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Agricultural News


Foodservice Purchases of Beef Outpace Growth in the Sector

Fri, 05 Apr 2013 10:54:59 CDT

Foodservice Purchases of Beef Outpace Growth in the Sector
Each year between 700 and 1,000 significant foodservice purchasing executives report their wholesale beef purchases for the Foodservice Volumetric study. Enough data is collected to allow fairly robust extrapolations to the industry at large. Estimates are also cross-checked with 25 distributors and 5 protein processors focused on the foodservice channel. The time range covered is 12 months through a September month-end. A margin of error of +/- 10% should be assumed when interpreting pound estimates.


In the 2012 report, volume sales for beef were reported up 1.8%, while real sales growth in the entire channel was tracked at 1.5%. Thus, even in a year where beef per pound prices escalated coupled with overall food inflation, beef was able to outpace growth of the foodservice channel overall. Willingness to pay higher prices is a great indicator of strong demand. Compared to 2007, the foodservice industry is down 9.6% in total sales, while beef volume is down 7.8% over the same timeframe. If the foodservice industry continues to recover, there is still upward pound potential for beef and there are strong indicators that foodservice operators have the opportunity to capitalize on the distinctive power and allure of beef.


The domestic foodservice market for beef is enormous, with close to 8 billion beef pounds being sold in commercial and non-commercial establishments. Beef wholesale operator purchases reached nearly $33 billion in 2012.


The recession hit foodservice hard, with a loss in traffic (customer visits) and a change in traffic patterns, with fine dining restaurants feeling a disproportionate share of the industry's loss. Some of the traffic leaving FSRs (full service restaurants) shifted to lower priced LSRs (limited service restaurants). Restaurants also became more deal focused -either through value menus in LSRs or price specials (example - an appetizer and two entrees for a reduced price). Beef purchases shared some of the pain in foodservice, with approximately $3 billion in lost foodservice beef sales from 2007-2009.   


"We use Volumetric information to identify opportunities and highlight the areas that are currently aligned with checkoff work, and use it for strategic planning when it comes to future foodservice program development," says Trevor Amen, director of market intelligence for the National Cattlemen's Beef Association (NCBA), contractor to the Beef Checkoff Program. "One highlight to point out is that both volume and demand for ground beef at foodservice has remained steadily strong. And, we've seen great growth in beef volume from steaks, roasts and those whole muscle cuts."

Since 2010 the story has been very different, with beef wholesale sales growing by approximately $8.5 billion. Even since the peak beef dollar sales year of 2007, sales are up by approximately $5.5 billion.            


"As a beef producer, you can be proud that your checkoff is being used to understand in foodservice and the market conditions, as well as the changing consumer," says Amen. "We then apply these research findings to design programs to meet the needs and preferences of the consumer with the ultimate goal of increasing demand for beef with consumers. Our team also works closely with foodservice operators to build beef's presence on their menus and further build preference for beef with their patrons."The bottom line?


The beef industry must continue to provide great quality beef to this important channel. In addition, innovation is important to provide restaurant operators with a range of profit opportunities with beef. The Beef Checkoff Program can be a key resource for helping operators get the most out of the beef they purchase, maximizing utilization and stretching their purchasing dollar.


To read the complete story, visit the checkoff's Beef Issues Quarterly e-newsletter.


   

 

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