The Rise of Food Prices & What’s Ahead
You’ve probably observed the rising cost of the food you order for your restaurant. It would be hard not to notice—the price change hasn’t exactly been subtle! The USDA reports that meat prices are at record highs, and they’re only expected to get higher. Just this year, pork prices rose about 11 percent, while beef prices are expected to rise about 10 to 11 percent.
What’s behind this drastic price increase? There isn’t just one culprit—instead, there are several components. First, corn prices are going up. As you likely know, corn is used for a lot more than just food in the U.S. It’s also used to produce ethanol, which uses up a good portion of the corn crop—and that means prices are rising. And your restaurant doesn’t just rely on corn to produce a mean succotash! Corn is also used in the sweeteners you buy and it’s fed to the cows that provide your beef. It’s clear to see how rising corn prices create a chain reaction that leads to higher costs everywhere. And since corn demand is higher than ever, don’t expect prices to come down anytime soon.
Bad weather is also a major cause of rising prices. One particular area of concern in Brazil, where severe droughts caused price increases for Arabica coffee. In fact, Brazil’s National Coffee Council estimates that the country will produce about 20% less Arabica coffee than expected. And in Florida, hurricanes are causing problems with the state’s orange crop, which leads to higher prices for orange juice. Unfortunately, we can’t control the weather, which means there’s no way to control weather-disaster-related food cost increases.
And finally, when considering the rising price of the food you serve in your restaurant, it’s important not to overlook China’s influence. What does a county an ocean away from you have to do with your food cost? As it turns out, a lot! As the Chinese people become more financially secure, their demand for protein increases. This often means beef, and cows need a lot of feed. As the USDA reports, in 2013 alone, China’s grain imports went up to 22.8 million tons. Huge demand like that can decrease the supply in the states, which can end up leading to higher food prices.
No matter what’s causing high food prices, there’s one thing everyone can agree on: they’re not going away immediately. Although prices may go down slowly in the future, restaurant owners need to figure out what they can do to save money right now. You might consider using smaller cuts of meats, trying less expensive types of protein, or offering more vegetarian dishes that utilize cheaper ingredients. What are you doing to handle higher food costs at your restaurant?