Beef prices continue to trend upward, showing no signs of relief in the near term. Industry reports show the number of cattle in U.S. feedlots in 2013 was the second lowest on record, as ranchers still recoup from 2012’s drought and freezing temperatures grip the nation. With the U.S. Department of Agriculture forecasting a 5.7 percent slide in beef output in 2014, cattle futures hit an all-time high in December.

The news on the protein front isn’t all bad, however. Plummeting corn prices—as much as 50 percent from 2012's high—kept hogs well-fed in 2013, and contributed to lower wholesale prices for pork belly, which dropped 23 percent between September and year’s end 2013. Prices may drop another 1 percent by the end of 2014. The Department of Agriculture projects pork production will climb 2.9 percent in 2014. 

The 2013 record-breaking corn supply is also helping to keep chicken prices down. Restaurants will pay 5 to 10 percent less for chicken 2014, comments David Maloni, president of the American Restaurant Association in Sarasota, Florida.

Farmers are boosting their chicken output, a process that takes about six months, compared to about a year for hogs and three years for cattle.

Increased supplies of chicken wings helped lower costs and boost third-quarter earnings for Buffalo Wild Wings, which is approaching 1,000 locations. In a conference call with analysts this past October, CFO Mary Twinem noted there is “plenty of supply out there.”

A recent Datassential’s survey of 300 major chains found a major uptick in 2013 LTOs and new item introductions featuring chicken, as opposed to those featuring beef (not including hamburgers). Fourth-quarter 2013 was the exception, but most of that was driven by the holidays and beef-based holiday specials, says Maeve Webster, senior director of the industry research group.

Farmers Restaurant Group Executive Chef Joe Goetze has no plans to alter his restaurants’ menus. Based in and around Washington, D.C., the three-unit Farmers Restaurant Group is primarily owned by 40,000 U.S. family farmers.

"Founding Farmers restaurants have not taken a price increase since we opened our first location, back in September 2008, at the height of a recession,” remarks Goetze. “We have been through cost increases and market commodity fluctuations before, and will continue to work through the increases as they come, and will not pass them, or this beef cost increase, on to our guests.”

To keep costs down, Farmers Restaurant Group designs menus to take into account price fluctuations, while also maintaining its current volume of guests and sales figures.

Extensive offerings on the menu provide plenty of variety and options for guests, says Goetze. Since the restaurants aren’t steak or meat-driven concepts, when costs increase for specific ingredients the restaurants can still sell significant quantities of the other menu items, which also helps to keep costs in line.

“Our menus are designed to create balance, from balance of flavors and ingredients, to balance of food costs vs. the prices that we list on the menu,” says Goetze.

Chicken and pork, despite lower prices, will not replace beef in specific menu items.

“When we do research and development for our recipes, we always start with the main ingredient, be it beef, or poultry, or seafood,” says Goetze. “From that perspective, we would never compromise the original intention of what we want to make and serve. So, since the very beginning, beef (or pork, or poultry) will never be replaced on the menu. It's more important that our dishes are true, tested, and the most flavorful and authentic that we can make." 


By Joann Whitcher

Chef Profiles, Finance, Industry News