The sharply increased cost of eggs has been in the headlines for months, but in the latest round of earnings, restaurant chains pointed to another inflationary threat this year: beef.
In a presentation at UBS Global Consumer & Retail Conference last week, Shake Shack CFO Katie Fogertey said beef inflation was probably one of the biggest risks on the cost-of-goods side. “We don’t hedge our beef costs, and this is the biggest chunk of our food costs is in beef,” she said.
Beef costs rose by low single digits in the fourth quarter, Shake Shack said last month when reporting fourth-quarter earnings. But the company expects mid- to high-single digit commodity inflation for the year, led by beef costs—and that was before any consideration of tariffs, though CEO Rob Lynch doesn’t expect tariffs to have much of an impact because Shake Shack buys mostly domestic product.
The expected higher price of beef is in part the result of egg inflation, Lynch said.
Shake Shack doesn’t offer breakfast, so eggs aren’t really a problem for that brand, he noted.
“But other restaurant companies that have exposure to eggs may be moving away from eggs in the time being, which means they’re going to offer more beef products or chicken products to complement or substitute for that high-cost item,” Lynch said. “And when that consumption demand changes, it has the potential to change even some domestic pricing.”
The rising cost of beef has been a concern for years. The U.S. beef herd is reportedly the smallest since 1961 as a result of lower prices, drought and higher costs for farmers, forcing some to send more females into meat production, according to a Bloomberg report last year.
It takes more time to grow a cow, of course, than a chicken or other proteins. The downcycle, however, was not expected to last as long as it has. The U.S. Department of Agriculture had expected cattle inventory to improve this year, but now the agency is projecting recovery will begin in 2027, though that was before the Trump 2.0 administration’s on-again-off-again tariff wars, and aggressive approach on immigration, both factors that could further pressure ranchers.
The steak-heavy Texas Roadhouse, for example, raised its expectation of commodity inflation to between 3% and 4% this year, based on tighter than expected cattle supply in the second half of 2025.
“You need to see ranchers retaining cattle for breeding,” Michael Bailen, Texas Roadhouse’s senior director of investor relations, told analysts in February. “We have not seen a lot of that happening yet. So it would not be surprising to see us remaining in a cattle cycle for some time now.”
Likewise, Chicago-based Portillo’s, known for its Italian beef sandwiches, said it is expecting commodity inflation between 3% and 5% in 2025, with the most significant pressures coming from beef.
The average cost of ground chuck, for example, in U.S. cities increased more than 10% in February, year over year. Between January and February alone this year, the cost increased 4.5%, according to the U.S. Bureau of Statistics.
The USDA in a forecast last month said beef and veal prices are predicted to increase 3.2% this year. By comparison, chicken prices were expected to be about the same as last year because of strong poultry production, even though the avian flu remains a threat and is largely to blame for higher egg prices.
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