Tyson Begins $48 Million Poultry Production Expansion as Chicken Demand Soars

The “chicken sandwich wars” that began in 2019 are showing signs of heating up again, and Tyson Foods (NYSE:TSN) is preparing to supply the combatants. It announced Thursday it was initiating a $48 million expansion of its Arkansas poultry processing facilities. “Demand for convenient, high-quality chicken products continues to grow and we’re investing in projects that meet the needs of our customers,” Tyson Poultry Group president Donnie King said in a statement.

The project focuses on building more capacity at an existing facility in Pine Bluff rather than constructing a new factory from the ground up. Automated packing, more “fully cooked” processing lines, and additional air frying lines are among the planned additions or extensions, which will also create approximately 70 more local jobs. The renovation should be finished sometime in 2021.

Three workers in protective gear working at a poultry processing plant.

Image source: Getty Images.

Tyson’s decision to bolster its chicken production appears well timed. QSR Magazine reports Sense360 research shows the “chicken sandwich wars” are gathering fresh steam. The data shows 13 different restaurant chains launching new chicken products over the past year and a half, with a significant number in the final months of 2020. Almost all of the restaurants saw sales surge in the weeks following the poultry-based item’s first appearance on the menu.

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The studies provide a close look at McDonald’s performance after it started selling chicken sandwiches. Customer traffic jumped 19.1% on the day of launch and climbed even higher the day after, and monthly visits stayed higher once the popular sandwiches were available, even into the coldest winter months.

QSR Magazine‘s reporting also cites researcher Placer.ai, which said the chicken sandwich “fundamentally altered the trajectory for McDonald’s.” Tyson’s strategy, therefore, is clear: boosting its ability to supply processed chicken to a growing, eager American market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/04/23/tyson-begins-48-million-poultry-production-expansi/

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