Rising Meat Costs Could Soon Mean Higher Menu Prices at Restaurants
As restaurants continue to reopen across the country, diners may be in for a bit of sticker shock—and not just because owners have been forced to make bottom-line-affecting adjustments to protect customers and staff in the wake of the COVID-19 pandemic. A new report states that food costs themselves are up significantly, and a drastic increase in the price of meat is a key driver.
After analyzing $1.3 billion in restaurant purchases made in February compared to May, Buyers Edge Platform—a restaurant supply-chain company—found that overall food costs have increased 38 percent, according to Business Insider. The main culprit behind the jump was reportedly meat prices, with standard beef cuts up 87 percent, fresh ground-beef patties up 81 percent, and pork cuts up 70 percent. Frozen beef patties and chicken breasts reportedly had more modest increases—28 percent and 23 percent respectively—while bacon was the only product that saw price declines.
Meat prices were already on the rise due to the disproportionate impact COVID-19 has had on the meatpacking industry. But frustratingly, Buyers Edge CEO John Davie apparently suggested that part of the problem also stems from how a major meat concern was dealt with as the coronavirus crisis unfolded: When dining establishments closed due to COVID-19, the resulting disrupted supply chains forced meat producers typically selling to the restaurant industry to try to quickly pivot to retail. Now, restaurants may be paying the price to have those items sent back their way.
Regardless of the reason, these increased costs will likely force restauranteurs to react. “Generally, if the prices are significantly higher for 30 days or more, restaurants will have to start making decisions,” Davie was quoted as saying. “Those decisions could either involve raising prices or in eliminating the higher-priced items from the menu.”
But interestingly enough, Davie also told Business Insider that, as a strange silver lining, reopened restaurants may be more prepared to deal with this issue than they were before. “Ironically, some of the changes as a result of the coronavirus may actually make it easier for restaurants to be more dynamic in their pricing,” he stated. “As restaurants move to paper and digital menus (instead of reusable plastic ones), this provides them the flexibility to update pricing as needed with rising costs.”
Meanwhile, the federal government apparently still wants to double-check that these major fluctuations meat prices are on the up and up. Last month, news broke that the USDA and the Department of Justice were investigating whether collusion may be occurring in the industry. Then, last week, Bloomberg wrote that the four biggest players—Tyson Foods, JBS, National Beef, and Cargill, which collectively control 85 percent of the beef market—have been sent “civil investigative demands, which are akin to subpoenas,” from the Department of Justice’s antitrust division, citing an unnamed source.