If you’re planning a pricey trip out to a steakhouse like the Keg, better make it sooner rather than later.
Beef prices have surged this summer, as North American cattle shortages have combined with tight supplies for other red meat such as pork to send costs through the roof and cresting all-time highs. And it’s more than grocers and grocery shoppers who are feeling the pinch.
Steakhouses and other restaurants whose menus feature red meat prominently are grappling with soaring wholesale costs, and are now being forced to re-evaluate menus and prices.
“We are having a hard look at it. We try not to have a kneejerk reaction to this sort of thing in terms of menu pricing, but it’s obviously a concern of ours,” said Doug Smith, a spokesperson for Richmond, B.C.-based Keg, a chain most will know for its higher-end dining that features prime rib and steaks.
Statscan reported last month retail prices at grocery stores have shot up by 15 per cent or more in some cases for beef and pork cuts.
READ MORE: Grilling gets pricey this summer as meat prices surge
While grocery chains have been able to simply flow much of the price increases onto shoppers, restaurants like the Keg, Montana’s and Ruth’s Chris Steakhouse are having a much more difficult time of it.
One big reason – menus, which take months or longer to plan and price accordingly.
The Keg, which operates about 100 locations around the country and several in the U.S., sets prices differently in different locations. A top 8 oz. sirloin dinner at its Granville Island location in Vancouver fetches $27 at the moment.
That compares to average grocery store prices for the same cut of just under $20 for a kilogram, or 35 ounces. While its still far cheaper to eat in, the gulf is narrowing as prices have moved higher still in June and July, Grier says.
So far, The Keg, which only uses fresh beef and therefore can’t hedge itself as much as other chains that use frozen red meat, has eaten the higher wholesale prices.
“We have not changed menu prices at this time,” Smith said. But that may not last.
“We’re currently renewing our projections further on into the year and we are in the process of planning a new menu which will include new beef price forecasts,” he said.
Steakhouses across North America are adjusting to the more costly environment.
“We’re preparing ourselves that it’s going to be a long journey on beef,” Arne Haak, an exec at Ruth’s Chris Steakhouse, told a conference in the United States in June. Ruth’s Chris Steakhouse owns locations in Toronto, southern Ontario and Calgary.
Steaks and other beef dishes at the mostly U.S. chain could rise by five per cent at those restaurants after Ruth’s locked in its beef needs at an elevated but fixed cost for the rest of the year, company officials said.
A smaller 12-ounce rib-eye steak has been added to its menu, a cut four ounces smaller than its traditional 16-ounce version.
The George Morris Centre’s Grier said U.S. prices for wholesale cattle (which affects Canadian prices) are up 22 per cent from the start of the year, based on his calculations.
Meanwhile, futures prices in Chicago, the biggest and most important exchange in North America for influencing wholesale and retail prices, continue to shoot higher.
“They’re just blowing up,” the analyst said.
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