Restaurants are being forced to pass along the costs to their customers as beef prices skyrocket amid cattle shortages.
- U.S. beef production is predicted to decrease by 2 billion pounds next year, according to the U.S. Department of Agriculture.
- Ground beef prices have increased 20% since 2020, with a current average of $5.33 per pound, with prices expected to raise 15 to 25 cents next year, Rabobank reports.
- The cause is due to ongoing droughts and increasing expenses for farmers, with shrinking herds decreasing by 3% in the past year, The Wall Street Journal reports.
- Minnesota Beef Council CEO Kelly Schmidt tells CBS News that the ongoing shortage could last at least 15 months.
- Restaurants like Olive Garden, Ruth’s Chris, and LongHorn warn consumers to expect more expensive menu prices for the next year amid the shortage.
Why It’s Important
Despite ongoing inflation and economic uncertainty, food prices have somewhat stabilized in the past year. This past winter’s egg shortage has largely been alleviated, with chicken shortages due to disease outbreaks being addressed and stocks replenished. Other meat prices have also been largely unphased by the ongoing price spike. Pork prices are momentarily decreasing as beef prices increase.
The worst affected at the moment are cattle ranchers in the Southwestern U.S. and restaurant operators. Ranchers are seeing marginal returns on expensive cattle herds, which is threatening thousands of farmers’ livelihoods for the immediate future. Restaurants are also being forced to pass on the increased cost to customers, as the price of beef increases by roughly 10% to 15% to meet rising costs.
Larry Lavine is a Texas-based restaurateur and entrepreneur who has founded dozens of restaurants in his career, including Chili’s and Loop 9 BBQ. He tells Leaders Media that there is likely no end in sight to the current beef shortage. Ranchers are currently unable to replenish their herds, which could set a new permanent higher price for beef going forward, even after improved weather and herd growth replenish stocks.
“I think price increases are starting to slow down, but everything is going up—food, electricity, supplies, and labor—so you have to make that up someway, and you do that by raising menu prices. In the BBQ business, you gauge everything by your brisket because you buy alot of it. And surprisingly it hasn’t gone up more than 5% to 8%. The price has gone up a little but not by a lot, so we’re pleased by that. But you still have to adjust your menu prices to stay in business,” he says.