Meat supply: Processing disruption not seen as a longterm threat
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However, meat prices are also creeping up, and customers nationwide should expect their favorite cuts to be 10% to 20% more expensive than normal, Sumner added. In the Bay Area, the consumer price index for meat, poultry, fish and eggs rose 10.4% from February to April, according to the U.S. Bureau of Labor Statistics, compared to 5.5% for all types of groceries.
The coronavirus has already changed some aspects of how meat is sold in the Bay Area. Woodard, for example, normally buys much of his meat from Restaurant Depot, which has locations in Oakland and San Francisco. But that supplier has opened to the general public during the pandemic, which means restaurateurs like Woodard must now compete with everyday shoppers for groceries.
And many of those everyday shoppers may be panicbuying meat right now, as alarming news has spread that more than 1,000 Wendy’s restaurants ran out of hamburgers and that Costco was limiting each customer’s meat purchases.
The disruptions to the supply chain are not happening at the cattle ranches, nor at the grocery stores. They’re happening in the middle tier: the large processing plants where meat is butchered before being sold to wholesalers. In those plants, workers are spaced closely together, which has enabled the spread of the coronavirus among nearly 5,000 employees, including nearly 200 at a Central California plant in Hanford (Kings County), and at least 20 deaths nationwide.
Those outbreaks led some Midwest slaughterhouses to temporarily close, but even while open they are processing meat more slowly than before. “To keep their workers healthy, these plants are spreading workers out and slowing down the line,” said Sumner. Plants owned by companies like Tyson and Smithfield are so large that even a small percentage reduction in efficiency can be felt in the supply chain.
It doesn’t mean there’s actually a shortage of meat, Sumner emphasized — farmers are still raising plenty of cows and pigs — but “I wouldn’t be surprised if there’s a supermarket chain here or there that ran out of hamburger in the afternoon,” Sumner said. “That’s the order of magnitude.” (Because the plants can’t accept as much meat as before, the prices paid to farmers for meat have plummeted, too.)
Wendy’s, Sumner explained, was particularly vulnerable to supplychain disruptions because it uses exclusively fresh, nonfrozen beef in its burgers. And Costco, he suspected, was responding more to the price increases of meat than to an actual scarcity. “That’s a strategy,” he said. “Rather than raise prices enough to slow down demand, do it with a bit of rationing.”
Woodard was able to reopen Smokin Woods this week — and even add a second popup location in the San Francisco restaurant Tastebuds — but getting ingredients for dinner is no easy task. He’s now buying his meat from a Sysco warehouse in Modesto. His brother, who lives in the area, is driving halfway to meet him for a handoff. Even then, quantities are limited. “They’re only allowing one case of meat per day per account,” said Woodard, who normally goes through more than two cases daily, and prices are up by 50%.
Until recently, higherend meat purveyors had seemed immune to disruptions in the meat supply chain, but they’re beginning to feel the effects too.
“In the last few weeks, we’re seeing prices double — in some cases triple,” said Clifford Pollard, owner of Cream Co. Meats, an Oakland company that specializes in ethically raised meat from smaller West Coast ranches. Precoronavirus, the company sold exclusively to restaurants, but it has now introduced direct toconsumer sales.
The smaller plants that Cream Co. depends on are also slowing down their processing lines, and sometimes turning away smaller ranchers in favor of bigger clients, Pollard says. Some Cream Co. suppliers process their own meat, but they’re getting inquiries from so many other buyers right now that they’re not able to sell to Cream Co. as much as they normally would.
All that means that artisan meat, which was already expensive, has become extremely expensive. At Palmetto, an Oakland steakhouse that opened on Monday, coowner Christ Aivaliotis had planned to offer a 12ounce rib eye for $38 for takeout. “We felt that was a bargain,” he said, given the beef ’s impeccable sourcing through Cream Co. “But by the time we trimmed it, we realized that if we sold it for $38 we’d be losing $5 per steak.” If they wanted to make a standard 20% to 25% margin on the dish, Aivaliotis said they’d have to sell the rib eye for $80.
They decided to compromise and sell it for $50, which still didn’t feel sustainable for their bottom line.
It’s normal for beef prices to fluctuate, but higherend meat tends to be more stable, said Cameron Hughes, owner of wagyu beef provider Holy Grail Steak Co. in San Francisco. “In the commodity market you see the much larger percentage swings, and right now is a pretty impressive swing,” said Hughes.
Because there’s such a demand for inexpensive products like ground beef at grocery stores, Hughes said, “you’re seeing a lot of highend beef pivoting into ground beef burger blends.”
Sumner said consumers should not be alarmed. Yes, prices are high, but he believes the worst is behind us. “I just don’t see anything in the horizon that suggests we’ve got bigger disruptions than the ones we’ve already gone through,” he said. “And most of us wouldn’t have even noticed if we hadn’t read the news.”