered eggs on
Facebook. Such advertising efforts
intend to communicate to
Northwestern students and
Evanston residents that these
restaurants value their patronage
and want to tailor their offerings to
meet these customers’ needs.

Conversely, Buffalo Joe’s and Chicken Shack, Evanston’s longest established chicken wing
providers, hardly utilize advertising. In a humorous anecdote, the Buffalo Joe’s’ manager
recalled how the restaurant distributed coupons many years ago but failed to provide any kind
of limitations or expiration dates on the coupons and consequently lost a great deal of money
on the promotion; since then, Buffalo Joe’s has not run any other promotions. In all likelihood,
these restaurants’ aversion to marketing may speak less to the potential value of marketing for
their restaurants than their respective managements’ apathy or aversion to expending time and
resources on advertising efforts.

It is important to note that three remaining firms (Chicken Shack, Buffalo Joe’s, and Domino’s)
vary significantly, thus our current Evanston market for chicken wings features a great deal of
product differentiation. Chicken Shack’s wings are breaded and served dry with a dipping
sauce on the side, whereas Buffalo Joe’s and Domino’s serve traditional chicken wings (i.e.
cooked in sauce or dry-rub seasoning). Domino’s primarily markets itself as a takeaway and
delivery pizza restaurant, and while some customers may be aware that Domino’s sells chicken
wings, we believe the majority of its customers do not come into Domino’s for its wings.
Therefore, Buffalo Joe’s in the only remaining that customers would identify as a “traditional”
chicken wing joint.

24
Arlen’s co-hosted this grand opening event with NU advertising student group F&F.
Students who found a golden egg and posted a photo online received a free meal.
Section 2: The Players
25
Location
Section 2: The Players
The restaurants we chose are scattered around the Evanston area, with Buffalo Wild Wings and
Buffalo Joe’s in the downtown Evanston area, Chicken Shack and Wings Over Evanston in the
Ridge & Emerson area, Domino’s on Foster Street, and Arlen’s on Noyes Street. In general,
Downtown Evanston is the most ideal location of the group due to its heavy foot traffic and
proximity to Northwestern’s campus. With that said, the downtown Evanston restaurants may
have suffered from a lack of parking and competition with nearby restaurants, given downtown
Evanston’s high saturation of comparable fast casual dining options. Arlen’s was situated on
Noyes Street, which has recently been experiencing a retail rebirth and has relatively few
competitors, especially at the dinner hour, but suffers from a lack of foot traffic. Domino’s’
location on Foster Street gives it somewhat of a monopoly on dining options within that
residential area, especially for late-night diners, but similarly struggles from low foot traffic.
Both situated around the Ridge & Emerson intersection, Wings Over Evanston and Chicken
Shack both have modest parking lots but are out-of-the-way for Northwestern students and
have extremely low foot traffic.

Hours
All of the restaurants we examined are open each day for lunch and dinner, with the exception
of Wings Over Evanston, which was closed for lunch Monday through Wednesday. Arlen’s had
the earliest evening hours, closing its doors at 9pm on weekdays and 10pm on weekends,
while Dominoes closes at 3am on weekends Buffalo Wild Wings stayed open until 2am on
weekends. The other restaurants closed around midnight or 1am on weekend nights. Our
group noted that chicken wings are a popular late night
snack for Northwestern students, thus we expected these
restaurants to keep their doors open late into the night on
weekends. While we found that a number of these
restaurants did have later hours on weekend nights, we were
surprised that more of these restaurants did not choose to
stay open until 2am or 3am to cater more fully to the late
night demand.

Parking
Marie, the manager of Buffalo Wild Wings in Skokie, spoke about the parking challenges for
the store’s downtown Evanston location. While Buffalo Wild Wings was situated across the
street from a parking lot and had a few street parking spots around its restaurant, Marie
observed how customers regularly complained about a lack of parking, and she believes that
many potential customers were discouraged from dining at Buffalo Wild Wings by the area’s
26
Section 2: The Players
lack of parking. Buffalo Wild Wings restaurants are more traditionally
located in shopping malls with substantial parking lots, thus the chain
may not have found the Evanston franchise’s street-corner location to
align with its best practices for restaurant success. Marie described
how the company’s decision to close the downtown Evanston
location and subsequently open a franchise in Old Orchard Mall
was largely motivated by the shopping center’s ample parking and
existing restaurant market.

There is a similar lack of parking in the other locations we’ve studied:
shops Noyes Street and Foster Street survive off of only scarce street
parking, Wings Over Evanston has a sizable parking lot but shares it with
a handful of other shops in the same strip mall, and Chicken Shack has
only a few parking spots outside its façade. While we certainly identify parking as a challenge
for the majority of retailers in Evanston, we also notice that most Northwestern students—who
make up a large portion of consumers in Evanston, particularly at restaurants serving chicken
wings—do not have cars or do not rely on driving to get around Evanston. Thus while parking
is absolutely a concern for Evanston restaurants, we believe that parking is one of many
important considerations for a potential market entrant rather than a make-it-or-break-it factor.

Interestingly, while we were able to identify the pros and cons of these various locations, we
are unable to establish a strong correlation between a restaurant’s particular location and its
success since the recent closures have each taken place in a different location (Buffalo Wild
Wings in downtown Evanston, Arlen’s on Noyes Street, and Wings Over Evanston on Emerson
Street). While we can certainly observe different location-related factors that affected these
businesses (Buffalo Wild Wings struggled with downtown Evanston’s lack of parking and
Arlen’s was hurt by Noyes Street’s lack of foot traffic), we cannot identify one ideal retail area in
Evanston from the data. With that said, the recent influx of restaurants in the downtown
Evanston area—including Blaze Pizza, 800 Degrees, and La Macchina—could indicate that
potential restaurateurs have chosen downtown Evanston as the most ideal location for new
restaurants.

Delivery
Of the six restaurants, Chicken Shack, Domino’s, and Wings Over Evanston offer delivery. We
are particularly interested in how the upsurge of third-party delivery services such as
Postmates and DoorDash have affected restaurants. Marie from Buffalo Wild Wings spoke
about the challenges of delivery for chicken wings. Buffalo Wild Wings does not offer delivery
27
Section 2: The Players
to customers because of the difficulty in maintaining the temperature and freshness
of chicken wings in delivery and the general risks associated with transporting
meat to customers. Additionally, Marie spoke about how these delivery services
can cause problems for the restaurant when customers call to complain about
the third party delivery service (e.g. cold food, incorrect order, slow service).
On the other hand, we noticed that Arlen’s partnered with DoorDash to offer
a complimentary tater tots deal with any Arlen’s DoorDash delivery.

Evidently, there is disagreement amongst these restaurants over the value
of offering delivery versus relying on—or even encouraging—third-party
delivery as well as the overall viability of transporting chicken
wings to customers. We believe that delivery is especially
relevant for this market since Northwestern students have a high
demand for both chicken wings and food delivery. It seems to us
that wings restaurants would profit greatly from offering delivery, but our conversation with
Marie helped us better understand the drawbacks of both restaurant-provided and third-party
delivery in this market.

Modeling Location Competition
The restaurants we examined vary greatly in a number of ways, from menu and product variety
to price and service, thus while location is certainly an important differentiating factor, we don’t
believe that a location-based economic model such as Hotelling or Salop fully captures the
extent of competition amongst these restaurants. We believe that location varies in importance
depending on the area: while Domino’s customers may not agonize over their choice to go to
Domino’s over other restaurants since Domino’s is relatively distant from its competitors, the
proximities of Buffalo Wild Wings and Buffalo Joe’s or Wings Over Evanston and Chicken
Shack would have made location competition a more pressing concern for these restaurants.
Thus between nearby restaurants, we could certainly use Hotelling to model their competition
and ensuing efforts to differentiate their products.

We found one aspect of the Salop model that we did not discuss in-depth in Econ 349 but
could be very relevant in our analysis: customers decide between similar products within the
circle but also have the option to choose an alternative product beyond the market. We believe
this dilemma is especially useful in understanding the downtown Evanston market, since the
presence of numerous comparable restaurants in the area means that downtown wings
restaurants are not only competing amongst each other but also with a number of other nearby
restaurants.

28
Section 2: The Players
The pricing and number of wings in meals sold varies across the restaurants in Evanston. All of
the restaurants use a block pricing scheme, but the number of wings in each offering varies.
Aside from Chicken Shack, all of the restaurants offer between two and four different choices
for portion size, each with between seven and 40 wings per meal (see above chart). There is a
fair amount of variation among the restaurants in the price per wings of the small meals,
ranging from $0.85 (Buffalo Joe’s) to $1.46 (Chicken Shack). Presumably since the types of
wings offered are different, the firms are competing both with quality and prices.

Chicken Shack offers many combo meals and utilizes other fairly complex pricing schemes.
Chicken Shack offers “wing buckets” which are similar in price and quantity to the offerings
from other restaurants, but additionally sells meal combinations with 4, 5, 6, or 7 wings
alongside fries and bread, with the option to add an additional wing for $1.64 (far greater the
cost of producing one more wing). While we were unable to interview Chicken Shack about this
pricing method, it appears to push customers who want more than 7 wings towards its 12 wing
bucket, as the bucket costs two dollars less than getting 12 wings using a 7-piece meal with 5
additional wings. In addition, this price point could be explained by higher production costs for
the breaded wings served at Chicken Shack, versus the cheaper cost of producing standard
unbreaded wings. Alternatively, perhaps Chicken Shack prices its wings above market prices in
order to push customers to purchase other, more profitable menu offerings, such as a
Price for
Small Order
Price Per
Wing
Price Per 10
Wings
Number of Wings
Offered (excluding
catering)
Buffalo Joe’s $8.49 $0.85 $8.49 10/20
Chicken Shack $10.25 $1.46 $14.64 12/18/24
Domino’s $6.99 $0.87 $8.74 8/14/40
Arlen’s Chicken $9.00 $0.90 $9.00 10/20/30
Buffalo Wild
Wings
$11.99 $1.20 $11.99 7/10/15/20
Wings Over
Evanston
$8.49 $0.85 $8.49 10/15/25
29
Pricing
Section 2: The Players
“chicken dinner” that includes one leg, one breast, one thigh, and one wing for relatively the
same price as 5 wings.

Bertrand Model?
To a certain extent, pricing competition can be modeled using a heterogeneous Bertrand
model: demand for a given restaurant is affected both by its own prices as well as the prices of
other restaurants (including ones that do not sell wings). Since these restaurants maintain
stable prices and chain prices are determined by the corporation, the Bertrand model may not
be regularly considered by existing restaurants, but Bertrand could be very useful for an
entering firm to understand how to set its prices to maximize profit. For the chain restaurants
(Buffalo Wild Wings, Domino’s, Wings Over), prices are uniform and follow the national prices.
Therefore, individual franchises of these chain restaurants are unable to change their prices to
respond to local demand or pricing trends. At Buffalo Joe’s and Chicken Shack, prices are set
internally but do not often vary or change. Buffalo Joe’s reportedly changes its prices
sporadically, on average less than once a year. While these restaurants have the autonomy to
change prices unlike their nationally affiliated competitors, they most likely refrain from doing
so in order to avoid upsetting loyal customers who are accustomed to the low prices.
Interestingly, prices neither fluctuate with changes in wing costs nor demand. Perhaps a more
profitable pricing model for Evanston wing restaurants might more regularly evaluate prices
30
Section 2: The Players
against variable input costs and seasonal demand. However, this practice would incur the cost
of changing prices on menus, as well as the risk of alienating customers, as discussed above. 

Discounts and Promotions
Many of the restaurants also compete with different deals, discounts, and loyalty programs.
Buffalo Wild Wings and Arlen’s both offer Wildcard discounts. Dominoes and Wings Over have
had each utilized various promotions involving wings to sell other menu items in a combination
meal. Neither Buffalo Joe’s nor Chicken Shack offer promotions or discounts. This is most
likely because both restaurants have been operating for a significant period of time, and have
established a large amount of loyal customers. In addition, as both restaurants serve a large
number of both Evanstonians as well as Northwestern students, there may not be much of an
opportunity to price discriminate to attract more customers.

Catering
All of the restaurants also offer wings as an option on a catering menu, but some restaurants’
catering prices are not specified. Catering orders are relatively infrequent throughout the
majority of the year, but skyrocket around certain holidays, such as the Super Bowl. Given the
significant product differences between Buffalo Joe’s, Domino’s, and Chicken Shack, the three
restaurants presumably don’t price compete much for catering orders. However, the large
influx of catering orders on certain dates have important capacity implications as discussed
below. 

31
Section 2: The Players
Capacity in this market can be examined both in terms of seating available in restaurants, as
well as the size and efficiency of kitchens. The former is much less interesting than the latter;
while there is some variation in the amount of seating in the restaurants we examined (see table
below for specifics), all three existing restaurants primarily serve take-out orders. According to
the managers of both Buffalo Joe’s and Domino’s, a lack of seating availability rarely prevented
additional sales for either restaurant, as customers are willing and able to place to-go orders if
no seats are available. Additionally, delivery options provided both by the restaurants (i.e.
Domino’s) or by third-party delivery services such as GrubHub and Postmates further reduce
the importance of physical seating capacity restrictions. Presumably, seating capacity was
much more important for Buffalo Wild Wings, which utilized a full service model.

The more important capacity restriction for wings restaurants is the size and efficiency of their
kitchens. Domino’s, Buffalo Joe’s, and Chicken Shack all have similarly sized kitchens, yet the
speed of their service varies. From casually observing service in each of these three
restaurants, we observed that Domino’s and Buffalo Joe’s both serve orders fairly quickly, while
Chicken Shack takes much longer to serve an order of wings. The speed of service is closely
related to the production process for each firm, as well as economies of scale in production.
Domino’s wings are simply heated up from frozen and therefore require the shortest production
time. Buffalo Joe’s is able to serve wings relatively quickly as it produces wings batches often
throughout the day and in high volumes per batch. Chicken Shack presumably takes longer to
cook wings because it serves a variety of different items and its wings are breaded, which is
labor intensive. However, both Buffalo Joe’s and Chicken Shack often have long lines and
longer wait times during peak hours, while Domino’s production time is consistent throughout
the day.

Seating Capacity Service Time for
Wings
Buffalo Joe’s 25 customers 8 minutes
Chicken Shack 20 customers 16 minutes
Domino’s 10 customers 6 minutes
32
Capacity
Section 2: The Players
Capacity restrictions in terms of kitchen size and efficiency are most important during high
periods of demand. Production capacity is reached for these restaurants during peak surges in
demand such as the Super Bowl and March Madness finals. Buffalo Joe’s sells 4000 pounds
of wings on Super Bowl Sunday, and its kitchen is unable to accommodate more sales during
this period. The bulk of these sales during surges are catering orders. Since most catering
orders are made in advance, restaurants are able to plan in advance to produce more wings
than they would ordinarily be able to produce. 

Economies of Scale and Scope
As discussed earlier, there are economies of scale for chicken wing production in bulk. Stores
get better deals on wings when they buy in bulk, and therefore are able to produce bulk-
purchased wings at a lower cost. In addition, since wings are made to order, restaurants can
more efficiently prepare ten orders at once, as opposed to producing ten orders individually.
However, given the limited kitchen space (both production areas and ovens) after a certain
point there are diminishing returns to increasing production.

There are also some economies of scope in production. For restaurants that sell other fried
food items along with chicken wings, the similar production processes allow firms to save
money on cooking equipment and employee training. For national chains, the same vendors
are often used to supply both wings and other ingredients, allowing stores to negotiate better
prices. However, this effect does not exist for local restaurants, as different raw food vendors
are used for wings and the ingredients for other foods, so no reduced prices can be reached by
producing different goods. With that said, Buffalo Joe’s uses scraps from chicken wings to
make soup, which is an example of economies of scope.

Cournot Model?
Some aspects of the decision making of firms in this market lend themselves to a Cournot
model for competition: wings restaurants order a different quantity of wings to sell each
morning, based off of predicted demand. Yet differentiated Cournot competition is not a good
economic model for the industry, as the restaurants in our study rarely reach quantity capacity.
Additionally, the wings restaurants in our study individually compete not only with each other,
but also with all other restaurants in Evanston. Therefore, the quantity decisions of each
individual restaurant likely don’t have much of an effect on any other store.

This is observable in practice: notably, Wings Over and BWW shutting down didn’t have an
apparent effect on the sales of Buffalo Joe’s. In speaking with the manager of Buffalo Joe’s, he
33
Section 2: The Players
repeatedly emphasized that he doesn’t base his business operations on what his competition
is doing. He described how when a new wings vendor opens in Evanston, Buffalo Joe’s
experiences a brief dip in sales as customers try out their newest wing option, but sales quickly
return to normalcy after this brief tryout period. 

34


35
Section 3:
The Customers, a Market
Model, & Entry Prospects
Section 3: The Customers, a Market Model, & Entry Prospects
Estimating the Evanston Demand
We estimate that demand for Chicken Wings in Evanston is a linear function with giveaway
quantity and choke price both varying seasonally. We estimated four different functions of
demand, based off of the presence of Northwestern students, and the varying seasonal
demand based off of sporting events. We assumed that the demand functions would be linear,
as there are no measurable consumer preference differences which cause firms to price
discriminate (which would yield a kinked demand function).

In order to estimate a choke price, we polled 10 friends who regularly eat wings about the
maximum price they would pay for a single order of wings. The highest price suggested was
$14; however, as our sample was likely skewed considering that some wealthier residents in
Evanston may be willing to pay more for a meal than college students, we adjusted our choke
price up slightly to $20. Further, we assumed that this choke price would change depending on
seasonal demand: on Sundays during footballs season, the maximum willingness to pay would
likely be much larger than on a Tuesday in March. Buffalo Joe’s reportedly sells 33% more
wings on the weekends during periods of high demands, then on weekdays when demand is
low. Therefore, we adjusted our estimate of the choke price to equal $18 during periods of low
demand, and $24 during periods of high demand.

In order to estimate the giveaway quantity for Evanston, we obtained an estimate for the
population of Evanston, and subtracted from that number the fractions of the population who
don’t eat chicken wings for various reasons. The population of Evanston was measured at
75,570 in the 2013 census. We reduced from that number the fraction of Evanstonians who are
vegetarian: 3.2% of Americans are vegetarian (Vegetarian Times), but as Evanston is a
relatively progressive college town, we estimated that 5% of the citizens of Evanston are
vegetarian. Additionally, we estimated that 15% of non-vegetarians in Evanston wouldn’t eat
wings even at no cost, due to taste preferences, health, or other reasons. Therefore, there are
61,022 people in Evanston who would eat chicken wings at a given time. However, as the
boundaries of Evanston span a much larger area than just the area directly bordering
Northwestern, we assumed that an additional 30% of this estimate would never eat wings at
our given establishments, given that there would be closer alternatives. Therefore, our
36
Demand & Elasticity
Section 3: The Customers, a Market Model, & Entry Prospects
approximate giveaway quantity is reduced to 42,000. Yet given that the census was taken
when Northwestern was in session, we assumed that the giveaway quantity would be less in
the summer, and estimated that quantity to be 38,000.

Price Elasticity of Demand
We expect the demand for the wing market to be price elastic, as we predict consumers are
relatively sensitive to increases in wing prices. We found the average PED for fast food to be
-0.9 (Sherk) and from this we estimate that the Evanston market for wings would have an
average PED of -1.2. This is mainly because the Evanston food market is extremely saturated,
thus we predict if wing prices were to rise, customers would be more likely to eat at another of
the many substitute restaurants. Furthermore, the Evanston consumer base comprises of many
students, who are known to be frugal and relatively sensitive to increases in prices. We do
acknowledge that this elasticity would likely fluctuate seasonally; in particular, during football
season we predict that consumers are less sensitive to wing prices as wings are often viewed
as an integral part of game viewing.

Income Elasticity of Demand
While most fast foods are considered to be inferior goods—meaning that an individual’s
demand for the good decreases as his income increases—we believe that chicken wings are
normal goods—for which an individual’s demand increases as his income increases—since
chicken wings are a niche product that are regularly consumed by people of varying incomes.
37
Section 3: The Customers, a Market Model, & Entry Prospects
With that said, we believe there is a certain threshold for income elasticity of wings. For poorer
customers, an increase in income could very well lead to an increase demand for wings, which
indicates a higher income elasticity of demand for this group of customers; for this group, we
estimate an IED of 1.5, meaning that a 10% increase in income would yield a 15% increase in
wings demanded. Conversely, wealthier customers likely would not experience significant
changes in demand for wings with income changes. For wealthier customers, we estimate an
IED of 0.3, meaning that wealthy customers’ demand for wings is barely increases following an
increase in income.

Advertising Elasticity of Demand
Advertising elasticity of demand measures the impact of a change in advertising on market
demand. We know that Buffalo Joe’s and Chicken Shack utilize little-to-no advertising, thus
Buffalo Joe’s and Chicken Shack both estimate their own AED to be close to 0. In other words,
for Buffalo Joe’s and Chicken Shack, adding any kind of advertising efforts to their business
model would have no significant effect on demand for their products. Conversely, we’ve seen
firms such as Arlen’s and Buffalo Wild Wings rely heavily on advertising campaigns to establish
and maintain their respective customer bases. We believe that the efficacy of a particular
advertising campaign varies depending on how established a firm is within the market. For new
firms, AED would be high (AED = 5) as any advertising efforts would be very impactful in
bringing brand awareness to the firm. However, as the firm becomes more well-known within
the community, returns to advertising would diminish and could, as the lack of advertising from
Buffalo Joe’s and Chicken Shack would suggest, eventually disappear altogether (AED = 0). It
is also important to note here that national wings chains, such as Buffalo Wild Wings and
Wingstop, benefit from their chains’ national advertising campaigns. For the purposes of
understanding AED within the Evanston market, we are defining a firm’s advertising as efforts
made by the individual firm to market specifically to the Evanston market.

38
Section 3: The Customers, a Market Model, & Entry Prospects






In our estimated model, profits of firms depend on their own prices, their competitors’ prices,
and seasonal demand for wings which varies depending on the presence of Northwestern
students and major sporting events. We believed that a heterogeneous Bertrand model best
describes wings competition, because the quantity of wings sold depends on a firm’s prices
and the prices of competitors, as well as the quality of the wings offered. In addition, in our
estimated inverse demand function the giveaway quantity varies based on whether NU
39
Modeling Rivalry
Section 3: The Customers, a Market Model, & Entry Prospects
students are on campus, and also if there are major sporting events, and if it’s a weekend, all of
which cause more wing demand to rise. The latter also affects the costs of wings, which
restaurants purchase daily, and the price of which fluctuates based off of daily demand.
Overall, we believe that a profit maximizing firm should set its price in order to maximize profit.
However, none of our individual firms studied behaved exactly in this way: local haunts such as
Buffalo Joe’s and Chicken Shack do not change their prices in an effort to maintain their
customer base and protect their reputation, while national chains are forced to adhere to
uniform corporate menu prices. While we believe that this model is interesting from the
perspective of understanding the decisions made by a general firm, it is not entirely useful as a
tool for a prospective entrant, as demand is extremely dependent on quality and reputation. 

40
Section 3: The Customers, a Market Model, & Entry Prospects
To estimate the relative market shares of each of our remaining wings restaurants, we reached
out to the restaurants to ask about the approximate quantity of wings they each sell per week.
The Buffalo Joe’s manager estimated the store sells around 1500 pounds of chicken wings per
day (or 10,500 pounds per week). The Domino’s manager estimated her store sells around 700
pounds of wings per week. We were unable to get a sales volume estimate from Chicken
Shack, but given the similarities in menu, product variety, revenues, and popularity of wings
between Domino’s and Chicken Shack, we estimate the Chicken Shack also sells around 700
pounds of chicken wings per week, as well. Additionally, we wanted to include other relevant
wings sellers that fall within our market limits: Bat 17, Bar Louie, and Clarke’s. We spoke with a
waiter at Bat 17 who estimated that the restaurants moves around 600 pounds of chicken
wings each week. We estimate that Bar Louie sells approximately the same amount of chicken
wings per week, given what we know about the high popularity of wings at Bar Louie. Similarly,
we estimate Clarke’s sells about 50% of the wings Bat 17 does (or 300 pounds per week), after
a Clarke’s waiter mentioned that Clarke’s wings offerings are not particularly popular amongst
customers. The following chart lays out each restaurant’s pounds of chicken wings sold per
week, which we used to calculate respective market shares.

Pounds of wings
sold per week
Evanston Market Share
Buffalo Joe’s 10500 78.36%
Chicken Shack 700 5.22%
Domino’s 700 5.22%
Bat 17 600 4.48%
Bar Louie 600 4.48%
Clarke’s 300 2.24%
TOTAL 13400 100%
41
Market Shares
Section 3: The Customers, a Market Model, & Entry Prospects
We chose to use a pie chart to visually represent the shares within our market. Evidently, based
on its weekly sales volume, Buffalo Joe’s sells the vast majority of wings in this market. It is
important to note that Buffalo Joe’s is the only restaurant listed that specializes in chicken
wings; for each of the other restaurants, chicken wings are a secondary, albeit often popular,
menu item.

42
Evanston Wings Market Shares
11%
5%
5%
78%
Buffalo Joe's Chicken Shack Domino's Wings sold as appetizers
Section 3: The Customers, a Market Model, & Entry Prospects
Given our understanding of the current wings market in Evanston, new entrants primarily
focused on selling wings would have to overcome a variety of obstacles in order to be
profitable in the long run. 

Market Trends
First and foremost, the overall longterm viability of wings restaurants is questionable given
current health and cost trends. As discussed in the broad market trends section of our report,
while prominent wings franchises are currently profitable and wings remain an extremely
popular food, this profitability has declined over the past 10 years as the cost of wings has
risen substantially. In fact, Buffalo Wild Wings maintains profits by utilizing a business model
where it attracts customers with its wing offerings, but pushes customers towards buying its
products with higher profit margins including boneless wings, sodas, and salads. Additionally,
as consumers continue to become more health conscious, the longterm viability of a business
focused on selling wings is somewhat questionable. Market trends imply that in order to be
profitable an entering firm must either reach high levels of volume, or offer more profitable
menu choices than bone-in wings. 

Evanston Market
Within the Evanston market, Buffalo Joe’s massive market share is a huge obstacle to entry. By
our estimates, Buffalo Joe’s captures roughly 80% of the wings market in Evanston by offering
a competitive price and product and by relying on a strong reputation developed over thirty
years. Buffalo Joe’s also has a major competitive advantage with an extremely low lease for its
prime downtown Evanston location. The owner, Joe, has a longstanding relationship with the
landowner, allowing him to pay “pennies on the dollar” for his lease. This cost advantage
allows Buffalo Joe’s to price its offerings lower than the rest of the market. Given the
combination of this cost advantage and Buffalo Joe’s reputation of selling high quality wings, it
would be nearly impossible for a new entrant to compete with Buffalo Joe’s on price and
quality alone. 

43
Prospects for Entry
Section 3: The Customers, a Market Model, & Entry Prospects
Therefore, in order for a new entrant to be successful, it would need to differentiate itself by
offering a service which Buffalo Joe’s doesn’t, force Buffalo Joe’s out of business, or capturing
a share of the market which doesn’t directly compete with Buffalo Joe’s. 

Seasonal Demand
Our estimations of the demand for chicken wings in Evanston has important implications for a
firm considering entry. A new firm may have trouble attracting enough customers when
Northwestern isn’t in session, as discussed earlier. Existing firms are able to remain profitable
in the summer by monopolizing non-Northwestern customers; our analysis revealed that a
large percentage of Buffalo Joe’s and Chicken Shack’s customers are not Northwestern
students, thereby maintaining profits year round. While we doubt a new entrant would be able
to capture many of these customers who have well-established wings preferences, a new firm
could consider re-focusing their operations in the summer to sell a more profitable item to
Evanstonians. However, this strategy would entail a large cost associated with switching
specialization twice a year, and would most likely not be profitable. 

Product Differentiation
There are several ways in which a new firm could potentially differentiate its product to capture
market share. First, a business could consider offering a wider variety of sauces than currently
are offered by existing firms. However, as the two firms offering the most sauce variety recently
exited the market, this alone is not a viable strategy for market success. While a business
could easily offer a lower quality than Buffalo Joe’s (simply by burning all their wings, for
example), given our understanding of the costs associated with operating a wings business, it
would be impossible to produce wings at a lower cost than Buffalo Joe’s, and thus impossible
to offer wings at a lower price while still making a profit. Alternatively, a market entrant could
offer higher quality wings at a higher price, which
would allow a new firm to have a much higher
profit margin on wings and to not directly
compete with Buffalo Joe’s. Instead, this new
business would likely compete with slightly more
upscale Evanston dining options, such as Lyfe
Kitchen. However, marketing wings as an
upscale item might not be profitable, especially
considering wealthier customers are often more
health conscious and are willing to pay a
premium for healthier items (which wings are
44
Section 3: The Customers, a Market Model, & Entry Prospects
certainly not). Arlen’s recently attempted to fill this niche, and after four months decided to shut
down its operations. While Arlen’s’ decision to close largely reflected its unfavorable location,
Arlen’s may have simply been offering a combination of quality and price for which there was
not sufficient demand. It remains unclear if a firm would be able to successfully offer and
market a higher quality chicken wing at a higher price perhaps in a different location than
Arlen’. There are certainly drawbacks to either pricing option, but a higher-priced, higher-
quality wing would still likely fare better than a wing in direct price competition with Buffalo
Joe’s. 

Product Differentiation
A new wings entrant could attempt to drive Buffalo Joe’s out of business by utilizing a
predatory pricing scheme, in the hopes of driving Buffalo Joe’s out of business and then
acquiring its former customers. However, a predatory pricing scheme would most likely fail for
several reasons. First, Buffalo Joe’s has a very loyal customer base and the entrant’s prices
would have to be extremely low for an extended period of time to discourage these customers
from returning to Buffalo Joe’s. Second, given the huge number of customers in Evanston who
purchase meals each day (as shown by the giveaway quantity), any extreme predatory pricing
scheme would attract business away from not only Buffalo Joe’s, but also other Evanston
restaurants. Due to capacity constraints regarding kitchen size, it would likely be impossible to
accommodate the consequential influx of customers from setting
such a low price. Finally, the owner of Buffalo Joe’s not only has a
very diverse business portfolio (strangely enough, including several
clubs in Miami, according to the Buffalo Joe’s manager), but also
has a personal connection to the Buffalo Joe’s Evanston restaurant.
It is unlikely that he would be willing to quickly close Buffalo Joe’s
even if operating at a loss, and he has the financial resources to
sustain Buffalo Joe’s for a very extended period of time. Therefore,
our analysis indicates that a new firm would be unwise to utilize a
predatory pricing scheme. 

Advertising
Given the extremely high market share of Buffalo Joe’s, and the high level of saturation in the
Evanston food market in general, chicken wing entrants to the Evanston market would need to
launch an expansive advertising campaign. Based on our analysis of advertising elasticity of
demand, we would recommend that this campaign be sudden and short, in order to attract a
burst of initial customers, some of whom would ideally prefer the newly offered product to its
45
Section 3: The Customers, a Market Model, & Entry Prospects
wing competitors. Recent entrants to the Evanston market have utilized heavily publicized
initial advertising campaigns with varying degrees of success. Notably, Blaze Pizza launched
their Evanston restaurant with a free pizza giveaway, which it announced and heavily promoted
through social media. This campaign was certainly successful, as Blaze Pizza has since
experienced sustained success in the Evanston restaurant market. However, this sustained
success certainly is also related to the desirable and unique product which Blaze sells; Blaze
was the first-to-market of create-your-own high-end pizza chains. Arlen’s recently launched
with a similarly high-profile advertising campaign, which included a Golden Egg Hunt intended
to reach Northwestern students through social media. Arlen’s campaign seemed to be fairly
successful, causing an initial surge of business. However, as Arlen’s recently closed, a
successful initial advertising campaign is evidently necessary but not sufficient for sustained
success. 

Discounts and Promotions
Similarly, while a new firm should definitely consider using discounts and promotions, these
schemes alone are unlikely to guarantee sustained market success for an entering wings
restaurant. As discussed earlier, discounts and promotions are unlikely to attract Evanston
residents away from established firms like Buffalo Joe’s and Chicken Shack. Therefore, the
most successful discounts and promotions would target Northwestern students, whose
preferences are more malleable and who perhaps have a lower willingness-to-pay—firms could
price discriminate with a Wildcard discount. However, all three firms that recently exited the
Evanston market offered a Wildcard discount, which evidently does not sufficiently attract
Northwestern students’ business. Of the three wings firms currently in operation, only Domino’s
successfully employs promotions. Domino’s offers discounts during low periods of demand
(i.e. Tuesday nights), as well as deals which bundle their high profit margin items with other
offerings (i.e. soda and pizza combos). A new entrant would be advised to offer deals and
promotions similar to Domino’s’ tactics.

Services
In order to best compete in the Evanston market, a new firm could attempt to differentiate itself
by offering a different service than the market leader, Buffalo Joe’s. First, as Buffalo Joe’s does
not offer delivery, a new firm could attempt to acquire market share by providing a food
delivery service. From speaking with Northwestern students, we students have a high demand
for wings delivery, but we are concerned that delivery might not be a successful strategy for a
number of reasons. First, Wings Over Evanston, which specialized in the delivery of wings,
recently exited the market. While the specific reason behind its departure remains uncertain,
46
Section 3: The Customers, a Market Model, & Entry Prospects
presumably it was not operating at a profit despite a successful delivery service. In addition,
the advent of Domino’s’ wings delivery option poses a serious threat for any entrant. Given
Domino’s reported increased focus on wings, low wings price point, and established brand, it
would be difficult for a new wings firm to compete. Additionally, devoting restaurant space to a
staging area for delivery and purchasing the necessary infrastructure required for delivery (i.e.
car, driver, insurance, etc.) is costly. Despite the obvious demand for delivery, Buffalo Joe’s
chooses not to deliver wings because its would have to either sacrifice kitchen space or
seating to do so. Finally, the popularity of Postmates and similar services further condemns
focusing on delivery as an inferior strategy, as a new entrant would also be competing with
existing restaurants who do not offer delivery but benefit from these third-party delivery
services.

A new entrant could also consider using a full-service restaurant model, as no current wings
firms currently operating in Evanston are full service. However, as discussed earlier in the
context of Buffalo Wild Wings decision to shut down, this approach has various drawbacks. In
short, the combination of a lack of parking in downtown Evanston and competition from other
restaurants which offer chicken wings as appetizers cause including full-service to not be a
beneficial strategy.

Location
The location decision of a new entrant is extremely important, and has various implications
regarding many other business decisions. Due to the long and expensive process of building a
new restaurant in Evanston as described earlier, a new entrant would likely lease a store. There
are two distinct areas within walking distance from Northwestern’s campus with different
advantages and disadvantages which a firm could consider locating:

• Downtown Evanston: A location in downtown Evanston has one huge benefit: the large
amount of foot traffic ensures that there are many customers willing to travel to a
restaurant located here. Since individual wing orders are not highly profitable, selling a
large quantity of orders is imperative to success. However, there are also several
disadvantages to a downtown Evanston location. First, as the location is desirable for
many different stores, rent is extremely high. In addition, there are many other restaurants
in downtown Evanston competing for customers. Moreover, market dominator Buffalo
Joe’s is located in downtown Evanston, yet is able to offer low prices due to it’s low
lease. Therefore, it would be very difficult for a traditional wing enterprise to be
successful if located in downtown Evanston. 

47
Section 3: The Customers, a Market Model, & Entry Prospects
• Noyes Street: New entrants could also choose to operate on Noyes Street. While Noyes
Street has much less foot traffic than downtown Evanston, leases are also much less
expensive. In addition, there are not many other restaurants on Noyes Street, and this
location is still very close to the large potential customer base on Northwestern’s
campus. However, Noyes Street may not be a sustainable location for a new wings firm,
as demonstrated by the recent closures of many Noyes Street restaurants, including
Arlen’s. Furthermore, an Arlen’s employee we interviewed briefly cited “not enough foot
traffic” as its reason for closing operations. Evidently, while Noyes Street may be a have
some advantages over downtown Evanston, it still might not be able to support a new
wings establishment. 

Neither location within our market seems suitable for a new wing restaurant to be successful.
Based on our comprehensive analysis, it seems that Arlen’s was best positioned to be
successful in this Evanston market. Unfortunately, Arlen’s shut down operations one day before
we were scheduled to interview them. Without further research, based on our analysis of the
current Evanston market, and after considering various different business strategies, we
conclude that we would not recommend entry into the Evanston market for any restaurant
emphasizing the sale of traditional chicken wings. 

While we would not currently recommend opening a traditional wings restaurant in Evanston,
after examining the market we determined that several creative interpretations of wings
restaurants could be viable. Most notably, we believe that in the future a food truck specializing
in chicken wings could be extremely profitable. A food truck would be able to serve the
seasonal demand of Northwestern students the majority of the year, and then re-locate or
temporarily close during the summer. Additionally, a
food truck does not require an expensive Evanston
lease to operate, and can be located closer to students
than any existing stationary wing restaurant.
Unfortunately, Evanston currently requires food trucks
to be tied to an existing brick-and-mortar Evanston
restaurant, but Evanston is considering lifting this
restriction later this year. 

48


49
Section 4: Appendix
Section 4: Appendix


50
Section 4: Appendix
Marie, Manager
Buffalo Wild Wings
Marie provided us with valuable information regarding why Buffalo Wild Wings in downtown
Evanston closed. She cited parking and departure of Northwestern students over school
breaks as the biggest challenges for this location. Marie also explained the benefits of the
franchise model; most notably, Buffalo Wild Wings franchises benefit from national advertising,
thus franchises have to do only minimal local advertising themselves. She also explained how
Buffalo Wild Wings stores often operate with higher costs than competitors because it must
meet its corporate office’s high health standards.

Contact: bww3169@kpwmanagement.com

Dean, Manager
Buffalo Joe’s
Dean has been working at Buffalo Joe’s for 34 years since its opening, starting by flipping
burgers and eventually becoming manager. He was able to provide us key insight into the
philosophy of Buffalo Joe’s and why it’s been so successful. Additionally, he broke down the
wing-making process for us and gave us decent sales estimates. He also provided us with
information regarding Evanston health regulations. Having been in the market for so long, Dean
was extremely knowledgeable and helpful in framing the industry landscape. Dean makes
many of the everyday business decisions of Buffalo Joe’s, including choosing how many
pounds of wings to purchase. Interviewing Dean was incredibly interesting, because while he
definitely has never taken an Industrial Economics course, some of his business decisions line
up with the theory we studied in class. However, other business decisions seem to not be profit
maximizing, such as not trying to persuade customers to buy soda because “it rots your teeth.”

More importantly, Dean was incredibly nice, has a very affable character, and really was a
pleasure to talk to. Interestingly, Dean’s father is still Joe’s accountant. Dean also had several
hilarious remarks, including his tangent on Joe’s Miami club business in the 1970’s, and
interjections about the Keg shutting down and how Northwestern is changing. Dean also gave
51
Experts
Section 4: Appendix
us free wings, and we would really appreciate it if you reached out and thanked him for helping
us, because his insights proved to be invaluable. 

Contact: (847) 328-5525

Kelly, Manager
Domino’s
Kelly has been working at the Domino's in Evanston since it opened around a year and a half
ago. Prior to the location opening up on Foster, she worked at a different Domino's in the city
and was able to share some interesting comparisons between the two. She told us about how
pricing and advertising decisions aren't made by the managers of the Evanston store, but
rather by the owner who owns several franchises. Being situated away from downtown
Evanston, Kelly helped us see the tradeoffs of having the restaurant closer to where students
live but farther away from more foot traffic, as well as the advantages of being one of few
restaurants in the area to be open late. 

Contact: (847) 563-3030

52
Section 4: Appendix
Arlen’s Chicken
Buffalo Wild Wings
Wings Over Evanston*
*Wings Over Madison Prices Use

Numbers of
Wings in Order
Order Price Price Per Wing
10 $9 $0.90
20 $16 $0.80
30 $23 $0.77
10 $9 $0.90
Serving
Size
Number of
Wings
Price Price Per
Wing
Snack 7 $6.79 $0.97
Small 10 $11.99 $1.20
Medium 15 $16.99 $1.13
Large 20 $20.99 $1.05
Number of
Wings
Price Price Per Wing
10 $8.49 $0.85
15 $12.49 $0.83
25 $19.99 $0.80
60 $43.99 $0.73
53
Pricing Data
Section 4: Appendix
Chicken Shack
Buffalo Joe’s
Domino’s
Serving Size Number of
Wings
Price Price Per
Wing
Dinner Options 4 $7.36 $1.84
5 $8.43 $1.69
6 $9.23 $1.54
7 $10.25 $1.46
Additional w/ Dinner 1 $1.64 $1.64
Wing Buckets: 12 $17.70 $1.48
18 $25.92 $1.44
24 $35.38 $1.47
Serving
Size
Number of
Wings
Price Price Per
Wing
Single (1
pound) 10 $8.49 $0.85
Double
Order 20 $14.99 $0.75
Party Pan 70 $54.99 $0.79
Double
Party Pan 200 $95.99 $0.48
Number of
Wings
Price Price Per Wing
8 $6.99 $0.87
14 $9.99 $0.71
40 $28.99 $0.72
54
Section 4: Appendix
Allison, Jocelyn. "Buffalo Wild Wings Sues P&G Over 'Blazin' Trademark - Law360." Buffalo
Wild Wings Sues P&G Over 'Blazin' Trademark - Law360. Law360, 29 Apr. 2009. Web.
18 Mar. 2016.

Bhasin, Kim. "Boneless Chicken Wings Are Getting A Whole Lot More Popular." Business
Insider. Business Insider, Inc, 04 Feb. 2013. Web. 17 Mar. 2016.

Boghani, Priyanka. "USDA Sets New Limits on Salmonella in Your Chicken Wings." Frontline.
PBS, 4 Feb. 2016. Web. 17 Mar. 2016.

Brox, Denene. "Winging It." QSR Magazine. Journalistic Inc., Oct. 2012. Web. 17 Mar. 2016.

"Buffalo Wild Wings (BWLD)." Wikinvest. N.p., n.d. Web. 17 Mar. 2016.

"Chicken." How Chicken Is Made. MadeHow, n.d. Web. 18 Mar. 2016.

"Chickens Used for Food." PETA. PETA, n.d. Web. 18 Mar. 2016.

Doering, Christopher. "Ethanol Producers Criticize New EPA Fuel Standard." Des Moines
Register. USA Today Network, 30 Nov. 2015. Web. 18 Mar. 2016.

Frei, Brent T. "Boneless Wings Fly High." QSR. Journalistic Inc., n.d. Web. 17 Mar. 2016.

Gruley, Bryan. "The Secret Sauce." Bloomberg Business. Bloomberg, 6 Apr. 2015. Web. 17
Mar. 2016.

Max, Sarah. "Chicken-Wing Franchises Take Off." Entrepreneur. Entrepreneur Media, Inc., 07
Nov. 2011. Web. 17 Mar. 2016.

Maze, Jonathan. "Why Chicken Wing Prices Are Rising When They Should Be Dropping."
Nation's Restaurant News. Penton, 27 Mar. 2015. Web. 17 Mar. 2016.

Navarro, Alyssa. "Chipotle Bosses See Big Pay Cuts After Norovirus, E.coli Outbreaks." Tech
Times. N.p., 13 Mar. 2016. Web. 17 Mar. 2016.

Pagliery, Jose. "Big Business in Chicken Wings." CNNMoney. Cable News Network, 2 Aug.
2013. Web. 17 Mar. 2016.

Ray, Linda. "Fried Chicken Wings Nutrition." LIVESTRONG.COM. N.p., 23 Apr. 2015. Web. 17
Mar. 2016.

Sherk, James. "Higher Fast-Food Wages: Higher Fast-Food Prices." The Heritage Foundation.
N.p., n.d. Web. 17 Mar. 2016.

55
Works Cited
Section 4: Appendix
"Start A Business." Evanston Edge. City of Evanston, n.d. Web. 17 Mar. 2016.

Stearns, Denis. "Chipotle E. Coli O26 Outbreak Sickens 60 in 14 States." Food Poison Journal.
Marler Clark, LLP, 13 Mar. 2016. Web. 17 Mar. 2016.

Stromberg, Joseph. "A Brief History of the Buffalo Chicken Wing." Smithsonian.com.
Smithsonian Institution, 1 Feb. 2013. Web. 17 Mar. 2016.

Turbide, Dave. "Don't Play Chicken with Your Supply Chain." Seacoastonline.com.
Seacoastonline, 11 Feb. 2013. Web. 18 Mar. 2016.

"Vegetarianism In America." Vegetarian Times. N.p., n.d. Web. 17 Mar. 2016.

Wieczner, Jen. "Chipotle's 'Free Burrito' Coupons Are Making People Less Scared to Eat
There." Fortune. N.p., 04 Mar. 2016. Web. 17 Mar. 2016.

Williams, Geoff. "Over A Billion Chicken Wings Will Be Eaten During The Super Bowl And Other
Fun Food Factoids." Forbes: Food & Agriculture. Forbes Magazine, 30 Jan. 2016. Web.
17 Mar. 2016.	
  
56

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The History Of Restaurants
 

WINGS PROJECT

  • 1. Chicken Wings in Evanston Economics 349: Market Analysis Daniel Baker, Brendan Connelly, Rashad Laher, Sophie Truscott, Yuliya Yukhvidin
  • 2. Section 1: The Product Chicken Wings..................................................................................................................4 Substitutes........................................................................................................................6 Broad Market Trends........................................................................................................8 Supply Chain: Inputs, Costs & Production.....................................................................11 Regulatory Environment.................................................................................................16 Section 2: Local Sellers Product Differentiation....................................................................................................22 Location..........................................................................................................................25 Pricing.............................................................................................................................29 Capacity..........................................................................................................................32 Section 3: The Customers, a Market Model, and Entry Prospects Demand & Elasticity........................................................................................................36 Modeling Rivalry.............................................................................................................39 Market Shares................................................................................................................41 Prospects for Entry.........................................................................................................43 Section 4: Appendix Classroom Slide..............................................................................................................50 Experts............................................................................................................................51 Pricing Data....................................................................................................................53 Works Cited....................................................................................................................55
 Table of Contents
  • 4. Section 1: The Product In 1964, chicken wings were served for the first time at a diner in Buffalo, New York. For the next two decades, chicken wings remained relatively unknown; wings were generally considered a scrap part of the chicken and were most often used to make chicken stock. However, in the 1980s, chicken wings began to be added to menus nationally as enterprising restaurants realized that wings were incredibly inexpensive to produce and could therefore be sold with high profit margins. In 1982, the first major national wing chain, Buffalo Wild Wings, was founded. Chicken wings continued to gain popularity throughout the early 1990s and became associated with American football as the Buffalo Bills made four consecutive Super Bowl appearances. Today, chicken wings are a staple of American sports food, and have grown into a multiple billion dollar industry (Stromberg). “People are very passionate about their wings, about how they’re cooked, and what flavors they are,” says Matt Friedman, co-founder and CEO of Atlanta-based Wing Zone. Since wings first gained popularity, multiple variations of chicken wings have emerged, including the development of numerous sauces, rubs, and flavors, and the introduction of the increasingly popular boneless variety. Today, wings can be found in a variety of food establishments. Beyond restaurants that specialize in chicken wings, customers can enjoy chicken wings at various casual dining restaurants (such as Applebee’s, Chili’s, and Ruby Tuesday’s), traditional American restaurants, BBQ restaurants, Chinese restaurants, sports bars, and takeaway pizza restaurants (such as Domino’s and Papa John’s), to name a few. Given the rise in popularity of chicken wings over the past three decades and the relative ease and low cost of producing chicken wings, many restaurants have found it desirable to add chicken wings to their existing menus, thus contributing to the increasing availability of chicken 4 Chicken Wings Anchor Bar (Buffalo, NY): Home of the Original Buffalo Chicken Wings
  • 5. Section 1: The Product wings. Depending on the restaurant, wings can be enjoyed as a snack, appetizer, or entrée; some restaurants offer wings in multiple of these forms. Typical wings customers include bar-goers and sports party hosts. As mentioned previously, chicken wings are often associated with popular American spectator sports such as football and basketball, thus customer demand for wings spikes around major sporting events including the Super Bowl and the NCAA March Madness Tournament. In 2016, approximately 1.3 billion wings were consumed nationally on Super Bowl Sunday, a rough 190% increase from typical Sunday chicken wing sales (Williams). Seasonal demand for wings reaches its peak in the fall and winter months, when popular sports are in season, remains strong throughout the summer, when barbecues and cook-outs featuring chicken wings are common, and falls somewhat in the spring (Wikinvest). After their initial introduction to the public in upstate New York, buffalo wings established popularity amongst customers in the Northeastern United States but quickly expanded to the rest of the country; today, hungry customers can find chicken wings in restaurants and grocery stores all across the United States. In the Chicagoland area, there is an incredible range of restaurants and stores which sell chicken wings in various combinations of quality and presentation. In order to effectively analyze the chicken wing market in Evanston, we chose to study restaurants within walking distance from Northwestern University. Specifically, this range includes all establishments south of Lincoln Street, east of Ridge Avenue and Emerson Street, and north of Lake Street. This range excludes some well known lower-end wing franchises, such as the nearest KFC in Rogers Park, as well as the Buffalo Wild Wings located at Old Orchard Mall. Further, we chose to only study restaurants that specialize in the production of wings, as they directly compete with each other; thus we excluded pubs, sports bars and restaurants like Bar Louie and Bat 17 which only offer chicken wings as an appetizer, as well as store-bought wings. Lastly, while a variety of products can be classified as a chicken wings, including both bone-in and boneless wings, we chose to limit our focus to bone-in wings to provide the most accurate possible analysis of the market. Currently, the restaurants within the Evanston market offering our defined product are Buffalo Joe’s, Chicken Shack, and Domino’s. However, over the last 2 years several other Evanston restaurants with wings as a primary offering closed down. We chose to include these three restaurants—Arlen’s, Buffalo Wild Wings, and Wings Over Evanston—in our study, as their product offerings and shut-down decisions provide significant insights into the Evanston wings market and the viability of opening a new wings business in Evanston. 5
  • 6. Section 1: The Product Chicken Wing Entrée Chicken wings are served for a variety of different purposes and audiences, and have different substitutes based on the occasion. For our project, we focus mainly on bone-in wings served as a meal entrée at quick-service restaurants (as well as Buffalo Wild Wings, which is full-service yet otherwise offers a very similar product). Within this classification, the closest substitute for chicken wings is boneless wings served at quick service restaurants. The next closest substitutes are other less-healthy entrées served at quick-service restaurants, such as pizza from Blaze Pizza and burgers from Five Guys.  Beyond this “less-healthy quick-service” category, the next two closest substitutes are entrées offered at other fast casual restaurants (including Chipotle and Panera) and meals served at fast food restaurants (such as Burger King, KFC, and Taco Bell). These entrées from other fast casual restaurants, such as Chipotle and Panera, compete with chicken wing restaurants in terms of price and service, but tend to be slightly healthier or of higher quality. Entrées from fast food restaurants are of lower quality and price than wing entrées but are offered with similarly quick service. Finally, the two least similar but still viable substitutes for chicken wings entrées at quick service restaurants are meals served at restaurants (priced higher than quick-service wings) followed by home-cooked meals. Each of these last options could conceivably be eaten instead of quick-service wings, yet differ enough in quality and service to not directly price compete with wing entrées. 6 Substitutes
  • 7. Section 1: The Product Chicken Wing Appetizer Chicken wings are also often eaten as an appetizer or served as a buffet option at large social gatherings. In this wings-as-appetizer classification, the closest substitutes are other appetizers and finger foods offered at sports bars or catered, such as nachos, mozzarella sticks, and chicken fingers. In addition, frozen chicken wings, nuggets, and tenders sold at grocery stores are also close substitutes to bulk purchases of chicken wings. Finally, the grocery store versions of appetizers such as chips and salsa or the ingredients for nachos can also be considered substitutes for large orders of chicken wings. 7
  • 8. Section 1: The Product Over the last 10 years, the chicken wing market has grown into a multi-billion-dollar industry. From 2008 to 2013, the number of wings franchises grew by 4.1% a year and in 2015, the largest 20 chicken wing franchises surpassed 2,000 individual restaurants nationwide (Max). Buffalo Wild Wings, the largest wings chain in the country, currently operates more than 1200 stores nationally, a 600% increase in stores from 2003 when the company went public. Similarly, Wingstop, the second largest wings franchise, has grown from 90 stores in 2003 to over 800 stores today (Pagliany). Despite this rapid expansion amongst national wing chains, experts expect the number of wings restaurants to plateau in the next few years, as wings chains will soon be established in most major metropolitan and suburban areas across the country (Sheppard). National wing chains have seen steady revenue growth over the last 10 years as the number of their respective locations has increased, but profitability has contemporaneously declined as a result of increasing costs. Over the last five years, Buffalo Wild Wings’ revenues have increased by an average of 23% per year, primarily due to the opening of new locations each year. However, profit margins for individual wings restaurants have fallen on average, due to the increase price of bulk wings (Max). From 2013 to 2014, the cost per pound of chicken wings increased by 63%, from $1.17 per pound in March 2013 to $1.91 per pound in March 2015. In addition, the cost of wings is extremely volatile, as prices are much lower in the spring and summer than in the fall, coinciding with demand (Maze). Despite this recent steep cost increase, restaurants that primarily serve chicken wings have remained profitable, in part due to an increase in popularity of cheaper-to-produce boneless wings (discussed further below). While the majority of chicken farmers have moved towards raising larger birds—which are most profitable for farmers—wings restaurants have maintained their demand for the smallest wings possible to satisfy customer preferences. Thus, perhaps counterintuitively, the price of small- and mid-sized wings has eclipsed the price of less desirable larger wings, which further contributes to rising costs for wings restaurants (Maze). 8 Broad Market Trends
  • 9. Section 1: The Product The Rise of Boneless Wings Over the past 10 years, the conception of boneless wings has significantly changed the chicken wing market. Boneless wings are now incredibly popular: in 2013, boneless wings sales accounted for 81 percent of the 10.7 percent growth in total chicken wings sales and made up 14 percent of all chicken wings sales (Bhasin). Due to their shape and size, boneless wings’ breading holds sauces well, making boneless wings an ideal choice for customers who want maximum flavor with their chicken. Wing Zone CEO Matt Friedman told QSR Magazine, “What we found is that there were people who loved our sauces, but didn’t eat our traditional wings. So the boneless wing has given us another customer base” (Frei). According to Marie, the manager of Buffalo Wild Wings’s Village Crossing location, Buffalo Wild Wings encourages its servers to sell boneless wings since boneless wings have lower production costs and higher consumer prices than bone-in wings. In fact, Buffalo Wild Wings recently changed its national menu to show its boneless options to the left of bone-in options in the middle panel. This change was made in order to encourage the purchase of boneless wings, since Marie explained consumers tend to read paneled menus starting from the middle, from left to right within the panel. 9 Buffalo Wild Wings’s menu with middle black panel, with boneless wing options listed to the left (most visible) of traditional wing options to encourage customers to order the more profitable boneless wings.
  • 10. Section 1: The Product Growing Health Concerns Industry experts also cite growing consumer preferences for healthy options as a potential concern for the long term viability of the chicken wing industry (Ray). In the face of such health concerns, demand for chicken wings could very reasonably fall, since chicken are deep fried, and high in calories, cholesterol, and fat. Many fast food chains including McDonald’s and Burger King have responded to these concerns by adjusting their menus to include healthier, lower-calorie offerings while still maintaining their classic dishes. Chicken wings restaurants may elect to add similar items to their menus to maintain or even attract health-conscious customers, but if health concerns around chicken wings become too severe, some restaurants may reevaluate the profitability of chicken wings and remove the product from their menus altogether. 10 McDonald’s has added more healthy options to its menus as the chain has faced serious accusations about the unhealthiness of its food. Wings restaurants need to include healthy options to remain competitive.
  • 11. Section 1: The Product There are many different inputs necessary for producing chicken wings, with various associated costs, both fixed and variable, as illustrated in the above diagram. The primary component of chicken wings are the wings themselves. Therefore, we first examined the poultry industry in the United States. Chicken Chickens raised in order to be consumed, known as broilers, are raised on large production complexes and are bred for meatiness and quick weight growth. A small portion of these 11 Supply Chain
  • 12. Section 1: The Product broilers are designated to be breeder hens and live for around 45 weeks after which time they are slaughtered for inferior meat purposes such as dog food or soups. The rest of the chickens are raised until they are large enough to slaughter: the chicks take around 20 days to hatch, and a few days after hatching are taken to large grow-out houses where they are fed as much as possible for about six weeks, at which point they are ready to be slaughtered. Chicken feed is one of many inputs which is necessary for the production of chicken, and which affect’s the final price for chicken. Roughly 70% of chicken feed is corn based (with ~20% being soy and ~10% antibiotics and other ingredients), so the supply of chicken (or more specifically for our purposes, chicken wings), is sensitive to shocks in the national corn market (“Chicken”). In recent years, the corn market has been affected by increasing EPA ethanol requirements: the EPA has been steadily raising the mandatory amount of ethanol in gasoline, causing more corn to be shifted to energy production, leaving a decreased stock of corn for livestock. As a result, corn prices have increased substantially, causing the cost of raising chicken to increase, and thereby causing poultry prices to increase (Turbide). This resulting increased price of livestock feed, as well as many old cars not running well on biofuels, caused some to object to these higher ethanol requirements. However, many argue that this effect on food supply is minimal and that increasing ethanol production is good for corn producers and gives consumers more of a choice at the pump (Doering). Regardless, the supply chain for chicken wings is intertwined with a variety of unexpectedly connected markets. After reaching full size, the chickens are slaughtered, de-feathered and prepared for the distributor. Separate parts of the bird could be sold to the distributor or the entire chicken, depending on demand. Distributors strongly prefer to sell all parts of the chicken so none go to waste, although the breast and, recently, wings are most demanded. All of the meat usually ends up being processed in some way besides the feet, which are not considered edible in the United States (aside: though some suppliers may send chicken feet to Asia where they are considered a delicacy.) In the United States, around 9 billion chickens are slaughtered for meat every year. An obvious potential substitute of production for chickens is egg-laying. However, this alternative is clearly only available for hens and only around 305 million are currently used for this purpose in the US annually - a relatively small number compared to the number of birds used for their flesh (PETA). 12
  • 13. Section 1: The Product Variable Costs The largest variable cost in production are the wings themselves. The supply of wings and ensuing cost varies by individual restaurant: most restaurants have contracts with a particular supplier, especially national chains such as Buffalo Wild Wings and Domino’s. Some negotiate a fixed price for a given year in order to hedge possible volatile upward swings in prices; however, most firms that we interviewed paid a different price for each daily order of wings. As explained in the market trends section of our report, an average of daily prices for wings comes out to $1.80 per pound. Besides the cost of the wings themselves, there are many other variable costs that go into operating a wings restaurant and cooking wings. One important variable cost is the cost of sauces and seasonings for the wings. Buffalo sauce is primarily made from hot sauce, melted butter, vinegar, garlic, pepper, and a few other ingredients. The exact supply chain of how a firm obtains sauce and seasoning depends on whether they make their own in house or if they buy in bulk from a distributor. Buffalo Wild Wings sells bottles of their custom sauces and seasoning at $4.99 per 12 fluid ounce bottle online, as well as at their in-person stores. While this doesn’t likely reflect the true cost to Buffalo Wild Wings of producing their sauce, since they have likely marked it up a fair amount, the website does state that one bottle is good for around 75-100 wings, or 7.5-10 pounds of wings. They also sell seasoning for $4.99 per 4.1 ounce bottle which covers approximately 300 wings, or 30 pounds. From using these benchmarks and looking at a few wholesale vendors of wing sauce, where they sell a gallon of sauce for around $40 we’ve ascertained that the cost of sauce/seasoning for wings is roughly $0.45/pound of wings. Many firms have gone to lengths to try to protect their signature flavors. Buffalo Joe’s prides itself on having a secret recipe for its sauce which only the owner knows the dry ingredients for, (the manager knows the wet ingredients.) Buffalo Wild Wings sued Procter & Gamble in 2009 over the use of the world “blazin’” in one of their new flavors of Pringles since Buffalo Wild Wings has trademarked many of the names of their sauce flavors, which includes “Blazin Sauce” and they are also known for their Blazin’ Challenge where customers attempt to eat twelve “blazin” wings in under six minutes. While it can be tough to protect the recipe for the sauce itself, Buffalo Wild Wings instead focuses on going after companies who seemingly use BWW’s branding to promote themselves (Allison). 13
  • 14. Section 1: The Product Frank’s Hot Sauce has been able to market itself extremely successfully as the original secret ingredient for the first serving of buffalo wings at Anchor Bar in Buffalo, New York and is used in many homemade sauces. Another major variable cost in the production of wings is labor. Marie, the manager of Buffalo Wild Wings in Skokie, told us that roughly 14% of their daily costs goes to paying labor. Assuming a brand new firm would sell roughly 700 pounds of wings per week, or 100 pounds per day, as the firms with lower market shares like Domino’s and Chicken Shack do, we estimate that this would require an average total of four employees working at a time, accounting for both food production and delivery. Assuming the wage for these workers is a little higher than minimum wage, say $9 per hour, then for a firm that has employees working 12 hours (open 11:00 am to 10:00 pm with an extra hour for setting up/cleaning), the cost of labor per pound of wing of this new firm is roughly $4.30 per pound. While this is a high cost, we expect that eventually a firm that specializes in wings would be able to take up a higher market share and sell somewhere around 300 pounds of wings per day, which is still small relative to Buffalo Joe’s, and after hiring more employees in order to offset the additional demand, the long run variable cost of labor would be closer to $1.75 per pound of wings. There are also variable utility costs that go into the production and sale of wings such as electricity and water, but some others to account for include frying oil and gasoline. The costs of water, electricity, and oil are likely very minimal per pound of wings, a conservative estimate being around $0.15 per pound. Also if a firm has one delivery car using two tanks of gas per week, with a gas tank of roughly 12 gallons and gas costs of $2.25 per gallon, this would lead to a cost of $0.03 per pound of wings if roughly 2000 pounds of wings are being sold per week. When also taking into account the low packaging costs for delivery and dine-in customers, in total these costs would lead to a variable cost of approximately $0.25 per pound. When a new firm enters the market, they probably have to spend heavily on advertising in order to get a customer base, maybe somewhere around a quarter of the price they charge for a pound of wings if 25% of the customers are drawn in by the advertisement. However, since we are more concerned with the long run costs, marketing costs will end up being lowered because they won’t be able to draw more customers. They may still want a small amount of advertising however, we’ll say roughly $0.10 per pound of wings for our model. In summary, the total (long run) Variable Cost = $4.35/pound of wings ( $1.80 (wings) + $0.45 (preparation) + $1.75 (labor) + $0.25 (utility costs) + $0.10 (advertising)) 14
  • 15. Section 1: The Product Fixed Costs In addition to all the variable costs, there are many fixed costs also associated with running a wings restaurant. The largest fixed cost for firms in our market is rent. Given at least 2500 square feet needed for a restaurant, at a price of $30 per square foot for commercial rent in Evanston in a desirable location, the yearly fixed cost for rent is at least $75,000/year. In addition, Evanston requires food establishments under 5000 square feet to pay an annual fee of $617 to the health department, which should also be considered a fixed cost. A new business would also probably want to insure their property and possessions inside the restaurant in order to be protected from fire, theft, or other damages. They may buy liability insurance or worker’s compensation insurance. In total, these insurances could total the business around $5000 per year. The wings restaurant also has to be stocked with seating for customers, fryers for cooking wings, refrigerators/freezers for storing supplies, shelves, and other equipment. These costs are likely just incurred once when the restaurant opens, so they are thought of mostly as a sunk fixed cost. The firm may have some of these things previously from another venture or could be able to sell this equipment should the restaurant fold. Therefore, we won’t include these costs in our function directly, however, depreciation and maintenance of this equipment would likely cost around $5000 per year. If the restaurant offers delivery, we’ll regard delivery cars in the same way as the aforementioned equipment, that they can be resold and shouldn’t be thought in the same way as other fixed costs like rent. However, the restaurant would have to pay insurance yearly on the car and a $50 food delivery vehicle fee, so the yearly fixed cost of a car accounting for insurance, maintenance, and this fee is around $1500 per year. In total, the yearly fixed costs of running a wings restaurant would run in the ballpark of $90,000 per year for a conservative estimate. This brings our total cost function to being: C=90,000+4.35x where x is the number of pounds of wings produced. 15
  • 16. Section 1: The Product Federal Regulations Restaurants must adhere to regulations set by national agencies including the U.S. Food and Drug Administration (FDA) and U.S. Department of Agriculture (USDA), as well as local health departments. While the FDA establishes mandatory regulations for restaurants, local health departments are responsible for enforcing these regulations. In Evanston, establishments are inspected a certain number of times each year, as determined by their assessed risk category. Restaurants in Category 1, the highest risk designation, prepare fresh ingredients and generally have extensive menus, and are inspected three times a year; Buffalo Joe’s and Chicken Shack are both in this category (as were Buffalo Wild Wings, Arlen’s, and Wings Over Evanston.) Domino’s is considered a Category 2 business since its food is delivered frozen, thus Domino’s only receives an inspected twice a year. Food establishments can be shut down at any time due to pest infestation, loss of electricity, raw sewage, or fire. In addition, Illinois state law mandates that all employees who handle food must receive certificates in sanitary practices from the American National Standards Institute. Evanston New Business Process In Evanston, new restaurants must go through a fairly lengthy process in order to begin operations. First, all new businesses must complete a New Business Interest Form, and schedule a consultation with an Economic Development Specialist. If a business wishes to remodel or rebuild their space, it must apply for and receive a building permit from the Building, Health, and Fire offices; these building plans must adhere to local, state, and national zoning restrictions and regulations. In addition, restaurants must obtain a Food Establishment License from the City of Evanston to legally sell consumable goods. The price of these licenses vary based off of the category of risk as well as the physical size of the establishment. Finally, before beginning operations 16 Regulatory Environment
  • 17. Section 1: The Product restaurants must pass a final inspection by the Health Department. If a restaurant wishes to sell beer and wine, they must acquire a class D liquor license, which must be renewed annually. Food Safety: Salmonella As a food industry that involves raw meat, there are a number of regulations that wings restaurants must follow in order to sell USDA-approved wings. “Over the past seven years, USDA has put in place tighter and more strategic food safety measures than ever before for meat and poultry products,” (Boghani). The USDA believes that toughening restrictions on poultry will greatly reduce the danger of food-borne illnesses like Salmonella. Some of these regulations may impede profitability. From our interview with Marie at Buffalo Wild Wings, we learned that Buffalo Wild Wings is required to keep the same wing vendor in order to streamline accountability in the case that something goes wrong with the chicken. With rising wing prices, this makes it more difficult to balance wing prices since businesses cannot use their right to competition to pressure lower prices. 17
  • 18. 18 Chipotle: A Lesson in Food Safety Recent food poisoning outbreaks have highlighted the costs to restaurants associated with serving food that does not meet national food safety regulations. With a recent E. Coli outbreak in at least 14 states in late 2015, Chipotle scrambled to address public health concerns and minimize the impact of faltering consumer confidence on the company’s sales (Stearns). Tech Times reports that Chipotle saw fourth-quarter earnings of $68 million in 2015, a 44% decrease in sales from 2014 as a result of the food- borne illness. In an effort to salvage profits and save face for shareholders, Chipotle announced that it would suspend end-of-year bonuses for its executives for 2015 (Navarro, 2016). Furthermore, in February 2016, Chipotle held a national meeting to improve distribution and food preparation practices to improve its food safety and also to announce a massive to its restaurants. Chipotle subsequently ran a free burrito marketing campaign throughout the month of February. Chipotle acknowledged that this promotion would likely result in decreased revenues in the current quarter but would generate renewed confidence amongst customers that would payoff in the long run (Wieczner). Evidently, there can be enormous costs associated with serving food that does not meet food safety standards. Particularly for wings restaurants that deal with raw meat, the repercussions of skirting around health codes could have disastrous effects on profits. While powerful chain restaurants such as Chipotle may have the resources and customer loyalty to recover from a food-borne illness scandal, smaller, independent restaurants must be particularly careful to follow food standards and best practices for food preparation to avoid an expensive health scandal.
  • 20. Section 2: The Players 20 Buffalo Joe’s Open since: 1984 Known for: First wings shop in Evanston, only remaining “traditional wings joint” serving great standard wings in no- frills shop, beloved by townies Insights: While Northwestern students contribute to significant portion of customer base, sales are actually highest over summer breaks when local kids return home to Evanston. Relies on long-established reputation for serving quality food to maintain popularity and sales. Open since: 1990 Other popular items: Fried chicken, crinkle-cut fries, biscuits Known for: Delicious fried chicken, various meal combination options, catering, regularly listed as one of the best fried chicken restaurants in Chicago Insights: Make up for unexceptional interior and minimal customer service with excellent food. Many patrons and potential buyers may not be aware that the restaurant offers delivery. Chicken Shack Domino’s Open since: December 2014 Other popular items: Pizza, Cinna Stix Known for: Pizza takeaway and delivery, late night hours, poor management Insights: Late night hours, delivery option, and location on Foster Street make it a particularly desirable choice for Northwestern students living in the residential area west of campus. Wings sell well but many potential buyers may not be aware that Domino’s sells (and delivers) chicken wings.
  • 21. Section 2: The Players 21 Open: November 2015 - March 2016 (4 months) Reasons for closing*: Low projected annual revenue (approximately $700,000), lack of foot traffic on Noyes Street, new DMK concept (DMK was trying out a fried chicken model in this Evanston location -- may have been more inclined to shut down when the restaurant wasn’t immediately succeeding than a long-term restaurant would be) Known for: High-end fried chicken and milkshakes; offshoot of previous DMK Burger Bar (reputation for high quality and high prices). Insights: Spent money on big student advertising campaign (Golden Egg Hunt) and branding (i.e. logo and menu, interior decoration), but students complained about steep prices and small servings. High-end concept was interesting attempt to differentiate itself from other chicken/wings restaurants in Evanston. Ultimately closed due to location, low revenues, and perceived failure of new restaurant concept for DMK Restaurants. *learned this information from speaking briefly with Arlen’s employees on closing day (3/7/2016) Arlen’s Chicken Open: November 2009 - November 2014 (5 years) Reasons for closing: Lack of parking, departure of Northwestern students over summer breaks Known for: Wide variety of sauces & seasonings, sports bar atmosphere, full service restaurant with wings focus Insights: Worked to integrate itself within the Northwestern community by sponsoring Northwestern Athletics (notably hosting halftime events at Northwestern football games) and hosting weekly Dance Marathon Trivia events, but mass departure of Northwestern students over school holidays left the restaurant without a sustainable customer base. Location was unusual for Buffalo Wild Wings (most of its franchises are located in malls with large parking lots, major foot traffic, and many other comparable dining options), thus Buffalo Wild Wings decided that a location in Old Orchard Mall in Skokie would allow the chain to perform better in the Evanston/Skokie market. Buffalo Wild Wings Open: January 2011 - July 2015 (4.5 years) Reasons for closing: Not sure! Rumored to have failed health inspection. In doing our industry analysis, we noticed that Wings Over had many of the characteristics demanded in our Evanston market (including delivery, relatively low prices, numerous flavors), thus we cannot say with certainty why Wings Over closed. We guess that Wings Over’s closure was most likely due to its location (off the beaten track for many Northwestern students) or perhaps the restaurant’s revenues did not meet its corporate office’s performance expectations. Known for: No frills chain offering delivery Insights: Delivery model would seem to yield high sales for the restaurant, especially amongst Northwestern students, yet restaurant was not able to stay in business (for unknown reason). Wings Over Evanston
  • 22. Section 2: The Players Beyond the differences between firms shown in the above chart, firms in the chicken wing market differentiate themselves through the taste and quality of their product. These variations in taste arise from differing quality of chicken, preparation methods, and the provision of various flavors, sauces, and rubs. Flavor Varieties The most easily quantifiable difference between firms is the number and types of sauces they offer. Each firm we are studying offers at least four different types of sauces. Wings Over Evanston’s menu offers the most variety with 24 different sauces and rubs, and Buffalo Wild Comparison of Evanston Wings Restaurants Restaurant Nearest Intersection Weekly Hours Price per 10 wings Ownership Serves alcohol? Delivery? Wildcard Discount? Buffalo Joe's Clark & Sherman Daily: 11am-12am $8.49 Independent Beer & Wine No No Chicken Shack Ridge & Emerson Mon-Sat: 10am-12:30am Sun: 12pm-8pm $14.64 Independent No Yes Buy one chicken dinner, get second 15% off Domino's Foster & Maple Sun-Thurs: 10am-1am Fri-Sat: 10am-3am $8.74 Chain No Yes No Arlen's Chicken Noyes & Sherman [CLOSED] Sun-Thurs: 11am-9pm Fri-Sat: 11am-10pm $9.00 Independent No 3rd party 10% off Buffalo Wild Wings Maple & Clark [CLOSED] Sun: 11am-12am Mon-Thurs: 11am-1am Fri-Sat: 11am-2am $11.99 Chain Full Bar No 10% off food Wings Over Evanston Emerson & Ridge [CLOSED] Mon-Wed: 4pm-1am Thurs-Sun: 11am-1am $8.49 Chain No Yes 10% off 22 Product Differentiation
  • 23. Section 2: The Players Wings follows closely with 21 varieties. Arlen’s, Buffalo Joe’s, Chicken Shack, and Domino’s each offer ten or fewer flavors. This discrepancy amongst firms could be attributed to the menu focus and ownership of each establishment; Wings Over and Buffalo Wild Wings are the only national chicken wing specialty chains that we are studying, thus they may have more resources to develop and produce a wider array of flavored sauces. Only two of our firms, Buffalo Wild Wings and Wings Over Evanston, offer dry-rub seasoning. Dry-rub seasonings act as an alternative to traditional sauces; rather than cooking the wings in a liquid sauce, the fried chicken wing is coated with a powdered seasoning such as Old Bay. Dry-rubs are not nearly as popular as traditional wing sauces, however some customers do prefer them. The mere presence of these dry-rubs on a wings menu can indicate that a restaurant is dedicated to providing its customers with as many choices as possible. Intuitively, it seems that a wider selection of flavors would appeal to a larger consumer base and thus bring in more business for a firm. However, both national wings chains with many flavors, Buffalo Wild Wings and Wings Over Evanston, have recently exited the Evanston market. Furthermore, Evanston’s long-standing major player, Buffalo Joe’s, only offers four varieties of wings. The manager of Buffalo Joe’s prides himself on the simplicity of its menu and few flavor varieties; in the 34 years Buffalo Joe’s has been operating, very few changes have been made to the menu and store. He claims that this consistency contributes to customer loyalty, and is part of the reason why Buffalo Joe’s has so many long-term customers. While we would not say that Buffalo Wild Wings and Wings Over Evanston failed in the Evanston market as a result of their impressive flavor options, the success of Buffalo Joe’s’ simple menu challenges the association of wide flavor variety and market success. Advertising We also observed a varying level of interest in advertising from our firms. Even since leaving its downtown Evanston spot for the Old Orchard Mall, Buffalo Wild Wings continues to sponsor halftime events at Northwestern football and basketball games, presumably to maintain brand awareness amongst sports-going Northwestern students and Evanstonians. In its downtown Evanston location, Buffalo Wild Wings hosted more than 100 students each week for Dance Marathon-sponsored trivia events. Beyond benefitting from the obvious revenue surges from trivia-going customers, hosting trivia helped to keep Buffalo Wild Wings relevant and popular on campus. Additionally, Arlen’s Chicken hosted a Golden Egg Hunt competition for 23
  • 24. Section 2: The Players Northwestern students in anticipation of its grand opening to stimulate Arlen’s brand awareness and excitement on campus, which involved students searching around campus for hidden golden eggs and posting pictures of discovered eggs on Facebook. Such advertising efforts intend to communicate to Northwestern students and Evanston residents that these restaurants value their patronage and want to tailor their offerings to meet these customers’ needs. Conversely, Buffalo Joe’s and Chicken Shack, Evanston’s longest established chicken wing providers, hardly utilize advertising. In a humorous anecdote, the Buffalo Joe’s’ manager recalled how the restaurant distributed coupons many years ago but failed to provide any kind of limitations or expiration dates on the coupons and consequently lost a great deal of money on the promotion; since then, Buffalo Joe’s has not run any other promotions. In all likelihood, these restaurants’ aversion to marketing may speak less to the potential value of marketing for their restaurants than their respective managements’ apathy or aversion to expending time and resources on advertising efforts. It is important to note that three remaining firms (Chicken Shack, Buffalo Joe’s, and Domino’s) vary significantly, thus our current Evanston market for chicken wings features a great deal of product differentiation. Chicken Shack’s wings are breaded and served dry with a dipping sauce on the side, whereas Buffalo Joe’s and Domino’s serve traditional chicken wings (i.e. cooked in sauce or dry-rub seasoning). Domino’s primarily markets itself as a takeaway and delivery pizza restaurant, and while some customers may be aware that Domino’s sells chicken wings, we believe the majority of its customers do not come into Domino’s for its wings. Therefore, Buffalo Joe’s in the only remaining that customers would identify as a “traditional” chicken wing joint. 24 Arlen’s co-hosted this grand opening event with NU advertising student group F&F. Students who found a golden egg and posted a photo online received a free meal.
  • 25. Section 2: The Players 25 Location
  • 26. Section 2: The Players The restaurants we chose are scattered around the Evanston area, with Buffalo Wild Wings and Buffalo Joe’s in the downtown Evanston area, Chicken Shack and Wings Over Evanston in the Ridge & Emerson area, Domino’s on Foster Street, and Arlen’s on Noyes Street. In general, Downtown Evanston is the most ideal location of the group due to its heavy foot traffic and proximity to Northwestern’s campus. With that said, the downtown Evanston restaurants may have suffered from a lack of parking and competition with nearby restaurants, given downtown Evanston’s high saturation of comparable fast casual dining options. Arlen’s was situated on Noyes Street, which has recently been experiencing a retail rebirth and has relatively few competitors, especially at the dinner hour, but suffers from a lack of foot traffic. Domino’s’ location on Foster Street gives it somewhat of a monopoly on dining options within that residential area, especially for late-night diners, but similarly struggles from low foot traffic. Both situated around the Ridge & Emerson intersection, Wings Over Evanston and Chicken Shack both have modest parking lots but are out-of-the-way for Northwestern students and have extremely low foot traffic. Hours All of the restaurants we examined are open each day for lunch and dinner, with the exception of Wings Over Evanston, which was closed for lunch Monday through Wednesday. Arlen’s had the earliest evening hours, closing its doors at 9pm on weekdays and 10pm on weekends, while Dominoes closes at 3am on weekends Buffalo Wild Wings stayed open until 2am on weekends. The other restaurants closed around midnight or 1am on weekend nights. Our group noted that chicken wings are a popular late night snack for Northwestern students, thus we expected these restaurants to keep their doors open late into the night on weekends. While we found that a number of these restaurants did have later hours on weekend nights, we were surprised that more of these restaurants did not choose to stay open until 2am or 3am to cater more fully to the late night demand. Parking Marie, the manager of Buffalo Wild Wings in Skokie, spoke about the parking challenges for the store’s downtown Evanston location. While Buffalo Wild Wings was situated across the street from a parking lot and had a few street parking spots around its restaurant, Marie observed how customers regularly complained about a lack of parking, and she believes that many potential customers were discouraged from dining at Buffalo Wild Wings by the area’s 26
  • 27. Section 2: The Players lack of parking. Buffalo Wild Wings restaurants are more traditionally located in shopping malls with substantial parking lots, thus the chain may not have found the Evanston franchise’s street-corner location to align with its best practices for restaurant success. Marie described how the company’s decision to close the downtown Evanston location and subsequently open a franchise in Old Orchard Mall was largely motivated by the shopping center’s ample parking and existing restaurant market. There is a similar lack of parking in the other locations we’ve studied: shops Noyes Street and Foster Street survive off of only scarce street parking, Wings Over Evanston has a sizable parking lot but shares it with a handful of other shops in the same strip mall, and Chicken Shack has only a few parking spots outside its façade. While we certainly identify parking as a challenge for the majority of retailers in Evanston, we also notice that most Northwestern students—who make up a large portion of consumers in Evanston, particularly at restaurants serving chicken wings—do not have cars or do not rely on driving to get around Evanston. Thus while parking is absolutely a concern for Evanston restaurants, we believe that parking is one of many important considerations for a potential market entrant rather than a make-it-or-break-it factor. Interestingly, while we were able to identify the pros and cons of these various locations, we are unable to establish a strong correlation between a restaurant’s particular location and its success since the recent closures have each taken place in a different location (Buffalo Wild Wings in downtown Evanston, Arlen’s on Noyes Street, and Wings Over Evanston on Emerson Street). While we can certainly observe different location-related factors that affected these businesses (Buffalo Wild Wings struggled with downtown Evanston’s lack of parking and Arlen’s was hurt by Noyes Street’s lack of foot traffic), we cannot identify one ideal retail area in Evanston from the data. With that said, the recent influx of restaurants in the downtown Evanston area—including Blaze Pizza, 800 Degrees, and La Macchina—could indicate that potential restaurateurs have chosen downtown Evanston as the most ideal location for new restaurants. Delivery Of the six restaurants, Chicken Shack, Domino’s, and Wings Over Evanston offer delivery. We are particularly interested in how the upsurge of third-party delivery services such as Postmates and DoorDash have affected restaurants. Marie from Buffalo Wild Wings spoke about the challenges of delivery for chicken wings. Buffalo Wild Wings does not offer delivery 27
  • 28. Section 2: The Players to customers because of the difficulty in maintaining the temperature and freshness of chicken wings in delivery and the general risks associated with transporting meat to customers. Additionally, Marie spoke about how these delivery services can cause problems for the restaurant when customers call to complain about the third party delivery service (e.g. cold food, incorrect order, slow service). On the other hand, we noticed that Arlen’s partnered with DoorDash to offer a complimentary tater tots deal with any Arlen’s DoorDash delivery. Evidently, there is disagreement amongst these restaurants over the value of offering delivery versus relying on—or even encouraging—third-party delivery as well as the overall viability of transporting chicken wings to customers. We believe that delivery is especially relevant for this market since Northwestern students have a high demand for both chicken wings and food delivery. It seems to us that wings restaurants would profit greatly from offering delivery, but our conversation with Marie helped us better understand the drawbacks of both restaurant-provided and third-party delivery in this market. Modeling Location Competition The restaurants we examined vary greatly in a number of ways, from menu and product variety to price and service, thus while location is certainly an important differentiating factor, we don’t believe that a location-based economic model such as Hotelling or Salop fully captures the extent of competition amongst these restaurants. We believe that location varies in importance depending on the area: while Domino’s customers may not agonize over their choice to go to Domino’s over other restaurants since Domino’s is relatively distant from its competitors, the proximities of Buffalo Wild Wings and Buffalo Joe’s or Wings Over Evanston and Chicken Shack would have made location competition a more pressing concern for these restaurants. Thus between nearby restaurants, we could certainly use Hotelling to model their competition and ensuing efforts to differentiate their products. We found one aspect of the Salop model that we did not discuss in-depth in Econ 349 but could be very relevant in our analysis: customers decide between similar products within the circle but also have the option to choose an alternative product beyond the market. We believe this dilemma is especially useful in understanding the downtown Evanston market, since the presence of numerous comparable restaurants in the area means that downtown wings restaurants are not only competing amongst each other but also with a number of other nearby restaurants. 28
  • 29. Section 2: The Players The pricing and number of wings in meals sold varies across the restaurants in Evanston. All of the restaurants use a block pricing scheme, but the number of wings in each offering varies. Aside from Chicken Shack, all of the restaurants offer between two and four different choices for portion size, each with between seven and 40 wings per meal (see above chart). There is a fair amount of variation among the restaurants in the price per wings of the small meals, ranging from $0.85 (Buffalo Joe’s) to $1.46 (Chicken Shack). Presumably since the types of wings offered are different, the firms are competing both with quality and prices. Chicken Shack offers many combo meals and utilizes other fairly complex pricing schemes. Chicken Shack offers “wing buckets” which are similar in price and quantity to the offerings from other restaurants, but additionally sells meal combinations with 4, 5, 6, or 7 wings alongside fries and bread, with the option to add an additional wing for $1.64 (far greater the cost of producing one more wing). While we were unable to interview Chicken Shack about this pricing method, it appears to push customers who want more than 7 wings towards its 12 wing bucket, as the bucket costs two dollars less than getting 12 wings using a 7-piece meal with 5 additional wings. In addition, this price point could be explained by higher production costs for the breaded wings served at Chicken Shack, versus the cheaper cost of producing standard unbreaded wings. Alternatively, perhaps Chicken Shack prices its wings above market prices in order to push customers to purchase other, more profitable menu offerings, such as a Price for Small Order Price Per Wing Price Per 10 Wings Number of Wings Offered (excluding catering) Buffalo Joe’s $8.49 $0.85 $8.49 10/20 Chicken Shack $10.25 $1.46 $14.64 12/18/24 Domino’s $6.99 $0.87 $8.74 8/14/40 Arlen’s Chicken $9.00 $0.90 $9.00 10/20/30 Buffalo Wild Wings $11.99 $1.20 $11.99 7/10/15/20 Wings Over Evanston $8.49 $0.85 $8.49 10/15/25 29 Pricing
  • 30. Section 2: The Players “chicken dinner” that includes one leg, one breast, one thigh, and one wing for relatively the same price as 5 wings. Bertrand Model? To a certain extent, pricing competition can be modeled using a heterogeneous Bertrand model: demand for a given restaurant is affected both by its own prices as well as the prices of other restaurants (including ones that do not sell wings). Since these restaurants maintain stable prices and chain prices are determined by the corporation, the Bertrand model may not be regularly considered by existing restaurants, but Bertrand could be very useful for an entering firm to understand how to set its prices to maximize profit. For the chain restaurants (Buffalo Wild Wings, Domino’s, Wings Over), prices are uniform and follow the national prices. Therefore, individual franchises of these chain restaurants are unable to change their prices to respond to local demand or pricing trends. At Buffalo Joe’s and Chicken Shack, prices are set internally but do not often vary or change. Buffalo Joe’s reportedly changes its prices sporadically, on average less than once a year. While these restaurants have the autonomy to change prices unlike their nationally affiliated competitors, they most likely refrain from doing so in order to avoid upsetting loyal customers who are accustomed to the low prices. Interestingly, prices neither fluctuate with changes in wing costs nor demand. Perhaps a more profitable pricing model for Evanston wing restaurants might more regularly evaluate prices 30
  • 31. Section 2: The Players against variable input costs and seasonal demand. However, this practice would incur the cost of changing prices on menus, as well as the risk of alienating customers, as discussed above. Discounts and Promotions Many of the restaurants also compete with different deals, discounts, and loyalty programs. Buffalo Wild Wings and Arlen’s both offer Wildcard discounts. Dominoes and Wings Over have had each utilized various promotions involving wings to sell other menu items in a combination meal. Neither Buffalo Joe’s nor Chicken Shack offer promotions or discounts. This is most likely because both restaurants have been operating for a significant period of time, and have established a large amount of loyal customers. In addition, as both restaurants serve a large number of both Evanstonians as well as Northwestern students, there may not be much of an opportunity to price discriminate to attract more customers. Catering All of the restaurants also offer wings as an option on a catering menu, but some restaurants’ catering prices are not specified. Catering orders are relatively infrequent throughout the majority of the year, but skyrocket around certain holidays, such as the Super Bowl. Given the significant product differences between Buffalo Joe’s, Domino’s, and Chicken Shack, the three restaurants presumably don’t price compete much for catering orders. However, the large influx of catering orders on certain dates have important capacity implications as discussed below. 31
  • 32. Section 2: The Players Capacity in this market can be examined both in terms of seating available in restaurants, as well as the size and efficiency of kitchens. The former is much less interesting than the latter; while there is some variation in the amount of seating in the restaurants we examined (see table below for specifics), all three existing restaurants primarily serve take-out orders. According to the managers of both Buffalo Joe’s and Domino’s, a lack of seating availability rarely prevented additional sales for either restaurant, as customers are willing and able to place to-go orders if no seats are available. Additionally, delivery options provided both by the restaurants (i.e. Domino’s) or by third-party delivery services such as GrubHub and Postmates further reduce the importance of physical seating capacity restrictions. Presumably, seating capacity was much more important for Buffalo Wild Wings, which utilized a full service model. The more important capacity restriction for wings restaurants is the size and efficiency of their kitchens. Domino’s, Buffalo Joe’s, and Chicken Shack all have similarly sized kitchens, yet the speed of their service varies. From casually observing service in each of these three restaurants, we observed that Domino’s and Buffalo Joe’s both serve orders fairly quickly, while Chicken Shack takes much longer to serve an order of wings. The speed of service is closely related to the production process for each firm, as well as economies of scale in production. Domino’s wings are simply heated up from frozen and therefore require the shortest production time. Buffalo Joe’s is able to serve wings relatively quickly as it produces wings batches often throughout the day and in high volumes per batch. Chicken Shack presumably takes longer to cook wings because it serves a variety of different items and its wings are breaded, which is labor intensive. However, both Buffalo Joe’s and Chicken Shack often have long lines and longer wait times during peak hours, while Domino’s production time is consistent throughout the day. Seating Capacity Service Time for Wings Buffalo Joe’s 25 customers 8 minutes Chicken Shack 20 customers 16 minutes Domino’s 10 customers 6 minutes 32 Capacity
  • 33. Section 2: The Players Capacity restrictions in terms of kitchen size and efficiency are most important during high periods of demand. Production capacity is reached for these restaurants during peak surges in demand such as the Super Bowl and March Madness finals. Buffalo Joe’s sells 4000 pounds of wings on Super Bowl Sunday, and its kitchen is unable to accommodate more sales during this period. The bulk of these sales during surges are catering orders. Since most catering orders are made in advance, restaurants are able to plan in advance to produce more wings than they would ordinarily be able to produce. Economies of Scale and Scope As discussed earlier, there are economies of scale for chicken wing production in bulk. Stores get better deals on wings when they buy in bulk, and therefore are able to produce bulk- purchased wings at a lower cost. In addition, since wings are made to order, restaurants can more efficiently prepare ten orders at once, as opposed to producing ten orders individually. However, given the limited kitchen space (both production areas and ovens) after a certain point there are diminishing returns to increasing production. There are also some economies of scope in production. For restaurants that sell other fried food items along with chicken wings, the similar production processes allow firms to save money on cooking equipment and employee training. For national chains, the same vendors are often used to supply both wings and other ingredients, allowing stores to negotiate better prices. However, this effect does not exist for local restaurants, as different raw food vendors are used for wings and the ingredients for other foods, so no reduced prices can be reached by producing different goods. With that said, Buffalo Joe’s uses scraps from chicken wings to make soup, which is an example of economies of scope. Cournot Model? Some aspects of the decision making of firms in this market lend themselves to a Cournot model for competition: wings restaurants order a different quantity of wings to sell each morning, based off of predicted demand. Yet differentiated Cournot competition is not a good economic model for the industry, as the restaurants in our study rarely reach quantity capacity. Additionally, the wings restaurants in our study individually compete not only with each other, but also with all other restaurants in Evanston. Therefore, the quantity decisions of each individual restaurant likely don’t have much of an effect on any other store. This is observable in practice: notably, Wings Over and BWW shutting down didn’t have an apparent effect on the sales of Buffalo Joe’s. In speaking with the manager of Buffalo Joe’s, he 33
  • 34. Section 2: The Players repeatedly emphasized that he doesn’t base his business operations on what his competition is doing. He described how when a new wings vendor opens in Evanston, Buffalo Joe’s experiences a brief dip in sales as customers try out their newest wing option, but sales quickly return to normalcy after this brief tryout period. 34
  • 35. 
 35 Section 3: The Customers, a Market Model, & Entry Prospects
  • 36. Section 3: The Customers, a Market Model, & Entry Prospects Estimating the Evanston Demand We estimate that demand for Chicken Wings in Evanston is a linear function with giveaway quantity and choke price both varying seasonally. We estimated four different functions of demand, based off of the presence of Northwestern students, and the varying seasonal demand based off of sporting events. We assumed that the demand functions would be linear, as there are no measurable consumer preference differences which cause firms to price discriminate (which would yield a kinked demand function). In order to estimate a choke price, we polled 10 friends who regularly eat wings about the maximum price they would pay for a single order of wings. The highest price suggested was $14; however, as our sample was likely skewed considering that some wealthier residents in Evanston may be willing to pay more for a meal than college students, we adjusted our choke price up slightly to $20. Further, we assumed that this choke price would change depending on seasonal demand: on Sundays during footballs season, the maximum willingness to pay would likely be much larger than on a Tuesday in March. Buffalo Joe’s reportedly sells 33% more wings on the weekends during periods of high demands, then on weekdays when demand is low. Therefore, we adjusted our estimate of the choke price to equal $18 during periods of low demand, and $24 during periods of high demand. In order to estimate the giveaway quantity for Evanston, we obtained an estimate for the population of Evanston, and subtracted from that number the fractions of the population who don’t eat chicken wings for various reasons. The population of Evanston was measured at 75,570 in the 2013 census. We reduced from that number the fraction of Evanstonians who are vegetarian: 3.2% of Americans are vegetarian (Vegetarian Times), but as Evanston is a relatively progressive college town, we estimated that 5% of the citizens of Evanston are vegetarian. Additionally, we estimated that 15% of non-vegetarians in Evanston wouldn’t eat wings even at no cost, due to taste preferences, health, or other reasons. Therefore, there are 61,022 people in Evanston who would eat chicken wings at a given time. However, as the boundaries of Evanston span a much larger area than just the area directly bordering Northwestern, we assumed that an additional 30% of this estimate would never eat wings at our given establishments, given that there would be closer alternatives. Therefore, our 36 Demand & Elasticity
  • 37. Section 3: The Customers, a Market Model, & Entry Prospects approximate giveaway quantity is reduced to 42,000. Yet given that the census was taken when Northwestern was in session, we assumed that the giveaway quantity would be less in the summer, and estimated that quantity to be 38,000. Price Elasticity of Demand We expect the demand for the wing market to be price elastic, as we predict consumers are relatively sensitive to increases in wing prices. We found the average PED for fast food to be -0.9 (Sherk) and from this we estimate that the Evanston market for wings would have an average PED of -1.2. This is mainly because the Evanston food market is extremely saturated, thus we predict if wing prices were to rise, customers would be more likely to eat at another of the many substitute restaurants. Furthermore, the Evanston consumer base comprises of many students, who are known to be frugal and relatively sensitive to increases in prices. We do acknowledge that this elasticity would likely fluctuate seasonally; in particular, during football season we predict that consumers are less sensitive to wing prices as wings are often viewed as an integral part of game viewing. Income Elasticity of Demand While most fast foods are considered to be inferior goods—meaning that an individual’s demand for the good decreases as his income increases—we believe that chicken wings are normal goods—for which an individual’s demand increases as his income increases—since chicken wings are a niche product that are regularly consumed by people of varying incomes. 37
  • 38. Section 3: The Customers, a Market Model, & Entry Prospects With that said, we believe there is a certain threshold for income elasticity of wings. For poorer customers, an increase in income could very well lead to an increase demand for wings, which indicates a higher income elasticity of demand for this group of customers; for this group, we estimate an IED of 1.5, meaning that a 10% increase in income would yield a 15% increase in wings demanded. Conversely, wealthier customers likely would not experience significant changes in demand for wings with income changes. For wealthier customers, we estimate an IED of 0.3, meaning that wealthy customers’ demand for wings is barely increases following an increase in income. Advertising Elasticity of Demand Advertising elasticity of demand measures the impact of a change in advertising on market demand. We know that Buffalo Joe’s and Chicken Shack utilize little-to-no advertising, thus Buffalo Joe’s and Chicken Shack both estimate their own AED to be close to 0. In other words, for Buffalo Joe’s and Chicken Shack, adding any kind of advertising efforts to their business model would have no significant effect on demand for their products. Conversely, we’ve seen firms such as Arlen’s and Buffalo Wild Wings rely heavily on advertising campaigns to establish and maintain their respective customer bases. We believe that the efficacy of a particular advertising campaign varies depending on how established a firm is within the market. For new firms, AED would be high (AED = 5) as any advertising efforts would be very impactful in bringing brand awareness to the firm. However, as the firm becomes more well-known within the community, returns to advertising would diminish and could, as the lack of advertising from Buffalo Joe’s and Chicken Shack would suggest, eventually disappear altogether (AED = 0). It is also important to note here that national wings chains, such as Buffalo Wild Wings and Wingstop, benefit from their chains’ national advertising campaigns. For the purposes of understanding AED within the Evanston market, we are defining a firm’s advertising as efforts made by the individual firm to market specifically to the Evanston market. 38
  • 39. Section 3: The Customers, a Market Model, & Entry Prospects In our estimated model, profits of firms depend on their own prices, their competitors’ prices, and seasonal demand for wings which varies depending on the presence of Northwestern students and major sporting events. We believed that a heterogeneous Bertrand model best describes wings competition, because the quantity of wings sold depends on a firm’s prices and the prices of competitors, as well as the quality of the wings offered. In addition, in our estimated inverse demand function the giveaway quantity varies based on whether NU 39 Modeling Rivalry
  • 40. Section 3: The Customers, a Market Model, & Entry Prospects students are on campus, and also if there are major sporting events, and if it’s a weekend, all of which cause more wing demand to rise. The latter also affects the costs of wings, which restaurants purchase daily, and the price of which fluctuates based off of daily demand. Overall, we believe that a profit maximizing firm should set its price in order to maximize profit. However, none of our individual firms studied behaved exactly in this way: local haunts such as Buffalo Joe’s and Chicken Shack do not change their prices in an effort to maintain their customer base and protect their reputation, while national chains are forced to adhere to uniform corporate menu prices. While we believe that this model is interesting from the perspective of understanding the decisions made by a general firm, it is not entirely useful as a tool for a prospective entrant, as demand is extremely dependent on quality and reputation. 40
  • 41. Section 3: The Customers, a Market Model, & Entry Prospects To estimate the relative market shares of each of our remaining wings restaurants, we reached out to the restaurants to ask about the approximate quantity of wings they each sell per week. The Buffalo Joe’s manager estimated the store sells around 1500 pounds of chicken wings per day (or 10,500 pounds per week). The Domino’s manager estimated her store sells around 700 pounds of wings per week. We were unable to get a sales volume estimate from Chicken Shack, but given the similarities in menu, product variety, revenues, and popularity of wings between Domino’s and Chicken Shack, we estimate the Chicken Shack also sells around 700 pounds of chicken wings per week, as well. Additionally, we wanted to include other relevant wings sellers that fall within our market limits: Bat 17, Bar Louie, and Clarke’s. We spoke with a waiter at Bat 17 who estimated that the restaurants moves around 600 pounds of chicken wings each week. We estimate that Bar Louie sells approximately the same amount of chicken wings per week, given what we know about the high popularity of wings at Bar Louie. Similarly, we estimate Clarke’s sells about 50% of the wings Bat 17 does (or 300 pounds per week), after a Clarke’s waiter mentioned that Clarke’s wings offerings are not particularly popular amongst customers. The following chart lays out each restaurant’s pounds of chicken wings sold per week, which we used to calculate respective market shares. Pounds of wings sold per week Evanston Market Share Buffalo Joe’s 10500 78.36% Chicken Shack 700 5.22% Domino’s 700 5.22% Bat 17 600 4.48% Bar Louie 600 4.48% Clarke’s 300 2.24% TOTAL 13400 100% 41 Market Shares
  • 42. Section 3: The Customers, a Market Model, & Entry Prospects We chose to use a pie chart to visually represent the shares within our market. Evidently, based on its weekly sales volume, Buffalo Joe’s sells the vast majority of wings in this market. It is important to note that Buffalo Joe’s is the only restaurant listed that specializes in chicken wings; for each of the other restaurants, chicken wings are a secondary, albeit often popular, menu item. 42 Evanston Wings Market Shares 11% 5% 5% 78% Buffalo Joe's Chicken Shack Domino's Wings sold as appetizers
  • 43. Section 3: The Customers, a Market Model, & Entry Prospects Given our understanding of the current wings market in Evanston, new entrants primarily focused on selling wings would have to overcome a variety of obstacles in order to be profitable in the long run. Market Trends First and foremost, the overall longterm viability of wings restaurants is questionable given current health and cost trends. As discussed in the broad market trends section of our report, while prominent wings franchises are currently profitable and wings remain an extremely popular food, this profitability has declined over the past 10 years as the cost of wings has risen substantially. In fact, Buffalo Wild Wings maintains profits by utilizing a business model where it attracts customers with its wing offerings, but pushes customers towards buying its products with higher profit margins including boneless wings, sodas, and salads. Additionally, as consumers continue to become more health conscious, the longterm viability of a business focused on selling wings is somewhat questionable. Market trends imply that in order to be profitable an entering firm must either reach high levels of volume, or offer more profitable menu choices than bone-in wings. Evanston Market Within the Evanston market, Buffalo Joe’s massive market share is a huge obstacle to entry. By our estimates, Buffalo Joe’s captures roughly 80% of the wings market in Evanston by offering a competitive price and product and by relying on a strong reputation developed over thirty years. Buffalo Joe’s also has a major competitive advantage with an extremely low lease for its prime downtown Evanston location. The owner, Joe, has a longstanding relationship with the landowner, allowing him to pay “pennies on the dollar” for his lease. This cost advantage allows Buffalo Joe’s to price its offerings lower than the rest of the market. Given the combination of this cost advantage and Buffalo Joe’s reputation of selling high quality wings, it would be nearly impossible for a new entrant to compete with Buffalo Joe’s on price and quality alone. 43 Prospects for Entry
  • 44. Section 3: The Customers, a Market Model, & Entry Prospects Therefore, in order for a new entrant to be successful, it would need to differentiate itself by offering a service which Buffalo Joe’s doesn’t, force Buffalo Joe’s out of business, or capturing a share of the market which doesn’t directly compete with Buffalo Joe’s. Seasonal Demand Our estimations of the demand for chicken wings in Evanston has important implications for a firm considering entry. A new firm may have trouble attracting enough customers when Northwestern isn’t in session, as discussed earlier. Existing firms are able to remain profitable in the summer by monopolizing non-Northwestern customers; our analysis revealed that a large percentage of Buffalo Joe’s and Chicken Shack’s customers are not Northwestern students, thereby maintaining profits year round. While we doubt a new entrant would be able to capture many of these customers who have well-established wings preferences, a new firm could consider re-focusing their operations in the summer to sell a more profitable item to Evanstonians. However, this strategy would entail a large cost associated with switching specialization twice a year, and would most likely not be profitable. Product Differentiation There are several ways in which a new firm could potentially differentiate its product to capture market share. First, a business could consider offering a wider variety of sauces than currently are offered by existing firms. However, as the two firms offering the most sauce variety recently exited the market, this alone is not a viable strategy for market success. While a business could easily offer a lower quality than Buffalo Joe’s (simply by burning all their wings, for example), given our understanding of the costs associated with operating a wings business, it would be impossible to produce wings at a lower cost than Buffalo Joe’s, and thus impossible to offer wings at a lower price while still making a profit. Alternatively, a market entrant could offer higher quality wings at a higher price, which would allow a new firm to have a much higher profit margin on wings and to not directly compete with Buffalo Joe’s. Instead, this new business would likely compete with slightly more upscale Evanston dining options, such as Lyfe Kitchen. However, marketing wings as an upscale item might not be profitable, especially considering wealthier customers are often more health conscious and are willing to pay a premium for healthier items (which wings are 44
  • 45. Section 3: The Customers, a Market Model, & Entry Prospects certainly not). Arlen’s recently attempted to fill this niche, and after four months decided to shut down its operations. While Arlen’s’ decision to close largely reflected its unfavorable location, Arlen’s may have simply been offering a combination of quality and price for which there was not sufficient demand. It remains unclear if a firm would be able to successfully offer and market a higher quality chicken wing at a higher price perhaps in a different location than Arlen’. There are certainly drawbacks to either pricing option, but a higher-priced, higher- quality wing would still likely fare better than a wing in direct price competition with Buffalo Joe’s. Product Differentiation A new wings entrant could attempt to drive Buffalo Joe’s out of business by utilizing a predatory pricing scheme, in the hopes of driving Buffalo Joe’s out of business and then acquiring its former customers. However, a predatory pricing scheme would most likely fail for several reasons. First, Buffalo Joe’s has a very loyal customer base and the entrant’s prices would have to be extremely low for an extended period of time to discourage these customers from returning to Buffalo Joe’s. Second, given the huge number of customers in Evanston who purchase meals each day (as shown by the giveaway quantity), any extreme predatory pricing scheme would attract business away from not only Buffalo Joe’s, but also other Evanston restaurants. Due to capacity constraints regarding kitchen size, it would likely be impossible to accommodate the consequential influx of customers from setting such a low price. Finally, the owner of Buffalo Joe’s not only has a very diverse business portfolio (strangely enough, including several clubs in Miami, according to the Buffalo Joe’s manager), but also has a personal connection to the Buffalo Joe’s Evanston restaurant. It is unlikely that he would be willing to quickly close Buffalo Joe’s even if operating at a loss, and he has the financial resources to sustain Buffalo Joe’s for a very extended period of time. Therefore, our analysis indicates that a new firm would be unwise to utilize a predatory pricing scheme. Advertising Given the extremely high market share of Buffalo Joe’s, and the high level of saturation in the Evanston food market in general, chicken wing entrants to the Evanston market would need to launch an expansive advertising campaign. Based on our analysis of advertising elasticity of demand, we would recommend that this campaign be sudden and short, in order to attract a burst of initial customers, some of whom would ideally prefer the newly offered product to its 45
  • 46. Section 3: The Customers, a Market Model, & Entry Prospects wing competitors. Recent entrants to the Evanston market have utilized heavily publicized initial advertising campaigns with varying degrees of success. Notably, Blaze Pizza launched their Evanston restaurant with a free pizza giveaway, which it announced and heavily promoted through social media. This campaign was certainly successful, as Blaze Pizza has since experienced sustained success in the Evanston restaurant market. However, this sustained success certainly is also related to the desirable and unique product which Blaze sells; Blaze was the first-to-market of create-your-own high-end pizza chains. Arlen’s recently launched with a similarly high-profile advertising campaign, which included a Golden Egg Hunt intended to reach Northwestern students through social media. Arlen’s campaign seemed to be fairly successful, causing an initial surge of business. However, as Arlen’s recently closed, a successful initial advertising campaign is evidently necessary but not sufficient for sustained success. Discounts and Promotions Similarly, while a new firm should definitely consider using discounts and promotions, these schemes alone are unlikely to guarantee sustained market success for an entering wings restaurant. As discussed earlier, discounts and promotions are unlikely to attract Evanston residents away from established firms like Buffalo Joe’s and Chicken Shack. Therefore, the most successful discounts and promotions would target Northwestern students, whose preferences are more malleable and who perhaps have a lower willingness-to-pay—firms could price discriminate with a Wildcard discount. However, all three firms that recently exited the Evanston market offered a Wildcard discount, which evidently does not sufficiently attract Northwestern students’ business. Of the three wings firms currently in operation, only Domino’s successfully employs promotions. Domino’s offers discounts during low periods of demand (i.e. Tuesday nights), as well as deals which bundle their high profit margin items with other offerings (i.e. soda and pizza combos). A new entrant would be advised to offer deals and promotions similar to Domino’s’ tactics. Services In order to best compete in the Evanston market, a new firm could attempt to differentiate itself by offering a different service than the market leader, Buffalo Joe’s. First, as Buffalo Joe’s does not offer delivery, a new firm could attempt to acquire market share by providing a food delivery service. From speaking with Northwestern students, we students have a high demand for wings delivery, but we are concerned that delivery might not be a successful strategy for a number of reasons. First, Wings Over Evanston, which specialized in the delivery of wings, recently exited the market. While the specific reason behind its departure remains uncertain, 46
  • 47. Section 3: The Customers, a Market Model, & Entry Prospects presumably it was not operating at a profit despite a successful delivery service. In addition, the advent of Domino’s’ wings delivery option poses a serious threat for any entrant. Given Domino’s reported increased focus on wings, low wings price point, and established brand, it would be difficult for a new wings firm to compete. Additionally, devoting restaurant space to a staging area for delivery and purchasing the necessary infrastructure required for delivery (i.e. car, driver, insurance, etc.) is costly. Despite the obvious demand for delivery, Buffalo Joe’s chooses not to deliver wings because its would have to either sacrifice kitchen space or seating to do so. Finally, the popularity of Postmates and similar services further condemns focusing on delivery as an inferior strategy, as a new entrant would also be competing with existing restaurants who do not offer delivery but benefit from these third-party delivery services. A new entrant could also consider using a full-service restaurant model, as no current wings firms currently operating in Evanston are full service. However, as discussed earlier in the context of Buffalo Wild Wings decision to shut down, this approach has various drawbacks. In short, the combination of a lack of parking in downtown Evanston and competition from other restaurants which offer chicken wings as appetizers cause including full-service to not be a beneficial strategy. Location The location decision of a new entrant is extremely important, and has various implications regarding many other business decisions. Due to the long and expensive process of building a new restaurant in Evanston as described earlier, a new entrant would likely lease a store. There are two distinct areas within walking distance from Northwestern’s campus with different advantages and disadvantages which a firm could consider locating: • Downtown Evanston: A location in downtown Evanston has one huge benefit: the large amount of foot traffic ensures that there are many customers willing to travel to a restaurant located here. Since individual wing orders are not highly profitable, selling a large quantity of orders is imperative to success. However, there are also several disadvantages to a downtown Evanston location. First, as the location is desirable for many different stores, rent is extremely high. In addition, there are many other restaurants in downtown Evanston competing for customers. Moreover, market dominator Buffalo Joe’s is located in downtown Evanston, yet is able to offer low prices due to it’s low lease. Therefore, it would be very difficult for a traditional wing enterprise to be successful if located in downtown Evanston. 47
  • 48. Section 3: The Customers, a Market Model, & Entry Prospects • Noyes Street: New entrants could also choose to operate on Noyes Street. While Noyes Street has much less foot traffic than downtown Evanston, leases are also much less expensive. In addition, there are not many other restaurants on Noyes Street, and this location is still very close to the large potential customer base on Northwestern’s campus. However, Noyes Street may not be a sustainable location for a new wings firm, as demonstrated by the recent closures of many Noyes Street restaurants, including Arlen’s. Furthermore, an Arlen’s employee we interviewed briefly cited “not enough foot traffic” as its reason for closing operations. Evidently, while Noyes Street may be a have some advantages over downtown Evanston, it still might not be able to support a new wings establishment. Neither location within our market seems suitable for a new wing restaurant to be successful. Based on our comprehensive analysis, it seems that Arlen’s was best positioned to be successful in this Evanston market. Unfortunately, Arlen’s shut down operations one day before we were scheduled to interview them. Without further research, based on our analysis of the current Evanston market, and after considering various different business strategies, we conclude that we would not recommend entry into the Evanston market for any restaurant emphasizing the sale of traditional chicken wings. While we would not currently recommend opening a traditional wings restaurant in Evanston, after examining the market we determined that several creative interpretations of wings restaurants could be viable. Most notably, we believe that in the future a food truck specializing in chicken wings could be extremely profitable. A food truck would be able to serve the seasonal demand of Northwestern students the majority of the year, and then re-locate or temporarily close during the summer. Additionally, a food truck does not require an expensive Evanston lease to operate, and can be located closer to students than any existing stationary wing restaurant. Unfortunately, Evanston currently requires food trucks to be tied to an existing brick-and-mortar Evanston restaurant, but Evanston is considering lifting this restriction later this year. 48
  • 51. Section 4: Appendix Marie, Manager Buffalo Wild Wings Marie provided us with valuable information regarding why Buffalo Wild Wings in downtown Evanston closed. She cited parking and departure of Northwestern students over school breaks as the biggest challenges for this location. Marie also explained the benefits of the franchise model; most notably, Buffalo Wild Wings franchises benefit from national advertising, thus franchises have to do only minimal local advertising themselves. She also explained how Buffalo Wild Wings stores often operate with higher costs than competitors because it must meet its corporate office’s high health standards. Contact: bww3169@kpwmanagement.com Dean, Manager Buffalo Joe’s Dean has been working at Buffalo Joe’s for 34 years since its opening, starting by flipping burgers and eventually becoming manager. He was able to provide us key insight into the philosophy of Buffalo Joe’s and why it’s been so successful. Additionally, he broke down the wing-making process for us and gave us decent sales estimates. He also provided us with information regarding Evanston health regulations. Having been in the market for so long, Dean was extremely knowledgeable and helpful in framing the industry landscape. Dean makes many of the everyday business decisions of Buffalo Joe’s, including choosing how many pounds of wings to purchase. Interviewing Dean was incredibly interesting, because while he definitely has never taken an Industrial Economics course, some of his business decisions line up with the theory we studied in class. However, other business decisions seem to not be profit maximizing, such as not trying to persuade customers to buy soda because “it rots your teeth.” More importantly, Dean was incredibly nice, has a very affable character, and really was a pleasure to talk to. Interestingly, Dean’s father is still Joe’s accountant. Dean also had several hilarious remarks, including his tangent on Joe’s Miami club business in the 1970’s, and interjections about the Keg shutting down and how Northwestern is changing. Dean also gave 51 Experts
  • 52. Section 4: Appendix us free wings, and we would really appreciate it if you reached out and thanked him for helping us, because his insights proved to be invaluable. Contact: (847) 328-5525 Kelly, Manager Domino’s Kelly has been working at the Domino's in Evanston since it opened around a year and a half ago. Prior to the location opening up on Foster, she worked at a different Domino's in the city and was able to share some interesting comparisons between the two. She told us about how pricing and advertising decisions aren't made by the managers of the Evanston store, but rather by the owner who owns several franchises. Being situated away from downtown Evanston, Kelly helped us see the tradeoffs of having the restaurant closer to where students live but farther away from more foot traffic, as well as the advantages of being one of few restaurants in the area to be open late. Contact: (847) 563-3030 52
  • 53. Section 4: Appendix Arlen’s Chicken Buffalo Wild Wings Wings Over Evanston* *Wings Over Madison Prices Use Numbers of Wings in Order Order Price Price Per Wing 10 $9 $0.90 20 $16 $0.80 30 $23 $0.77 10 $9 $0.90 Serving Size Number of Wings Price Price Per Wing Snack 7 $6.79 $0.97 Small 10 $11.99 $1.20 Medium 15 $16.99 $1.13 Large 20 $20.99 $1.05 Number of Wings Price Price Per Wing 10 $8.49 $0.85 15 $12.49 $0.83 25 $19.99 $0.80 60 $43.99 $0.73 53 Pricing Data
  • 54. Section 4: Appendix Chicken Shack Buffalo Joe’s Domino’s Serving Size Number of Wings Price Price Per Wing Dinner Options 4 $7.36 $1.84 5 $8.43 $1.69 6 $9.23 $1.54 7 $10.25 $1.46 Additional w/ Dinner 1 $1.64 $1.64 Wing Buckets: 12 $17.70 $1.48 18 $25.92 $1.44 24 $35.38 $1.47 Serving Size Number of Wings Price Price Per Wing Single (1 pound) 10 $8.49 $0.85 Double Order 20 $14.99 $0.75 Party Pan 70 $54.99 $0.79 Double Party Pan 200 $95.99 $0.48 Number of Wings Price Price Per Wing 8 $6.99 $0.87 14 $9.99 $0.71 40 $28.99 $0.72 54
  • 55. Section 4: Appendix Allison, Jocelyn. "Buffalo Wild Wings Sues P&G Over 'Blazin' Trademark - Law360." Buffalo Wild Wings Sues P&G Over 'Blazin' Trademark - Law360. Law360, 29 Apr. 2009. Web. 18 Mar. 2016. Bhasin, Kim. "Boneless Chicken Wings Are Getting A Whole Lot More Popular." Business Insider. Business Insider, Inc, 04 Feb. 2013. Web. 17 Mar. 2016. Boghani, Priyanka. "USDA Sets New Limits on Salmonella in Your Chicken Wings." Frontline. PBS, 4 Feb. 2016. Web. 17 Mar. 2016. Brox, Denene. "Winging It." QSR Magazine. Journalistic Inc., Oct. 2012. Web. 17 Mar. 2016. "Buffalo Wild Wings (BWLD)." Wikinvest. N.p., n.d. Web. 17 Mar. 2016. "Chicken." How Chicken Is Made. MadeHow, n.d. Web. 18 Mar. 2016. "Chickens Used for Food." PETA. PETA, n.d. Web. 18 Mar. 2016. Doering, Christopher. "Ethanol Producers Criticize New EPA Fuel Standard." Des Moines Register. USA Today Network, 30 Nov. 2015. Web. 18 Mar. 2016. Frei, Brent T. "Boneless Wings Fly High." QSR. Journalistic Inc., n.d. Web. 17 Mar. 2016. Gruley, Bryan. "The Secret Sauce." Bloomberg Business. Bloomberg, 6 Apr. 2015. Web. 17 Mar. 2016. Max, Sarah. "Chicken-Wing Franchises Take Off." Entrepreneur. Entrepreneur Media, Inc., 07 Nov. 2011. Web. 17 Mar. 2016. Maze, Jonathan. "Why Chicken Wing Prices Are Rising When They Should Be Dropping." Nation's Restaurant News. Penton, 27 Mar. 2015. Web. 17 Mar. 2016. Navarro, Alyssa. "Chipotle Bosses See Big Pay Cuts After Norovirus, E.coli Outbreaks." Tech Times. N.p., 13 Mar. 2016. Web. 17 Mar. 2016. Pagliery, Jose. "Big Business in Chicken Wings." CNNMoney. Cable News Network, 2 Aug. 2013. Web. 17 Mar. 2016. Ray, Linda. "Fried Chicken Wings Nutrition." LIVESTRONG.COM. N.p., 23 Apr. 2015. Web. 17 Mar. 2016. Sherk, James. "Higher Fast-Food Wages: Higher Fast-Food Prices." The Heritage Foundation. N.p., n.d. Web. 17 Mar. 2016. 55 Works Cited
  • 56. Section 4: Appendix "Start A Business." Evanston Edge. City of Evanston, n.d. Web. 17 Mar. 2016. Stearns, Denis. "Chipotle E. Coli O26 Outbreak Sickens 60 in 14 States." Food Poison Journal. Marler Clark, LLP, 13 Mar. 2016. Web. 17 Mar. 2016. Stromberg, Joseph. "A Brief History of the Buffalo Chicken Wing." Smithsonian.com. Smithsonian Institution, 1 Feb. 2013. Web. 17 Mar. 2016. Turbide, Dave. "Don't Play Chicken with Your Supply Chain." Seacoastonline.com. Seacoastonline, 11 Feb. 2013. Web. 18 Mar. 2016. "Vegetarianism In America." Vegetarian Times. N.p., n.d. Web. 17 Mar. 2016. Wieczner, Jen. "Chipotle's 'Free Burrito' Coupons Are Making People Less Scared to Eat There." Fortune. N.p., 04 Mar. 2016. Web. 17 Mar. 2016. Williams, Geoff. "Over A Billion Chicken Wings Will Be Eaten During The Super Bowl And Other Fun Food Factoids." Forbes: Food & Agriculture. Forbes Magazine, 30 Jan. 2016. Web. 17 Mar. 2016.   56