DELCO FOODS
VOL. 25, NO. 10
RE-TOOLING
KEY FACTORS
YOUR MENU
TO DETERMINE
THE FUTURE By Peter Thor, President, Bellissimo Foods Uncertainty of the future is a normal part of all our lives, but this year has tested the boundaries of normal. To better prepare for both survival and success in our uncertain future, we examine likely supply and consumer demand scenarios going into 2021. The elephant in the room is, of course, the Corona Virus. While some discount its implications, it has and will continue to effect food supply and prices, as well as demand. Until a vaccine or cure for Corona Virus is widely distributed, there will be disruption and supply issues, particularly in protein due to the human labor requirements. On the supply side, more than 2000 farms feed our 328 million consumers, but the processing plant middle is highly concentrated. The largest 4 companies process about 75% of beef, pork, and poultry; and the largest 4 cheese makers control the majority of cheese sold in both retail and foodservice. Plant workers are necessarily exposed and as a result many plants continue to run 50-85% capacity. Until a vaccine is widely available, shortages and higher prices that are likely to continue. Weather related damages in the Southeast and West are affecting poultry and vegetable production. International factors also help determine supply and pricing in the US. While Covid receives the most attention, ASF (African Swine Fever) has spread to Europe and recently been discovered in Germany. The resultant export ban and pig culls are likely to increase international demand for US meat exports and higher prices. Bottom line, we expect supply to (continued on page 2)
A PROUD DISTRIBUTOR OF BELLISSIMO
OCTOBER 2020
In these uncertain times, re-tooling your menu is critical to attract new customers, add new items, replace stagnant items, and highlight new services. Perhaps you’ve added services like take-out, delivery, touchless ordering? Periodic menu review also forces menu item cost analysis which is critical to increasing both revenue and profits. A re-tooled menu can attract new customers and encourage your “regulars” to come back more frequently. Add-on items like appetizers, sides, and desserts can boost sales. New items with special short-term pricing can be (continued on page 3)
MARKET UPDATE Dairy Cheese Blocks
PRICE
LAST MONTH
DIFFERENCE
$2.576
$1.727
$0.849
The cheese block price premium over barrels remains histoically large. Per the USDA, August cheese inventories were up 1% (y/y) but the monthly drawdown was below the 5 year average. Expect the cheese markets to remain volatile.
Beef 50% Trimmings
PRICE
LAST MONTH
DIFFERENCE
$0.484
$0.584
($0.10)
Beef production picked up recently and is up 2% YTD over last year. Packers look to be trying to cement the seasonal low on the wholesale beef markets with the USDA choice cutout rising modestly recently.
Poultry
PRICE
Wings(Jumbo) $2.153
LAST MONTH
DIFFERENCE
$1.988
$0.165
Chicken wing prices remain firm currently over $2.100/lb and are the costliest since 2017. Tighter production schedules should continue to support the chicken wing markets in the near term.
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