Egg prices got all the attention, but U.S restaurants are sounding the alarm on a bigger ingredient crisis that could hit menus hard; here's all about it

While egg prices have made headlines in recent months, American restaurants now are ringing the alarm about an even bigger ingredient crisis that could soon slam customers hard: beef, as per a report.

With the recent spike in egg prices, fueled by outbreaks of bird flu, restaurants now have another headache: beef prices are increasing, and they worry about how it will affect their menus, according to Daily Mail. Based on recent figures, prices for beef and veal have jumped 5.5% higher in January than they did in the same period last year, more than inflation in the rest of the American economy, Daily Mail reported.

Why Beef Prices Are Up?

There are several reasons behind this beef price surge, among them a record-low US beef herd, which is being hit by recurrent droughts and shifting weather conditions, as per Daily Mail. Ranchers are sounding an alarm that cattle take a much longer time to become market-ready compared to other proteins such as chickens or eggs, resulting in supply chain delays, according to the report.

Moreover, the US has prohibited imports of Mexican cattle upon the identification of the New World Screw Worm, reported Daily Mail. Although the US Department of Agriculture is diligently trying to remove the ban and rebuild cattle stocks by 2027, ranchers and restaurants are already experiencing the strain, and customers will soon feel the brunt in their restaurant bills, as per the report.

How Will This Affect Restaurant Prices?

Increases in prices will probably be forwarded to consumers by way of menu price hikes, reported Daily Mail. If beef keeps on going up in price, classics such as McDonald's Big Mac price could rise to approximately $6, Texas Roadhouse sirloin could run more than $15, and Shake Shack's double cheeseburger could cost over $10, as per Daily Mail.

Shake Shack CFO Katie Fogertey said, "We don’t hedge our beef costs, and this is the biggest chunk of our food costs is in beef," as quoted by Daily Mail. Shake Shack anticipates mid to high-single digit percentage increases for beef in the coming year because of the decreased populations, the Daily Mail reported.

The price increase is a result of fewer cattle, and because demand for beef continues to expand, particularly as consumers seek alternatives to high-priced eggs, according to the report.

The Effect of Tariffs

There is also an added uncertainty, a proposed 25% tariff on all Canadian beef imports, set to take effect on April 2, could push prices even higher, as per Daily Mail.

Canada exports around 75% of its international supply of beef to the US, so the tariffs are likely to noticeably increase the prices of beef, as per the report.

Most restaurants will then be able to pass on the increased costs to consumers, and even domestic beef farmers will hike prices to buffer the impact, according to Daily Mail. Small beef farmers, especially from Canada, are already experiencing the brunt of the tariffs, with some expecting huge financial losses, as per the report.

A Growing Concern for Restaurants

While restaurant chains such as McDonald's, Texas Roadhouse, and Shake Shack have cautioned of the increasing costs, reported Daily Mail. Some restaurants that have already been affected by egg prices can shift towards promoting more beef or chicken dishes to adapt to the shifts in demand as well as cost, as per the report.

Shake Shack's CEO Rob Lynch claimed that, "Other restaurant companies that have exposure to eggs may be moving away from eggs in the time being, which means they’re going to offer more beef products or chicken products to complement or substitute for that high-cost item," as quoted by Daily Mail. Lynch also added that, "When that consumption demand changes, it has the potential to change even some domestic pricing," Daily Mail quoted.

FAQs

Has beef prices increased?
Yes. Beef and veal prices rose by 5.5% in January compared to last year, surpassing inflation in other sectors of the economy, reported Daily Mail.

Why is the beef herd declining in the US?
Droughts, changing weather conditions, and slower cattle growth are all factors contributing to the lower beef herd.