RESTAURANT CHAINS FEELING CHINESE DRIVEN MEAT PRICE INFLATION

Bloomberg reports:

  • Meat costs are finally going up, and that’s weighing on a dining industry that’s already reeling from rising minimum wages.
  • McDONALDS: McDonald’s Corp. warned investors Tuesday its 2019 commodity costs in the U.S. could rise as much as 3 percent, more than the 1 to 2 percent inflation it had forecast just three months ago.
  • BJ RESTAURANTS (MATASII Watch List): Brewhouse chain BJ’s Restaurants Inc. last week said it’s expecting increases in pork prices,
  • TEXAS ROADHOUSE (MATASII Watch List): Texas Roadhouse Inc., an American chain specializing in steaks, higher prices are on the menu, with customers paying as much as 3 percent more as it tries to offset rising costs. “That’s going to go a long ways on margins,” said President Scott Colosi.
  • YUM CHINA HOLDINGS (KFC):  China’s KFC operator Yum China Holdings Inc. said spiking poultry costs will weigh down margins for the rest of the year.

CHINA'S SWINE FEVER

  • A swine fever that’s decimating China’s hog industry is part of the problem, with meat processors around the world rushing to make up for shortages caused by the outbreak.
  • Pork supplies are tighter across the U.S. and Europe, pushing up protein prices across the board as companies look to substitute with more chicken and beef.

Spot prices are rising for beef, pork and chicken

  • Six weeks ago we reported that US federal agents seized 1 million pounds, or 454 metric tons, of pork smuggled from China to the same port amid growing fears the meat could contain traces of the African swine fever virus that has ravaged the Asian country’s hog herd.

OVERALL INFLATION PRESSURES

  • Restaurants, also facing higher labor costs across the U.S., are being forced to raise menu prices as a result.
  • Higher menu prices come on top of the more expensive sodas and diapers Americans are already ponying up for in the grocery aisles.

Additional reports show

  • US retail prices for boneless hams hit $4.31 per pound in March, the highest since 2015.

  • In the European Union, wholesale pig prices have climbed 16% in two months, while lean hog futures traded on the CME are higher by 32% since the February lows.

But as we know, inflation, like every other basic economic "mystery" that the Fed tries fruitlessly to understand, will only wind up being an issue after it's too late to correct the problem. 

 



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SOURCE:  04-30-19  -  - "Rising Meat Prices Threaten Restaurant Chains’ Bottom Lines"

SOURCE:  04-30-19  -  - "Restaurants Roasted By Rising Meat Prices"

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