Good morning. The U.S. Coast Guard boarded an oil tanker off the coast of Venezuela, power has been restored to most of San Francisco after a widespread outage yesterday and Bowen Yang left “S.N.L.” We’ll have more news below, but first we want to examine how rising beef prices have stressed restaurant owners this holiday season. Today, Julie Creswell, a business reporter, explains the dilemma.
High steaks
Americans eat a lot of beef — nearly 59 pounds per person this year, according to the U.S. Department of Agriculture. That equals to about 118 eight-ounce filet mignons for everyone in the United States. And they eat a lot of it in December. The holiday season is a hot time for steakhouses, as companies book back rooms for lavish parties and families treat themselves to nice bottles of wine. This year, though, it’s been tricky. Beef prices are near record levels. And steakhouses — from the wood-paneled clubs of Manhattan to chain outposts along highways — are trying to cover their costs and still keep their customers. In early November, Tommy Hall, who oversees five fine-dining steakhouses in the Southeast, told me that beef prices had climbed to a level that put his Halls Chophouse restaurants in a “code red.” So he raised the price of an eight-ounce filet mignon to $61 from $57. A rib-eye was bumped to $85 from $82. The back storyThe problem is a classic imbalance between supply and demand. While Americans still crave and eat a lot of beef, the nation’s cattle inventory is at its lowest level since the 1950s. Herds began to shrink in recent years partly as a result of widespread drought, which reduced grazing land and forced ranchers to buy more feed. Closures of meatpacking plants have also depressed cattle prices, since there are fewer processors purchasing cattle. The prices of beef products, from ground beef to roasts to prime cuts of steak, have been on the rise since the Covid pandemic. But they’ve really shot higher in the last couple of years. In September 2023, a pound of ground beef averaged $5.11 across the country, according to the Bureau of Labor Statistics. Now, it is nearly 24 percent higher — more than $6.30 per pound. A U.S.D.A. Choice boneless sirloin has risen 22 percent in that same time.
The effect on your billThe result of all of this is that diners will be paying more for their steak when they eat out. But how much more depends on the type of restaurant. Many fine-dining steakhouses, which typically sell the highest grade of prime steak to higher-income diners, say they are seeing little pushback as they price an eight-ounce filet mignon above $60. That’s a trend at high-end restaurants of all types, my colleague Julia Moskin reports: Chefs say affluent patrons are flocking to the fanciest, and priciest, items on their menus. But midpriced restaurants, which typically sell choice grades of steak and cater to a less-wealthy clientele, face a bigger challenge: How to raise prices to cover increased beef expenses while not chasing away customers? Outback Steakhouse began raising prices a couple of years ago, and some analysts say it may have pushed too hard. Traffic has nose-dived. And the stock of its parent company, Bloomin’ Brands, has plummeted more than 40 percent in the past year. But Texas Roadhouse has tried to keep price increases small and, as a result, customers continue to flood in. On a Friday night in mid-November, I visited a Texas Roadhouse in North Plainfield, N.J. The parking lot was jammed, and about 30 people stood in the lobby waiting for tables. As I nibbled on soft, pillowy rolls, slathered with the restaurant’s special honey-cinnamon butter, and dug into an eight-ounce Dallas filet ($28.99 with two sides), staff members rolled out a saddle into the middle of the restaurant. A woman gamely got on as the staff broke into a raucous birthday chant, with patrons clapping along. With a final “Yeehaw!” we all returned to our steaks.
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