More customers are going to Wendy’s and asking, “Where’s the beef?”
The Dublin, Ohio-based burger chain’s fresh beef shortage has led to the removal of burgers from the menu at as many as 1,000 locations.
Stephens analyst James Rutherford said a study of online menus for Wendy’s locations found that 18% of them, or more than 1,000 restaurants, were advertising only chicken products. Another analyst, Chris O’Cull of Stifel, said in a note Monday that 5% to 10% of Wendy’s locations were out of burgers.
As Restaurant Business reported last week, Wendy’s has been having an increasingly difficult time sourcing the beef used for its burgers.
The sharp decline in cattle production has made it more difficult for restaurant chains that use fresh beef in their burgers to find enough supply.
Many chains typically buy both 50% beef trim and 90% beef trim to come up with the right formula for their ground beef. The price for 50% beef trim has skyrocketed in recent weeks amid supply shortages, driving up costs for most restaurant chains that serve burgers.
But it’s particularly difficult for restaurant chains that serve fresh beef, because they have fewer options to source their product, while companies that use frozen beef don’t have that challenge.
On his company’s first quarter earnings call Monday, Shake Shack CEO Randy Garutti said his company has had “zero” problems sourcing beef, but noted that costs have risen considerably. “The plants that we use have not been impacted,” he said, according to a transcript of the call on financial services site Sentieo. “We do not, today, expect a supply issue. However, costs have really jumped over these last few weeks and there is some expectation of that moving forward.”
The beef shortage comes as plants have slowed production or closed altogether amid concerns of the coronavirus and the spread of the disease around the country. President Trump has ordered the companies back into operation, and experts expect supply challenges to ease in the coming weeks.
In his note, however, O’Cull suggested that “the key to plant reopenings is better labor relations more than economic demand, which makes predictions for plant recovery difficult.”