With numerous meat packaging plants shut down due to mass coronavirus outbreaks, a meat shortage is looming over the United States. Already, Americans are feeling the effects of the shortage as some restaurants deal with limited supply, and grocers are faced with skyrocketing prices.
The work conditions at meatpacking plants have been the cause of great concern amid the coronavirus outbreak, and for a good reason. Outbreaks at meatpacking plants have been substantial in scale, with one Smithfield plant being responsible for hundreds of infections alone. Dozens of plants have been closed amid mass outbreaks; the sheer number of closures have had a profound effect on the domestic meat supply.
Popular fast-food giant Wendy's (NASDAQ: WEN) has been particularly hard hit among its contemporaries due to its reliance on refrigerated, fresh beef as opposed to frozen burger patties. Roughly 1,000 of the company's restaurants are not serving any meat-based items due to the shortage of meat. Some customers have reported restaurants running out of meat entirely; the company is limiting menus at some restaurants to try and prevent this. Shake Shack (NYSE: SHAK), which similarly relies on refrigerated beef over frozen, has seen a rise in meat prices; sour news for the company after a revenue miss and the plummeting of same-store sales amid the outbreak.
Grocers are feeling the pinch particularly hard, with rising meat prices and shortages of fresh meat forcing major grocery chains to act. To limit the impact of the shortage, many chains are limiting purchases of meat per customer. Grocers are also charging more for meat to offset increased costs, with meat prices up 8.1% compared to May of last year. Experts at CoBank predict that consumers may see an increase in pork and beef prices as high as 20%.
The shutting down of processing plants has left farmers with swelling inventories that they are having a difficult time controlling. With nowhere to send their products, many farmers are being forced to euthanize animals and destroy inventory, the only other option they have aside from selling their stocks at a loss. As some experts predict, this may create a more severe shortage later in the year. Barring a second wave of coronavirus infections, many areas of the country may see drastically reduced availability of meat as communities begin to reopen.