From farm to table, high beef prices squeeze margins. How our steakhouse stock is balancing costs
Beef costs are still pressuring portfolio name Texas Roadhouse and leading to shakeups at other industry players.
TL;DR
- Tyson Foods is closing its beef plant in Lexington, Nebraska, resulting in 3,200 job losses, as part of a plan to "right-size its beef business."
- The company anticipates losing up to $600 million on beef production next fiscal year due to significantly higher cattle acquisition costs.
- Live cattle futures have increased by roughly 18% year-to-date, reaching all-time highs in mid-October before a slight decline and subsequent rise in December.
- Restaurants like Texas Roadhouse are experiencing squeezed profit margins due to commodity and wage inflation, despite minimal menu price increases.
- Texas Roadhouse has raised its full-year 2025 commodity inflation guidance to 6% and forecasts 7% for 2026.
- The historic lows in the cattle herd are attributed to years of regional droughts, restricted feeding supplies, and the three-year cattle production cycle.
- White House initiatives to curb high beef prices include reducing tariffs on Brazilian beef and announcing trade agreements with Latin American nations to boost import quotas.
- Experts are skeptical that these government interventions will yield meaningful results and could potentially hinder efforts to expand the national herd.