Tags: beef | prices | restaurants

Beef Prices: Restaurants Either Eat Costs or Increase Tabs

By    |   Tuesday, 01 July 2014 09:52 AM

Rising beef prices are forcing many restaurants and caterers to make tough choices ahead of the July 4 holiday and the ensuing summer months when barbeque is in high demand.

The Wall Street Journal reported Sunday that many are scrambling to place bulk orders to lock in current prices, and many are serving smaller portions with more sides and sauces. Some are experimenting with passing some or all of the costs on to customers, while others are eating the increased costs themselves to remain competitive.

"There are people out there that are panicked," Gregory Schulson, CEO of Burrito Beach Mexican Grill, a Chicago-area burrito chain, told the Journal. "Restaurants have a philosophical choice to make. Are you going to maintain your current products and eat the margin, charge your customers more, or adjust your product to meet the consumer at their price point?"

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According to the U.S. Department of Agriculture, in the 12 months through May, beef prices climbed 11 percent while cattle prices reached an all-time high.

Statistically, it looks like much of the costs are being passed on to consumers, as average fresh beef prices increased 12 percent to $5.45 per pound in the same time period.

Some restaurant owners, like Danny Johnston of Sunrise Café in Springfield, Illinois, remain steadfast in keeping prices down and riding out the storm, however.

"You basically just gotta absorb them, because you can't really pass them over to the customers a lot because they could go get a double cheeseburger down at McDonalds for a buck," he told ABC affiliate WICS Springfield.

When it comes to national chains, Chipotle Mexican Grill, for example, has raised the price of beef entrees 8 percent compared to 4 and 6 percent for chicken and pork. Grocers like Kroger and Whole Foods Market are seeing increased demand for cheaper cuts of beef like cube steaks.

Industry experts blame the price increases on increased crop prices, which are used to feed and fatten cattle. Others mention PED disease, which also wiped out some herds during the current period of high demand.



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Rising beef prices are forcing many restaurants and caterers to make tough choices ahead of the July 4 holiday and the ensuing summer months when barbeque is in high demand.
beef, prices, restaurants
372
2014-52-01
Tuesday, 01 July 2014 09:52 AM
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