Rising Beef Costs Prompt Consumers to Buck Trend
In the heart of Texas and New Mexico, Skeeter Miller, the co-owner of County Line barbecue restaurant chain, is grappling with the impact of record-high ground beef prices. Miller's customers might find the escalating costs at the grocery store more understandable now, as he is paying nearly double the price for hamburger meat compared to a few months ago.
The current profitable state of ranching in America, driven by high demand and low supply of cattle, is a significant factor in the ground beef price surge. This trend has also led many of Miller's rivals to shrink their portions, but Miller aims to feed people, not fool them.
Similarly, Paul Urban, co-owner of Block 16 sandwich shop in Omaha, Nebraska, increased the price of a burger from $8.95 pre-pandemic to $11.95. Restaurants and stores across the nation are following suit, raising prices due to costlier ground beef.
However, the situation is not just limited to the restaurant industry. Brady Blackett, a third-generation Angus cattle producer in Utah, recalls a tough drought a few years ago, caused in part by climate change, which made feeding cattle expensive. This, combined with the decreased imports of beef due to tariffs and concerns about parasites, has further exacerbated the problem.
The U.S. Department of Agriculture forecasts a 4% decline in beef production this year and another 2% in 2026. This decline, due to drought and other factors, has contributed to the ground beef price increase. Chris Dubois from research firm Circana reports a plateau in spending on ground beef, a historically fast-growing category.
In the summer of 2022, producers in the U.S. slaughtered more beef cows than ever due to losses during the pandemic, rising inflation, interest rates, and falling beef prices. Despite this, the repopulation of the U.S. beef cattle herd is going slowly due to high operating costs and the profitability of selling young females (called heifers) for meat.
The rising ground beef prices have forced restaurants and stores to make adjustments, leading to a shift in consumer loyalty and menu adjustments away from beef towards other options. The price of ground beef has increased by 51% since February 2020, and higher prices have started to drive away some diners, with visits down about 5% across Miller's six locations.
However, the brisket cost has increased even more, forcing Miller to consider not cooking brisket until the price comes down. Despite the challenges, Miller remains committed to providing quality meals to his customers, aiming to feed them, not fool them.
In these trying times, the beef industry is navigating a 'perfect storm' of high demand and low supply, leading to historic high ground beef prices. As consumers adjust to these changes, the industry continues to evolve, adapting to the new normal.
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