Restaurants ‘Beef Up’ Menus as Prices Drop

​​Bret Thorn  Feb 29, 2016​

Af​​ter several yea​​rs of record highs, beef prices are finally starting to come down, providing opportunities for restaurant operators to capitalize on Americans’ love for the meat with renewed vigor.

But custo​mer expectations for beef are evolving and expanding. Burgers and steaks aren’t the only ways Americans want to eat beef, and many of them want to know more about the beef they’re eating.

“People in today’s marketplace, particularly the next generational customers, are looking for food with a story, and they want that story to make them feel good about what and where they’re eating it,” said Tom Ryan. 

Ryan has built his career on beef, first as a McDonald’s executive, then as founder of the fast-casual burger chain Smashburger, and now as chief concept officer of three-unit polished-casual concept Tom’s Urban.

Prices on the decline

Beef prices are finally falling following several years of spikes.

DeWayne Dove, vice president of risk management at Denver-based purchasing cooperative SpenDifference, said he expects beef costs to drop between 10 percent and 23 percent over the next year, depending on the cut.

National beef production is expected to increase 4 percent as both the number of cattle and the body weight of the average animal rise, Dove said. Moreover, the price of corn, an important component of cattle feed, is about half of what it was in 2012. 

As a result, Dove said he expects the price of primal cuts to fall between 10 percent and 17 percent this year, and the price of 90-percent lean trimmings — the main component of ground beef — to fall by 23 percent. 

Quick service sla​​​shes prices

Restaurants have already started to respond to the reduced cost of beef in different ways. 

The big quick-service burger chains — including McDonald’s, Burger KingWendy’s, andCarl’s Jr. and Hardee’s — have taken the opportunity to try to gain market share by slashing prices, now that they can afford to do so. 

Wendy’s kicked off a price battle in October with its 4 for $4 Meal. Customers at the chain’s 5,750 domestic locations can get a Jr. Bacon Cheeseburger, four chicken nuggets, small fries and a drink for $4.

McDonald’s followed suit with its McPick 2 for $2 menu, which let customers at its 14,350 domestic locations pick two items from four choices — a McDouble, McChicken, small fries or mozzarella sticks — for $2. At the end of February it followed that promotion with a premium variation featuring items such as the Big Mac and Quarter Pounder in a 2-for-$5 value offering.

Burger King upped the ante with its 5 for $4 Deal — a bacon cheeseburger, chicken nuggets, small fries, small drink and a chocolate chip cookie — at its more than 7,100 domestic restaurants. Meanwhile, 1,771-unit Hardee’s and 1,142-unit Carl’s Jr. are touting a $4 Real Deal offer — a double cheeseburger, spicy chicken sandwich, fries and a drink.

Improving quality

Cousins Subs, a Menomonee Falls, Wis.-based sandwich specialist with 105 locations in Wisconsin and Arizona, is taking a different approach. Instead of lowering prices, the chain is upgrading its meat from a relatively undifferentiated loin shoulder cut to USDA Choice antibiotic-free and hormone-free chuck and sirloin tips.  

Cousins vice president of marketing Justin McCoy said the chain made the move in response to consumer demand.

“There is growing sentiment to look at how products are being handled. And where we can make changes to continue to improve on that, we are,” McCoy said.

That’s in line with the results of a recent study conducted by Cargill on consumer perceptions of meat. 

Cargill, which surveyed more than 8,000 consumers, found high interest in naturally raised meat, especially among people under 35 years old. The survey also found an untapped market for meat among what it called “Socially Conscious Foodies.” Generally between the ages of 25 and 44, married, with children and with household incomes of $50,000 to $100,000, these consumers care about the origins of their food and make up about 25 percent of red meat consumers, Cargill found. No single attribute of meat was as important to those consumers as that beef suppliers are honest about how the meat is raised and where it comes from.

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