Meat Shortages Hit QSRs, Grocers

Wendy’s expects beef supplies to be tight for a “couple of weeks,” while Costco, Hy-Vee limit quantities.

May 07, 2020

ALEXANDRIA, Va.—Many of America’s meat-processing plants are starting to reopen after coronavirus outbreaks shut more than a dozen facilities last month, but not all workers are returning, according to Fortune.com. That means bottlenecks in the supply chain that are affecting restaurants and grocery stores, which are limiting the number of meat items consumers can buy in one trip. 

Wendy’s CEO Todd Penegor said on an earnings call with analysts yesterday that the fast-food chain likely will experience a “couple of weeks of challenging tightness that we’ll have to work through,” CNN reports. Wendy’s in many areas of the country have reportedly stopped selling burgers and are promoting their chicken menu items.

“We do believe it is temporary, and we're close with our big supply partners," Penegor said. “We have several of them on the fresh beef front, and we do believe we'll work through this in short order.”

Costco, meanwhile, is among the retailers limiting customers’ purchases of meat. “Fresh meat purchases are temporarily limited to a total of 3 items per member among the beef, pork and poultry products,” the wholesale retailer said on its website.

Hy-Vee yesterday began limiting customers to four packages of meat—fresh beef, ground beef, pork and chicken—when they check out at all of the West Des Moines, Iowa-based grocery chain’s 265 locations in the Midwest. “We continue to work with industry leaders so we are prepared for any possible fluctuations in product and can best serve our customers. At Hy-Vee, we have product available at our stores, but due to worker shortages at plants as well as an increase in meat sales, customers may not find the specific items they are looking for,” Hy-Vee said.

Meat supplies for retail grocery stores could shrink almost 30% by Memorial Day, leading to retail pork and beef price inflation as high as 20% relative to prices last year, Will Sawyer, lead economist at CoBank, estimates.

These shortages may intensify in the coming weeks given the lag between production at the slaughterhouses and distribution to stores, reports the Wall Street Journal. That means shoppers can expect higher prices and slimmed-down selections.

As consumers cook at home and buy more protein, supermarket meat sales are up—about 41% year-over-year for the week ended April 25, Nielsen reports. Many shoppers may turn to plant-based meat as a substitute. This week, Kroger starts selling products from Impossible Foods at 1,700 locations, a partnership that was arranged before the pandemic began. Beyond Meat, a rival of Impossible Foods, is beginning to sell its pea protein-based burger patties to more grocery chains, including Walmart, Sam’s Club and BJ’s Wholesale Club. 

Beyond Meat Chief Executive Ethan Brown said that over the next few months the company plans to discount its products and sell bulk packages to be more cost-competitive and capture new customers.

COVID-19 spread through meat plants in America’s heartland in March and April as companies struggled to adapt their workplaces to new rules dictated by the pandemic. Although President Donald Trump has signed an executive order to keep the meat plants running, absenteeism persists, putting the U.S. at risk of continued meat shortages and higher prices.

At a JBS USA plant in Greeley, Colorado, absenteeism is running as high as 30%, up from about 123% pre-pandemic. The company is paying those workers deemed vulnerable—about 10% of staff—to stay home, and others aren’t coming in because they are sick.

But some workers remain at home because they are scared, according to Kim Cordova, president of United Food & Commercial Workers Local 7 union, which represents workers at the plant. She didn’t provide specific numbers but noted that production speeds at the plant have slowed because of the labor crunch.

JBS is following federal “guidance around safety and social distancing, and we’re doing everything possible to provide a safe working environment for our team members who have been eager to get back to work,” the company said. The plant has distributed masks and face shields and put up plexiglass barriers to separate people. But workers still need higher quality protective equipment, Cordova said, and there are areas where employees can’t social distance.

Conditions at U.S. meat plants contributed to increased risk of infections, resulting in more than 4,900 ill workers, according to the Centers for Disease Control and Prevention. There were 20 deaths among employees as the virus spread to 115 meat plants across 19 states, data through late April showed. The CDC cited difficulty maintaining social distancing and adhering to the heightened cleaning and disinfection guidance among the factors that increased risks for workers.

Coronavirus Resources

NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.

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