Rising food prices pack a punch
As an enthusiastic at-home chef, I notice the fluctuating prices of my favorite grocery items—especially staples like beef, chicken, fruits and fish. Lately, it hasn't been pretty. With skyrocketing chicken and beef prices, California’s drought and Minnesota’s bird flu outbreak, restaurant watchers have also taken notice of this year’s historically unpredictable food prices.
The latest headline comes from my hometown Minneapolis-St. Paul Business Journal reporting that soaring chicken prices drove Buffalo Wild Wings’ stock down 10 percent in after-hours trading after the company reported a 41 percent year-over-year increase in poultry prices. Jumping chicken prices apparently do not pair well with higher labor costs.
Beef prices are doing the restaurant no favors, as well, with Missouri Farmer Today reporting that per-pound prices have edged even higher than the previous record set in February. Once an affordable protein for restaurants and families, ground beef is now going for more than $4.20 a pound.
In an interview last week with Arby’s CEO, Paul Brown, I asked about the impact of rising prices on his beef-centric business. While it's impacting company margins, Brown said cost increases haven’t been enough to impact his long-term strategy.
“We have been fortunate that our sales growth has far outpaced commodity cost growth, and we’ve decided that we’re not going to try to artificially change who we are because of a temporary blip in commodities costs,” he said.
Pork prices, meanwhile, have been a welcome bright spot, falling steadily through the first quarter of 2015. Supply growth and falling demand have pushed prices down, but may be impacted in coming months by a strengthening dollar.
It’s no easier for restaurants less focused on proteins, especially with the ongoing California mega-drought. With Slate recently asking its readers, “Have You Eaten Your Last Avocado?,” the article said rising avocado prices could lead Chipotle—which uses 97,000 pounds of them in a single day—to abandon guacamole altogether. I’ll believe that one when I see it.
In case you were wondering, kale prices have remained stable, even in the face of drought and increasing demand. Low-hanging prediction: kale-topped pork sandwiches coming soon to a menu board near you.