The US Department of Agriculture now estimates that retail beef prices will increase another 2.5% to 3.5% this year, resulting in nearly a 30% rise over the past five years. This acceleration of beef prices has affected every entity throughout the restaurant industry. Del Frisco’s Restaurant Group (NASDAQ: DFRG), Texas Roadhouse (NASDAQ: TXRH), and Bloomin Brands (NASDAQ: BLMN) are a few companies known for their steaks. However, there are several reasons why Del Frisco’s steakhouses aren’t as worried about rising beef prices as their competitors.
Rising beef prices
The summer of 2013 was actually normal regarding precipitation. Despite that, previous summers have had a lagging effect on the entire farming industry. It takes years for cattle feed to increase in production after enduring several years of droughts — and even longer for cattle herd sizes to return to normal.
Even if this coming summer is a repeat of 2013, farmers will still be hesitant to rebuild cow herds in an environment where there will still be uncertainty over the availability of cattle feed.