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Restaurants, grocers cope as beef prices continue to rise

4 min read

Food Retail

(Photo: Flickr user Youssef Abdelaal)

Beef prices have been rising for several years and there’s seemingly no ceiling, an ongoing trend that’s challenging restaurants and retailers to make changes ranging from price increases to putting less beef on the plate to promoting poultry and other animal proteins in the supermarket.

Retail and wholesale beef prices edged even higher this summer, according to the Agriculture Department, as growing demand for U.S. beef in Asia and other international markets pushed up exports and ranchers took longer than expected to replace herds thinned during the droughts of the last few years.

Operators have had to raise prices in many cases, said NPD Group Food Industry Analyst Bonnie Riggs, not just because of higher beef prices but because of overall food inflation.

“The average check at casual dining places is up three percent over a year ago. I’m sure they’ve had to take some price because of high food inflation,” she said.

Pork, dairy and other food prices are up, but they haven’t risen as fast and as furiously as beef prices in recent years, so in addition to charging more where they can, restaurants have also been getting more creative with recipes and menu diversity.

“Typically what does happen is that operators will promote other proteins. Chicken in particular is what we see, which is why it was a surprise to me that burgers were one of the top growing sales items in April-to-June reporting period,” Riggs said, adding that she expects chicken to become even more highly visible in the coming months, as suppliers that used to export their poultry to Russia find new outlets closer to home.

Quickservice chains have been adding new chicken sandwiches and other non-beef options, while casual and higher-end restaurants are creating new dishes that combine smaller portions of beef with other meats, seafood, vegetables and pasta in new ways, Riggs said. That’s true even in steakhouses and barbecue joints, where beef is the main event.

Outback is one that has done more of the combo-ing,” she said. “You can still have steak, but then along with it there’s another protein. Otherwise, if you’re going to a steakhouse and you want a big steak, you’re going to pay the price.”

A number of U.S. eateries are putting blended burgers on the menu, as Nation’s Restaurant News reported. Chefs are mixing in mushrooms and seasonings as a way to both add new flavors and make the increasingly pricey beef go a bit further.

“I would suggest that it is being done as an extender, a way of getting more for your  buck. Right now, consumers find it to be something new and different. Leave it to the restaurant operator to come up with ideas like that,” Riggs said.

Grocers are also featuring cheaper cuts and smaller packages, the Wall Street Journal reported in June.

“We’re seeing customers purchase more cube steaks instead of T-bones…and burgers instead of steaks,” Kroger spokesman Keith Dailey told the Journal.

The factors driving beef prices ever higher seem to be long term — demand abroad is only expected to grow as middle classes rise in developing countries, and the droughts that drove down the herds in Texas and the Southwest are still plaguing California, shining a light on the vast quantities of water and other resources needed to raise animals for meat.

Some companies are working on long-term solutions, including Beyond Meat, whose plant-based meat substitutes for chicken and beef have caught on quickly at Whole Foods and are increasingly being added to the shelves at supermarket chains including Publix, Target and Safeway, according to Fast Company.

Meanwhile, higher retail prices for prime cuts could be a good thing for restaurants, Riggs said.

“It’s sticker shock, it really is, so consumers are finding other alternatives,” she said. “Even myself, and I can afford it, but I’m not going to pay those kinds of prices for a steak from a retail outlet that I’m going to have to take home and prepare. I might as well go to a restaurant and let them prepare it for me. I think that would be a good point for a steak restaurant to promote as an advantage.”

How is your restaurant or supermarket adjusting to higher beef costs? Tell us in the comments.


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