WINSTON-SALEM, N.C. — Mark Grohman has a beef with the beef industry, according to the Winston-Salem Journal.
As the owner of Meridian Restaurant at 411 South Marshall St. in downtown Winston-Salem, Grohman has watched the cost of such cuts of beef as ribeye skyrocket as much as a few dollars a pound in the past several months.
“There’s always an excuse — drought, not enough beef production — but the reality is there’s been a steady increase for beef prices across the board,” he said. “That’s tough for a small restaurant.”
Grohman said his food costs have risen at least 6 percent, hurting the bottom line.
Wholesale prices for choice beef have spiked 11 percent in the past year, according to the U.S. Department of Agriculture. Choice beef is defined by the USDA as high quality meat with less fat than prime beef. Choice roasts and steaks from the loin and rib will be tender, juicy, and flavorful and are suited for dry-heat cooking.
The increase in prices leaves local wholesalers, supermarkets and restaurants with a difficult decision: swallow the costs or pass them on to customers.
“I’ve been eating the increase in cost myself instead of passing it on to my customers, but if beef prices continue to rise, I’m not going to have a choice,” Grohman said.
“It’s either that or convert to a seafood restaurant,” he jokes.
Teresa Neal, the president of the Olde World Meat Market at 166 Millers Creek Dr. in Winston-Salem, has already had to increase her prices.
In the past couple of weeks, she had to raise prices of steak by a dollar a pound and the prices of ground beef, which the shop grinds itself, by 30 to 40 cents a pound.
“We tried to hold prices down as long as we could, but with the steady climb of beef prices, it was inevitable,” she said.
The increase has been a long but steady climb. While the average retail price for choice beef was $3.32 a pound in 2002, it has nearly doubled, hitting a record high of $5.91 a pound in May.
Retail prices for beef are projected to increase as much as 6.5 percent this year — especially with the summer grilling season in high gear — compared to just 2 percent last year, according to the USDA.
Neal said she will do her best to keep from passing the increases to customers, but the rising cost is being felt by everyone in the industry.
The Olde World Meat Market gets its products from local wholesalers, who have also taken a hit.
With beef prices from the producers through the roof, co-owner Kristen Wiggins has had to adjust her prices at Odessa’s Wholesale Meat in Raleigh, which supplies meat to restaurants and customers around the state.
As a result, Odessa’s has seen a 12 percent decrease in demand for beef, Wiggins said.
“What we’ve noticed is a tremendous increase in the demand for poultry, up 30 percent since the start of the year, particularly in ground turkey as a substitute for ground beef,” she said.
In the past year, ground beef at grocery stores has hit a record high, averaging $3.856 a pound, according to the Bureau of Labor Statistics. That’s up 76 percent since 2009.
Although the prices of pork and poultry have slowly been creeping up as well, they remain a cheaper option to beef.
The rise in beef prices can be attributed to a seven-year decline in the number of cattle, resulting in the smallest U.S. herd in more than 60 years, said Kenneth Mathews, an agricultural economist for the U.S. Department of Agriculture.
Extended periods of drought in the Western U.S. have ravaged pastures, leading to a decline in cattle production.
“There’s fewer cattle, so we have a gap between our diminished supply and our steady demand,” Mathews said. “Many other countries are in the same situation and are trying to rebuild their herds, so importing isn’t really an option.”
But Mathews said if the rain levels of the last month continue, pastures will start to improve and U.S. producers will be able to rebuild their herds, although the recovery could take several years.
“It’ll be sometime down the road, 2017 or so, before we see any big increases in beef production,” he said. “I expect prices will remain on the high side until then.”