Why beef costs more — and what Long Island steakhouses are doing about it

Rothmann’s Steakhouse held off for as long as it could...

After two years of seeing its wholesale beef costs rise, the East Norwich restaurant finally raised the prices of its steaks about four months ago, said Mark Serrantino, corporate chef at Rothmann’s.

The restaurant’s wholesale beef expenses are about 15% more than they were last year, but it only raised its own meat prices by about 5%, said Serrantino, adding that a standard prime steak in Rothmann's now ranges from $59 to $89.  

Rothmann’s, like many other steakhouses and other beef-heavy restaurants, is trying to find the right balance between remaining profitable amid rising beef prices and not turning customers off with cost hikes, par ticularly during the busy holiday season. 

“It's how do we juggle or balance customers’ spending habits and what's acceptable to our customers to raise [costs], knowing that the prices have gone up," said Jon Sherry, general manager of Rothmann's. "So how much can we raise it? What is the bar?"

Natio n wide, wholesale beef prices  are about 15% higher than they were last year, according to U.S. Department of Agriculture data.

Costs  are higher due to several factors, including the number of cattle in the nation falling to the lowest level since 1951 and drought in several Western states a few years ago driving up farms’ irrigation and other production costs, said Becca Jablonski, visiting associate professor and agricultural economist at Cornell University in Ithaca.

Low supplies and strong consumer demand for beef are helping to drive high cattle prices, which is spurring farmers to sell female cows for meat processing instead of retaining them for breeding, she said.

"Because you don’t know what prices are going to be in the future. You only know what prices are now,” Jablonski said.

The USDA has three quality grades for beef, with the highest-quality being prime, followed by choice and select.

Nationwide, the average per-pound retail price of USDA choice, boneless sirloin steak in November was $13.34, an 11% increase from $12.01 a year earlier, while overall grocery prices rose 1.9% during the same period, according to the U.S. Bureau of Labor Statistics. The retail price of all uncooked beef steak rose 15.2%, from $10.67 to $12.29 per pound, during the one-year period.

On the wholesale front, the average per-pound price of choice beef the week of Dec. 19 was $3.58, up 13.3% from $3.16 a year earlier, according to the USDA.

But wholesale costs were even higher in the third quarter of this year, hitting $4.13 per pound the week of Sept. 5, which was a 33% price increase from a year earlier. It was the highest price since May 8, 2020, when COVID-19 pandemic-related farm and factory shutdowns led to wholesale prices hitting $4.41 per pound.

This year, businesses preparing for the busy holiday season also might have been a factor in beef price hikes, said Mario Ortez, collegiate assistant professor of agribusiness and entrepreneurship at Virginia Tech in Blacksburg, Virginia.

“I would… imagine that many retailers and food service buyers were working to secure beef for the holiday period — Thanksgiving through Christmas — during September, which, combined with tight supplies, may have helped drive prices to those early-fall highs,” he said.

Volume matters

 Three of Bohlsen Restaurant Group’s six restaurants are high-end steakhouses — Tellers: An American Chophouse in Islip, and Prime, which has one location in Huntington and another in Stamford, Connecticut.

The restaurant group did not raise its steak prices after its wholesale beef costs soared this year, said Michael Bohlsen, who co-owns the Islip-based company with his brother, Kurt.

"Right now, what we're doing is eating the [higher] cost. The only way to make money in a restaurant is volume. If you raise your prices more, people come less, no matter what," Michael Bohlsen said. 

The most popular steak in Bohlsen’s restaurants is filet mignon, which costs the company about $50 a pound now at wholesale. That's down from $60 a month ago, he said — but it was about $43 a year ago.  

From mid-Nove mber to mid-December, the Bohlsen Restaurant Group’s spending on beef for its three steakhouses totaled $375,000, up 5.6% from the $355,000 it spent during the same period last year, he said. The increase wasn't bigger because the company is buying less meat amid a decline in customer visits due to uncertainty over the economy, he said. 

AG Steakhouse, a Brazilian steakhouse in Westbury, has a $70 menu item with unlimited cuts of 16 different meats. But in September, the restaurant rolled out a $55 version, the Taste of AG, that excludes three pricier meats — lamb chops, filet mignon and rib-eye, owner Long Phu said. 

AG Steakhouse’s wholesale meat costs are 40% higher this month than they were a year ago, going from $42,000 to $59,000, Phu said. About 20% of that increase is due to meat becoming more expensive, while the rest of the hike is attributable to more meat being bought because more customers are coming to the 1½-year-old restaurant, he said. 

Steakhouses tend to draw a bigger share of high-income customers who desire unique or special-occasion dining compared with sit-down restaurants in general, said David Henkes, senior principal at Technomic, a Chicago-based restaurant industry research firm. Those eateries are slightly more insulated from price hikes that deter customers from coming than the general restaurant industry, but they are not immune to fewer visits and lighter foot traffic, he said. 

Ralph and Kathleen Longo, who eat at Rothmann’s about twice a month, ate only appetizers at the restaurant Tuesday and had steak dinners there earlier in the month, the Locust Valley couple said.

Rising beef prices aren’t a deterrent to them visiting Rothmann’s, which offers excellent service and delicious food, said Kathleen Longo, 68.

“We enjoy the food. We enjoy the restaurant. It is what it is,” she said in the restaurant Tuesday night.

Some consumers say they are spending less on dining out amid higher prices.

"We have cut down on going to more expensive restaurants just because of high prices," said Seaford resident Angelo Demetriou while shopping for meat in a Stew Leonard’s supermarket in Farmingdale on Wednesday. "We look for local family restaurants that are in our area and we try to help them out by giving them our business."

Nationwide, beef prices aren't expected to fall drastically anytime soon, economists said.

 It would take until 2028 for farmers to breed enough additional cattle to bring down beef costs meaningfully, but the financial barriers to growing the herds are significant, said Ber nt  Nelson, economist at the American Farm Bureau Federation, a trade group based in Washington, D.C.

The input costs for farmers, including expenses for labor, equipment, feed and fertilizer, have increased more than 50% in the last five years, he said. Also, high interest rates on borrowing can be a deterrent for farmers who would have to pay for cows, veterinary care, pastures, equipment and other needs, Nelson said.

"You know there's a chance we could see some growth [in cattle numbers], but I think that chance is relatively small," he said. "Because if we look at where prices are for cattle right now, they're high. There's a lot of reasons for people to sell right now, and there's just not a lot of reasons for people to get in and try to grow the herd."