Where’s the (Cost of) Beef? Steakhouses Feel the Pinch
(Getty/Nadiia Borovenko)
Steakhouse operators are getting a real-time lesson in how much Americans are willing to pay for beef. With U.S. cattle herds at their smallest level since the 1950s and wholesale prices climbing sharply, the New York Times reports that steakhouses are walking a fine line: raising menu prices enough to cover higher costs without driving customers away. The challenge is especially acute this month, when holiday corporate events and special-occasion dining often determine whether the year ends profitably.
Tommy Hall of the Halls Chophouse chain describes the situation as a “code red.” His restaurants recently raised the price of an 8-ounce filet mignon from $57 to $61, a move he says reflects pressure felt across the industry. Government data show that average retail prices for USDA Choice boneless steak are up about 20% from a year ago and hovering near record highs of $14.13 per pound.
High-end steakhouses say many of their customers are accepting the increases, but midpriced chains are feeling more strain. After Outback Steakhouse raised prices, customer traffic fell, some locations closed, and parent company Bloomin’ Brands saw its stock drop nearly 50%. Texas Roadhouse took a different approach, keeping price increases relatively small even as ingredient costs rose nearly 8%. That strategy helped maintain customer traffic but squeezed profit margins and contributed to a 14% decline in its stock.
Despite higher prices, Americans have not turned away from beef. The Department of Agriculture expects per-capita beef consumption this year to be nearly unchanged from last year, at about 58.5 pounds per person. Still, a Food & Wine report suggests prices are unlikely to ease anytime soon. The publication offers tips for budget-conscious diners, including lesser-known cuts like bavette steak. Taken from the bottom of the sirloin, the cut is similar to flank steak but has more marbling and thickness, making it well suited for a quick, steak-style sear.
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