The Tribune Democrat, Johnstown, PA

May 4, 2014

Drought, increased demand drive beef costs higher

David Hurst

JOHNSTOWN — People eager to drop a porterhouse steak onto a sizzling grill this summer will have to dig deeper into their wallets.

Thanks to a drought in the heart of the nation’s beef cattle country – and rising red meat demand – prices are spiking nationwide for juicy restaurant burgers and just about every other beef product, experts say.

The average cost of fresh beef climbed to $5.28 per pound in March – the highest price since 1987, according to the Texas Beef Council.

That’s 7.4 percent higher than the same time last year, the U.S. Department of Agriculture reported in its March food price outlook.

Johnstown retiree Donna Beals already noticed.

“It’s outrageous,” she said, loading groceries into her car in the downtown Ideal Market parking lot.

“The roasts and steaks – they’re off my (shopping) list,” Beals said, adding she’s as tired of the high meat prices as much as she is the “excuses” for them. “If it’s too expensive, I won’t buy it.”

Unfortunately for Beals, the higher prices probably won’t be going away anytime soon.

“As far as the industry is telling us, there’s no end in sight, unfortunately,” said Randy Salem, who owns and operates BiLo markets in Windber and on Osborne Street in Johnstown.

The prices have hit at the worst time of the year – grilling season – “and there’s not a thing I can do about it,” he said.

Salem said he’s noticed customers are already reacting, buying cheaper cuts and ground beef products instead of steaks and other pricier beef.

He said he’s sticking to his guns by only providing USDA select or better beef, which will often cost him – and consumers – more than imported Mexican products shoppers might find elsewhere.

“All you can do is try to work with suppliers and try to get the best deal possible for customers,” Salem said, pointing to an ad this week offering $5.99 per pound strip steaks as a deal folks might not see again anytime soon.

Restaurants, too, are feeling the price increase.

Some major chains such as Chipotle Mexican Grill announced they would change steak-related menu prices to reflect rising costs. Chipolte said its beef costs rose 25 percent from the fourth quarter of 2013 to this spring, The Associated Press reported.

Others, like McDonald’s and Burger King, have been reluctant to follow suit in the current economy, acknowledging that the rising costs are eating away at their profits.

They’ve instead tried to turn customers to more profitable, customer-affordable menu items. Burger King’s head of North American operations, Alex Macedo, said the chain has been able to maintain its profitability in part by marketing chicken items more aggressively.

Locally, restaurant operators such as Scott McLachlan of Scott’s By Dam, have noticed the rising beef prices.

“When prices go up, it hurts everybody,” he said.

But he said he’s been able to avoid the steep price hikes by shopping locally, dealing directly with local meat packing shops.

“I deal with Pudliner’s (Packing). I’m ordering 60 to 120 pounds from them every week, but my price per pound has probably only increased 10 cents in the past month,” McLachlan said. “Shopping local makes a difference. I’m a small-business guy and it means a lot to me that I’m helping keep the other small guys going.”

David Hurst is a reporter for The Tribune-Democrat. Follow him on Twitter at www.twitter. com/tddavidhurst