As restaurants reopen in Fresno, they are finding beef in short supply and paying more to get it.
That’s because the COVID-19 pandemic has closed down meatpacking plants throughout the country after reported outbreaks.
“We had a disruption at the processing end, where the cattle go to slaughter,” said Jimmy Maxey, an executive at Fresno meat processor Certified Meats. “When you have that disruption, then you have a disruption in the market.”
Max’s Bistro, a restaurant renowned for its hamburgers, says it has managed to keep up on supply while dealing with higher costs.
And, Colorado Grill, a quick-serve restaurant with three locations in Fresno, has seen a 20% increase in beef prices, according to investor Ali Nekumanesh.
COVID Causes Supply Chain Problems
Maxey said the problem is a basic lesson in economics.
“Simple supply and demand. Then you threw a couple of monkey wrenches in the marketplace,” Maxey said. “It was too many plants all at once had the problem. It reverberated through the marketplace.”
According to industry publication Meat and Poultry, dozens of American plants closed because of COVID-19 outbreaks. None are listed in California. Central Valley Meat Company in Hanford discovered positive coronavirus cases when pre-screening employees, but did not close the plant.
“You have a certain plant that has a problem and they shut it down for a few days to go in and do to retrofit it to make it safer for the people to work. When that happens, you disrupt the supply,” Maxey said.
When the supply decreases and demand stays constant or rises, prices increase.
Maxey’s Certified Meat buys from processors and packages meat for sale to grocery stores and restaurants.
“Meat was harder to get and higher priced. The good thing is, we didn’t buy everything from one plant,” Maxey said.
Local Restaurants Adapt
“The pricing has gone up, not because there’s not enough cattle out there, but what I’m being told by purveyors is there just isn’t enough processors to process the meat.” — JJ Wettstead, owner Max’s Bistro
Max’s Bistro is coping with pandemic realities. It recently reopened for dine-in service while still offering take-out and curbside service.
Because of the supply shortage, Max’s owner JJ Wettstead said that beef prices have increased by 30%.
“The pricing has gone up, not because there’s not enough cattle out there, but what I’m being told by purveyors is there just isn’t enough processors to process the meat,” Wettstead said.
Other cuts of meat such as steak have also been affected, said Max’s executive chef McKinzie Bridges. That has brought tweaks in the menu to offer quality meals at an affordable price.
“We took the short rib off the menu. That was something that was a long-standing favorite,” Bridges said. “But that price right there went up close to two dollars more a pound for something that’s a ‘cheaper’ cut of meat. So we decided to temporarily remove that and do some more seafood and vegan/vegetarian options.”
Raising Prices is a ‘Catch-22’
Nekumanesh — who is also the executive vice president of Deli Delicious — says Colorado Grill plans to reopen its dine-in service next week.
“We’ve experienced slight issues. I imagine things will get a little bit touchy once we fully open up and the supply issue continues,” Nekumanesh said.
Nekumanesh says raising prices would be a “Catch-22.”
“You’re darned if you do, you’re darned if you don’t. Consumers are very price-conscious,” Nekumanesh said.
When Will the Beef Shortage End?
Nekumanesh is hoping the supply problem is short term and is absorbing the higher costs for now. But, if supply problems continue into the next quarter, that may change.
“Five months ago, we were doing six-month planning. And, now this. I want to be optimistic. The market is resilient,” Nekumanesh said. “In the long run, we’ll come out ahead.”
At Max’s Bistro, the expectation is that the beef supply chain will get back to normal in the fall.
But Maxey thinks the disruption could linger longer.
“Whenever you disrupt the marketplace, you send signals that sometimes reverberate for several years until it gets back to normal,” Maxey said.