Beef prices take a bite out of restaurant reopening

“ It’s been a bumpy road. We closed because we are part of the movement who was trying to flatten the curb, and then three weeks ago we thought we are ready to go back to work just to find out that prices for specific items have gone up,” Padilla said.

Prices for beef and pork, two key ingredients in many of the restaurant’s dishes have skyrocketed.

“In the case of beef, it went up by 85 per cent. It was pretty much almost double the price,” he said.

The jump in prices is something market analysts say can be attributed to the current market conditions.

“ You need to remember that beef is a very inelastic product meaning any small changes to demand or supply will result in relatively large price responses,” said Brenna Grant of Canfax Research Services.

“Since COVID-19 started back in March we’ve had a number of demand and supply shocks to the system that have resulted in a lot of volatility in wholesale beef prices that restaurants would be facing right now,” added Grant.

Some of those demand and supply shocks include the brief closure of the Cargill meat plant, shift reductions at JBS and consumer stockpiling.

Padilla was lucky enough to find a supplier offering beef at a cost 60 per cent higher- a drop from the previous 85 per cent.

But with prices still sky high, the volatility in the market has led Padilla with no choice but to raise prices for the time being as he looks to reopen his restaurant Tuesday.

“The items with beef with have to go up 20 per cent hopefully for a short period of time to get us through this rough patch, and like I said hopefully things will go back to normal and we can always adjust the prices to whatever the market is” Padilla said.

Items with chicken or pork will undergo an eight per cent increase just to keep up.

“It’s tough the environment out there is very competitive and we like to have comparative options, but we don’t want to compromise quality,” he said.

The spike comes as restaurants desperately try to recoup their losses.

Padilla like so many restaurant owners qualified for the Canada Emergency Business Loan, an interest-free government loan that Padilla says was crucial to staying afloat during the shutdown.

“My cash flow would have been soaring right now because I mean we haven’t had sales in two months, and you still have to pay rent, you still have to pay services and at some point you have to bring back your staff,”

But Padilla says the money used from the loan will take some time to pay off.

“We would like to think we will do it in three years, I mean we are optimistic about that, but I mean we will never know until we reopen and see the tendency of people to go out and eat.” said Padilla.

As for when beef prices will stabilize, industry analysts say it is hard to tell.

“it’s really hard to say right now because there is so much unknown. But it is expected that we will see price adjustments as we see supplies stabilize, and also as we see restaurant demand come back on line so that will be another couple weeks to a month,” said Grant.

For now it is another adjustment for restaurant owners like Padilla who are trying to reopen their doors once again.

by Tiffany Goodwein

Beef prices take a bite out of restaurant reopening

Our Community