Meat: One of the Industry’s Biggest Challenges.
It’s no secret that we Americans love meat but now we’re wondering if the meat demand can be met. It may soon be in shorter supply at grocery stores, restaurants, and other providers around the nation. Many meat production plants have closed or are operating at a lower capacity due to closures caused by the COVID-19 pandemic and the resulting employee relations. This means the availability of meats has decreased while the price increases due to a steady demand. Not only are businesses struggling to stay afloat operating under the current conditions, but they now have to cope with sourcing issues. Increased meat prices raise food costs for businesses, forcing them to increase prices on the final product, and discouraging consumers. Also, many restaurants are struggling to obtain the same meat cuts they usually have available on their menu, making it hard to provide customers with a consistent experience. On a brighter note, some meat production plants such as JBS are not too worried about meat shortages. By limiting exports, it’s possible that plants can continue to provide a sufficient supply of meat locally. While production plants are just beginning to reopen in the following weeks, the future of the restaurant industry is still cloudy.
Orange County continues to talk with Governor Newsom to determine a course of action for the restaurant industry’s future, as well as working on reopening as soon as possible in a manner that is safe to both employees and patrons. Before restaurants are able to open again at full capacity, there are ways to adapt to the new struggles they face. Now is a great opportunity to create a flexible menu that revolves around what is available, fresh and reasonably priced. During menu development, create your recipe with several cuts so if one is in short supply, you’re ready for the substitute. Another good tip is to utilize products that are the opposite of what is in demand at grocery stores. For example, if prime rib and tenderloin are popular in the winter, the value of striploin and brisket will fall during that season, allowing businesses to profit off of a different cut of meat. Now is also a great time to mix in local farmers and purveyors to your business. Well-established local brands have been very resilient during this crisis and can provide a greater level of supply certainty and loyalty.
Businesses and civilians alike are struggling through this pandemic. Shortages and inconsistencies in product availability are even further hindering the restaurant industry. But there is hope in our ingenuity, strength, and the kindness that we show others. In time, we may return to a sense of normalcy. While we wait, I have no doubt that our industry will rise to meat the challenge.
We reached out the Nathan Bennett, President and CFO of West Coast Prime Meats to chat about local implications.
Are restaurants being affected by protein shortages now? Restaurants open for to-go are absolutely being affected. They are paying all-time high prices on some cuts of meat and dealing with outages on some normal items. We expect this situation to slowly improve over the coming weeks and months as plant capacity rebounds.
Will this impact restaurants when they re-open fully? As of now, restaurants fully re-opening seems to be getting further and further out. The County of Orange Health Department continues their conversation with the governor on what we need to do to attest that we as a county are ready to open. Once this happens, then we can start partially opening under the strict state restaurant operated guidelines which will be limited capacity, cleaning protocols, face coverings, etc… Depending on when our restaurants are allowed to open, they will likely be faced with higher than normal seasonal pricing, with some items have inconsistent availability.
What can restaurants do to control their food costs once things start to open?
- Be flexible and creative on the menu. Work with your purveyor on daily or weekly specials based on what is available at a reasonable price.
- You will have better availability and pricing on items that are opposite of retail/grocery seasonal demand. For example, in winter time prime ribs and filets are in high demand and pricing spikes for foodservice. This means strip loin (New York steaks), brisket, and tri-tips are a great value in the fall and winter.
- If you must have supply certainty, look at mixing in some non-commodity protein brands. Farms and ranches with mid-tier capacity and well established local brands have been more resilient to the current situation. Also, these suppliers are loyal to their regular customers and do their best to cover your orders. Once you get in their queue (which may take time), you will be part of their regular allocation.
- Build your relationship with your salesperson, ask for market updates, trends, specials, etc… These regular dialogues will help open up opportunities and build loyalty.