Shake Shack is seeing 'significant' increases in beef prices as coronavirus leads to plant closures
- Shake Shack said that beef prices have been significantly higher in recent weeks.
- Recent closures of meatpacking plants across the United States have stoked concerns about the country's food supply.
- The U.S. Department of Agriculture expects that meat prices for consumers will tick up slightly in 2020, with beef prices forecast to rise as much as 2%.
Shake Shack said Monday that it is seeing significantly higher beef prices as the coronavirus pandemic forces the closure of meatpacking plants.
"Over the last month, we've seen significant increases in beef, with the largest increase being realized over the last week," CFO Tara Comonte told analysts on the company's conference call disclosing first quarter earnings.
Shake Shack uses fresh ground beef in its burgers and touts the quality of its meat to attract consumers. Comonte said that chicken and pork prices are more predictable because the burger chain has pricing agreements in place.
"We do not, today, expect a supply issue. However, costs have really jumped," Shake Shack CEO Randy Garutti said.
Recent closures of meatpacking plants across the United States have stoked concerns about the country's food supply. Workers in meat processing plants often work shoulder to shoulder for hours at a time, making it nearly impossible for them to keep their distance from each other and prevent the spread of the virus.
Tyson Foods said earlier on Monday that the U.S. hog processing capacity has been nearly cut in half. The U.S. Department of Agriculture expects that meat prices for consumers will tick up slightly in 2020, with beef prices forecast to rise as much as 2%.
Last week, President Donald Trump invoked the Defense Production Act, a law intended for wartime usage, to require American meatpacking plants to stay open, even as worker deaths rise.
Shake Shack reported fiscal first-quarter adjusted earnings of 2 cents per share on revenue of $143.2 million. The company, like the broader restaurant industry, saw its same-store sales plummet in March after social distancing measures and stay-at-home orders led more consumers to cook their own meals.
Shares of Shake Shack rose 1% in extended trading on Monday.