Diners Served Up Tough Choices as Beef Shortage Forces Prices Higher

By ANDY FIXMER
Staff Reporter

Waiters at La Boheme are steering customers to fish and chicken entr & #233;es, and in the coming weeks the West Hollywood restaurant will be adding a new lamb dish to its menu.

The changes have little to do with shifting culinary tastes. The restaurant is just trying to find ways to absorb a 50 percent jump in the cost of beef without having to raise its prices.

"I'm maxed out on my prices right now," said Christine Banta, La Boheme's executive chef. "My best bet for trying to combat higher prices is making other items on the menu more attractive."

A confluence of events has cut supplies just as demand is increasing.

Canadian beef imports were banned in May, and only partially lifted in August, when a case of Mad Cow Disease was found in a herd. At the same time, an ongoing drought has made for poor grazing conditions, smaller herds and leaner cattle.

The dwindling supply comes as demand for beef has hit a 20-year high, fed in part by the opening of new steakhouses and the popularity of low-carbohydrate diets that have taken the onus off eating red meat.

The result has been a 70 percent increase in the cost of cattle at stockyards, where in the past year the price shot up to more than 48 cents per pound, to $1.15. This month, the asking price has eased back to about $1 a pound, but it isn't expected to fall much lower, according to Ron Gustafson, a beef analyst with the Economic Research Service of the U.S. Department of Agriculture.

"Restaurant owners are freaking out," said Martin Pine, a partner in Goldberg and Solovy Inc., a Vernon-based meat distributor. "The stuff went up so fast and so high it was crazy. It's only starting to come back down a bit now but no where near the level where it was."

At the Porterhouse Bistro in Beverly Hills, the prix fixe menu has remained at $29.50, even as its steak costs have increased 35 percent, to $8.75 per pound from $5.70.

Instead of raising prices, the restaurant decided to trim the size of its porterhouse by 4 ounces, according to Bobby Burton, the restaurant's general manager.

"There will probably be incremental raises in price but we are trying to hold off as long as possible," he said. "But with a prix fixe menu, we really don't have any margin. We're on a real thin line here."

Prices for prime cuts have increased far more than any other group because to meet demand, ranchers are rushing cattle to slaughter before they are fattened, resulting in fewer prime cuts and an increase in lower-quality meat.

At La Boheme, Banta said the restaurant has taken fillet mignon one of the most expensive cuts of meat off the regular menu. For special events, like weddings and corporate parties, the restaurant will serve a 6 ounce fillet 2 ounces smaller than in previous years and even then it tacks on extra $7 for each guest who orders it.

"The U.S. market is tapped out," said Banta. "With holiday parties coming up, it's just going to kill us if something doesn't give soon."

That's not expected to happen. The USDA has reported that beef conditions aren't likely to change until 2006, and that's assuming weather patterns improve. "It will take that much time before cattlemen can improve their grazing areas and raise herds large enough to meet demand," Gustafson said.

Until then, Pine said restaurants are going to have to raise prices or continue to take heavy losses on red meat dishes.

"They are crying the blues and there's nothing they can do about it," he said. "They can switch their menu items, but people want the fillets and the high-end choice steaks. We've been telling restaurants to raise their prices for months and they haven't listened, but they are starting to now."


Turkey Growers Slash Prices to Add to Share

Turkey farmers are licking their chops at the rising cost of beef.

"The cost of prime rib is going to make turkey a little more attractive this year," said Gary Flanagan, owner of Shelton's Poultry Inc., a Pomona organic turkey farm.

Flanagan said his farm would sell about 150,000 turkeys this year, an increase of about 15 percent from 2002. The retail price, about $2 a pound, has held steady from last year's.

That runs counter to the national industry, where the price of whole frozen turkeys has been falling. In August, the most recent month data is available, whole frozen turkeys sold for 13 cents less than the $1.87 a pound they commanded the year before, according to the United States Department of Agriculture.

And because of steep discounts supermarkets offer on birds during the holiday season, the price of turkey is expected to fall by more than 50 percent over the next two months.

Last year, discounting drove November turkey prices down 60 percent, to 74 cents a pound, from the month earlier. Prices rebounded quickly, selling in December 2002 for 82 cents a pound before returning to $1.43 in January.

Flanagan said his turkeys don't come frozen in a supermarket, so he claims to not be affected by industry trends. Instead, he said his prices have held steady because his overhead costs have remained flat.

"Our demand is driven by people who want to switch over to organic," he said. "We base our turkey prices on the cost of feed, the cost of living, and all those factors. And those have all been fairly constant this year."

Andy Fixmer

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