Beef Prices Expected to Drop

According to DeWayne Dove, vice president of risk management at Denver-based purchasing cooperative SpenDifference, beef prices could drop between 10 percent and 23 percent over the next year, depending on the cut. This change in cost is due, in large part, to an increase in national beef production—the number of cattle and the body weight of the average animal are expected to rise. Similarly, the price of corn, an important component of cattle feed, is about half of what it was in 2012.

For big quick-service burger chains like McDonald’s, Burger King and Wendy’s, they’re already taking this as an opportunity to gain market share by slashing prices. Wendy’s kicked off a price battle in October with its 4 for $4 Meal—a Jr. Bacon Cheeseburger, four chicken nuggets, fries and a drink. McDonald’s followed suit with a recent promotion offering Big Macs and Quarter Pounders in a 2-for-$5 value offering. Burger King decided to up the ante, too. They rolled out a 5 for $4 deal—a bacon cheeseburger, chicken nuggets, small drink and a chocolate chip cookie.

“The drop in beef prices is clearly the best news operators have had in many years,” Dove said. “With cheaper beef and lower prices of other commodities, restaurants are starting to consider lowering menu prices to increase customer counts and boost their profit margins at the same time.”