Skyrocketing Beef Prices Are Causing Steakhouses to Scramble During Holiday Season

Beef connoisseurs are experiencing sticker shock wherever they look. With U.S. beef prices soaring, steakhouses are scrambling to satisfy customers and their bottom lines, reports the New York Times.

Typically the busiest time of the year for steak-serving restaurants, owners are fretting over how to walk the culinary tight rope. The operator of Halls Chophouse, which has five locations in the Southeast, told the Times he experiences "butterflies in his stomach" each time he raises prices.

He describes the situation as a "code red."

Indeed, mid-tier steak chains are feeling the squeeze, much like their contemporaries across the restaurant industry. The stock of Outback Steakhouse's parent company, Bloomin' Brands, has fallen 47 percent over the last year.

But the stories of struggle aren't universal. Americans are still red-blooded carnivores, consuming beef at high, albeit slightly lower, rates. High-end steakhouses also aren't reporting much pushback from their affluent customer base, which continues to thrive in America's so-called "K-shaped" economy.

Why Are Beef Prices Soaring?

Beef prices have risen 20 percent over the last year due to a multitude of factors. The biggest is good old supply and demand: U.S. cattle inventory is at its lowest level in 75 years. Roughly 17 percent of ranches have closed since 2017.

With American beef inventory way down, providers aren't able to fill the gap from foreign sources, either. Earlier this year, the administration raised import tariffs on Brazilian beef to 50 percent, and closed the U.S. border to Mexican cattle due to a screwworm outbreak.

Operational expenses for American farmers are increasing, too. Input costs for ranchers are up 50 percent over the last five years, per CNBC.

How Much Less Beef Are Americans Eating?

Despite the sticker shock, Americans are still eating roughly the same amount of beef as before. Consumers will consume an average of 58.5 pounds of beef this year, just a shred lower than last year's average of 59.1 pounds.

Omaha Steaks, a major meat and food delivery company, says preorders for this year's holiday season are up 15 percent. The company has not had to raise prices, because it stockpiled beef last year, says the Times.

As Americans celebrate with their nearest and dearest, the temptation to cut into a juicy filet remains alluring. The aforementioned Times article mentions that Halls Chophouse is booked through the holidays.

January and February, however, look dicey.