Red meat putting you in the red?

Operators and their customers who love meat are starting to fork over more money to put protein on the plate. The problem starts with the feed. American cattle are traditionally finished on grain, but farmers looking for larger profits are now growing corn for ethanol production instead of animal feed. Cow/calf producers are currently bearing the brunt of higher feed prices, says Gregg Doud, chief economist for the National Cattlemen’s Beef Association. But economist Ephraim Leibtag with the Economic Research Service of the USDA reports that wholesale beef prices rose 1 percent in each of the last three months—not a huge uptick, but significant. “We’re now close to 5 percent higher year over year,” he says, adding that higher corn prices should remain a factor through the next six months.

Corn prices shouldn’t affect other red meats quite as much. Although hogs are also grain-fed, they are slaughtered earlier—seven months compared to around 18 months for cattle. Currently, the pork supply is large enough that prices have remained stable, but that may change as grain grows scarcer. Veal and lamb also reach the market faster—four and a half to six months and six to eight months respectively. Veal are formula-fed a diet of whey and whey products, while lamb are raised primarily on forage (grass pasture), sometimes with a short finishing time (30 to 45 days) on corn and alfalfa. Grass-fed cattle are still a very small percentage of the market.

It will take smart buying strategies and a bit of menu flexibility to make money off the center of the plate in the next few months. Think about locking in contracts with suppliers, subbing one red meat for another and cutting back on portion sizes before you’re hit hard with food cost increases and must raise menu prices.

Sourcing beef

Prime beef is most vulnerable to rising prices—it’s in great demand by high-end restaurants and the burgeoning steakhouse segment but the supply is smaller. It also represents a greater investment for the producer; an animal has to stay on feed longer to reach prime grade than it does choice, explains Ann Rasor Wells of the North American Meat Processors Association (NAMP). The supply of choice is more ample—good news for casual dining and midscale restaurants where it’s a mainstay. But fine-dining operators who always bought prime might be surprised; the quality, tenderness and consistency of this grade is better than it was five years ago, according to the National Cattlemen’s Beef Association (NCBA).

To soften the effect of rising beef costs, Doud suggests two strategies. “Pay attention to seasonal price patterns. More cattle come to market in the summer, so prices are slightly lower,” he says. And work with suppliers on setting up more sophisticated risk management systems. “Contract to buy further out in the future; instead of two to six weeks in advance, try for six weeks to six months,” Doud advises. Feedlot operators and processors are using the futures market to hedge, and restaurants should be doing the same.

Doud also points to two industry trends that can aid in purchasing: The proliferation of branded beef and a broader portfolio of products. More than 150 brands are now available to foodservice buyers, he says, and calling out these names on the menu can add prestige and a premium. Angus and Certified Angus Beef are probably the most widely used; Snake River Farms American Kobe is gaining ground, too. Operators can also choose from an array of less costly cuts, substituting beef tri-tip roast for top sirloin, for example, or a petite tender for tenderloin

Canadian beef can be a smart buy as well. After the BSE scare, Canada has been very proactive in instituting cattle slaughtering and tracking methods to ensure a safe supply. Once again, Canadian beef is being imported to the United States to help meet demand—about 4 percent of beef consumed by Americans is from Canada.

The “other” red meats

Veal, lamb and pork are not seen as often in the center of the plate—mainly because so much more beef is produced. Even so, the industry groups dedicated to these proteins are taking strides to change that.

Veal is making news through a just-launched program that encourages foodservice operators to source underutilized cuts. Taking a page from the cattle industry—which funded a program to promote “new” cuts such as the flat iron and petite tender—two universities conducted research to explore muscles in the veal chuck and shoulder for marketing potential. The veal optimization study found that the square cut chuck yielded a veal flat iron, petite tender, shoulder tender, shoulder filet and boneless shoulder rib.

Jim Eidman, executive VP of sales and marketing at Strauss Veal and Lamb in Wisconsin feels there are exciting opportunities in both casual and fine dining for these lower-cost cuts. “The Veal Committee (of the National Cattlemen’s Beef Board) has worked with chefs to develop recipes for these products and restaurants are starting to feature them in grilled, braised and sautéed dishes,” he says. The industry is also focusing on “the next generation” of veal—value-added products. Strauss Veal and Lamb has seen orders increase for veal seasoned with rubs and marinades, sausages with a diversity of flavor profiles and veal meatballs.

Although corn is not an issue in raising veal, producers face similar feed shortages. “We’re now competing with the energy drink companies for whey and whey products—the staple of the veal calf’s diet,” Eidman explains. “Historical highs for feed have been exceeded and we’re constantly looking for replacements.” That’s one of the reasons the cost for high-demand veal scaloppine and chops has risen and the industry is introducing alternative cuts.

Pork products are being developed for speed of service and more definitive flavor profiles, notes Paul Perfilio, national foodservice marketing manager for the National Pork Board. He cites two De Luigi breakfast sausage introductions—blueberry-maple and apple-cinnamon—as examples. “With the breakfast daypart exploding, products like these are much in demand,” he says.

Like the beef industry, pork folks are marketing fresh items from “less desirable” sections of the hog. “Pig wings,” pork stix and “hamm’rs” are fabricated from the hind shank of the animal into 8- to 10-ounce portions that resemble turkey drumsticks. When slow-roasted, they shrink to the size of small turkey drumsticks to make hand-held appetizers. And a pork leg—similar in look to a large steamship roast—is meeting with success on catering and buffet menus. “There’s also more interest in all-natural pork and a growing number of producers are getting into breed specific pigs raised sustainably,” Perfilio adds. “Consumers really want to know where their food is coming from.”

The pork industry is closely watching the ethanol situation, too. Hog farmers may start planting corn instead of raising hogs because it’s more profitable, which can hurt the pork supply with a double wallop. Pork belly prices are higher this year because of the huge demand for bacon and this should continue through the summer. “These are interesting times for protein producers,” says Perfilio. “We’re not sure yet where it will shake out.”

Lamb is benefiting from the “eat local” movement. “This trend has increased the use of lamb in foodservice and changed the way we market it,” says Margaret Magruder, chair of the American Lamb Board and a third-generation sheep farmer in Oregon. “Restaurants like to identify and describe the source and customers want to get a feel for who is sending the lamb to their plate.” Since lamb is raised primarily (or exclusively) on grass and without hormones, it’s a good story to tell.

The industry is also realizing it has a whole lamb to market. Although chops and racks are still the most popular at upscale spots, shanks are catching up. And burgers, stir-fry strips, shoulder for “barbecue” and other higher-margin cuts are showing up on lower-priced menus. A 2006 report from FoodBeat, a menu tracking company, notes that 81 percent of Trendspotter restaurants in their database feature lamb on the menu; items like Saddle of Oregon Lamb and Colorado Lamb Dip Sandwich are examples of the selections. Vacuum-packed, boxed cuts are more widely available, making lamb more convenient for casual operations.

“Prices for domestic lamb are pretty stable this year,” says Magruder. “Forage production has recovered after the drought and we raise sheep year round, so there are no boom or bust times.” The big challenge for American producers is lamb imported from Australia and New Zealand—its price is often lower because of the weaker dollar. However, domestic lamb has the advantage of delivering larger-size chops and other cuts. As a purchaser, weigh the pros and cons of each and monitor price fluctuations for domestic and imported lamb.

Get a little wild

Rich Flocchini, principal in Sierra Meat Company in Reno, Nevada, specializes in sourcing domesticized game. “We’ve seen a large increase in demand for ‘unusual’ red meats by the foodservice sector,” says Flocchini, who has raised buffalo himself since the 1960s and imports venison and kangaroo from down under. Lately, venison has become the darling of many chefs—its mild flavor, natural tenderness and lean nutrition profile make it an appealing red meat alternative.

Todd Gray, the chef-owner of Equinox in Washington, D.C., purchases Cervena venison in vacuum packs from his purveyor. It comes trimmed and ready to go—“adding up to a good food cost,” he reports. Flocchini also believes in portion cutting as a moneysaving measure. “All our meat is portion cut with a laser knife. It’s much more precise and saves labor and waste while controlling food costs,” he says.

Gray has been doing a lot with the Denver leg and saddle cuts of venison. “Since the meat is so lean, it’s important to keep it medium-rare,” he explains. “I often slice the leg into medallions and quickly sauté them to fan out over a starch.” The saddle, which can be divided as an eight-rib rack or tenderloin, takes well to grilling.