Record beef prices take a bite out of restaurants

Soaring beef prices are hitting restaurant companies at the wrong time.

The price of beef has hit record levels this summer, hurting operator profitability just as much of the industry is pushing discounts as heavily as they ever have.

On Thursday, for instance, Burger King owner Restaurant Brands International said that beef costs are eating into operator profitability. The company said that its beef costs are up in the “high teens” compared with 2024.

Executives suggested that the higher costs and lower profitability could influence the pace of remodels at the chain, a key strategy. The company said that it still expects about 400 store remodels this year. But the future could be up in the air.

“We’re mindful of the commodity cycle and impacts on profitability as we manage future remodel schedules with franchisees,” RBI CEO Josh Kobza told analysts.

“Beef prices have been elevated, and that does have some impact on our franchisees’ profitability,” he said later. But, he said, “it’s not going to change our long-term plan.” Burger King still expects 85% of restaurants to be remodeled in the coming years.

The price of 81% lean ground beef is up about 16% over the past year, according to Beef Checkoff. And just about every other cut of beef is up in the mid-to-high teens compared with a year ago.

That’s coming at a time when restaurant chains have relatively little in the way of pricing power while consumers dine more frequently on deals than they have in decades. Nearly three out of 10 restaurant visits is on a deal these days, according to the data firm Circana.

At Shake Shack, beef prices are expected to be up in the mid-teens in the second half of this year. But the company is taking steps to avoid major price hikes.