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Beef prices could pressure restaurant margins

  • Beef prices keep moving higher as a drought in Texas diminishes what's already a tight supply of cattle in the U.S.
  • Though beef demand in the U.S. is peaking with the summer grilling season starting, the impact on margins for sellers from higher wholesale prices could be felt later this year when consumers push back against absorbing the extra costs.
  • What to watch: Chipotle (CMG) passed on its menu price increases to consumers with relative ease, but other chains (MCD, BKW, WEN, TXRH, BLMN, RUTH) are expected to feel pressure on their bottom lines from higher beef prices.
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Comments (10)
  • thebaker
    , contributor
    Comments (12) | Send Message
     
    I took beef off my cafe menu.. to costly
    17 Jun 2014, 11:53 AM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1098) | Send Message
     
    What kind of cafe do you run? Is it a full blown restaurant or is it one of those coffee places with sandwitches? Did you replace beef with anything? Do you sell more chicken, eggs, pork and or mushroom items now that beef is gone?

     

    Hope you do not mind my curiosity but genuine reports from the trenches are very valuable for us investors.
    17 Jun 2014, 12:01 PM Reply Like
  • thebaker
    , contributor
    Comments (12) | Send Message
     
    It's a breakfast and lunch spot Just my wife and I
    Beef is not our number one seller any way. ( Eggs followed by our fresh turkey is )
    we do not sell enough beef to justify buying it any more ( I do not use deli meat I get fresh Angus beef and make the roast my self)
    Eggs and Milk have gone up a lot as well, the Turkey has held the same price more or less .
    And we won't even get into my new contract price for electricity ( up 25%)

     

    but then again in the northeast everything is expensive
    17 Jun 2014, 02:18 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1098) | Send Message
     
    Thanks for sharing. Sorry to hear about your cost issues.
    17 Jun 2014, 02:26 PM Reply Like
  • prof126
    , contributor
    Comments (51) | Send Message
     
    Just a tad ridiculous. A nickel more for a sandwich will hardly stop someone from eating at these fast food restaurants. Did someone short them perhaps?
    17 Jun 2014, 12:07 PM Reply Like
  • jumpnjoey77
    , contributor
    Comments (633) | Send Message
     
    People trade down.
    17 Jun 2014, 01:13 PM Reply Like
  • jumpnjoey77
    , contributor
    Comments (633) | Send Message
     
    Effects of that draught a couple years ago when whole herds had to be slaughtered.
    17 Jun 2014, 01:12 PM Reply Like
  • Milo Jones
    , contributor
    Comments (18) | Send Message
     
    At least beef prices hit all (burger) places relatively equally.
    17 Jun 2014, 01:23 PM Reply Like
  • efuerter 1
    , contributor
    Comments (6) | Send Message
     
    Don't forget that most of the national steakhouse chains enter into futures contracts to insure their beef costs remain stable. I assume that Bloomin Brands would be doing this.
    17 Jun 2014, 09:06 PM Reply Like
  • prof126
    , contributor
    Comments (51) | Send Message
     
    Boy am I glad that I did not panic and sell my WEN today. Lol
    18 Jun 2014, 07:27 PM Reply Like
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