%Beef prices are at a record high, pressuring both consumers and restaurants.
The average price for uncooked beef steaks in the U.S. hit a record high of $11.49 U.S. in June of this year, according to data from the U.S. Bureau of Labor Statistics.
Beef prices have steadily risen in recent years as unusually dry weather and high input costs drive U.S. cattle inventories down to their lowest level since 1951.
The record prices are putting pressure on consumers, as well as grocery stores such as %Costco Wholesale (NASDAQ: $COST) and restaurants that specialize in burgers such as McDonald’s (MCD).
On its recent earnings call with analysts and media, McDonald’s management team noted that North America isn’t the only place feeling the pressure from rising beef prices.
McDonald’s noted that beef prices are up about 20% in Europe this year, impacting both sales and profits at its global operations.
Similarly, Canada’s %RestaurantBrandsInternational (NYSE: $QSR), which owns the Burger King chain, said on a recent earnings call that, “Beef is about 25% of our cost basket and we’re seeing around 15% inflation year to date.”
Wendy’s (WEN) restaurant chain recently increased its commodity inflation outlook for the year to 4% because of higher beef prices.
Casual dining restaurant chain %TexasRoadhouse (NASDAQ: $TXRH), with beef making up more than half of its costs, raised expectations for full-year inflation to 5%, citing high beef prices.
Many beef-focused restaurant chains have said they are offering more chicken items on their menu to help offset the rising costs.
To help cover higher beef prices, restaurants are also pushing high-margin beverages and expanding their beverage offerings to include cold brews and energy drinks.
McDonald’s, the world’s largest quick service restaurant chain and one of the biggest buyers of beef globally, has seen its stock rise 4% this year to trade at $304.36 U.S. per share.
