Most people have likely seen the news that McDonalds is rolling out, for a limited time, a Chicken Big Mac. Some of you, of a certain age, might be singing the words in your mind now: “two all-beef patties, special sauce…” A question on many cattle producer’s minds has been “how long will people keep buying beef at record high prices?” If beef prices are higher relative to chicken prices might people begin to buy more chicken? Those are great questions about beef demand because relative prices matter. We would expect some changes in purchases away from beef as it becomes relatively more expensive. I don’t purport to know the goings on in McDonald’s as they create strategies to build their business but, we can look at some relative prices in the wholesale meat market to shed some light on the input price side.
In this case, we can compare wholesale chicken breast prices to beef trimmings prices to look at relative changes over time that might lend some support to trying a new menu item. There are several data series that could be used to capture the longer-term trends. On the chicken side we can use line run chicken breasts or boneless, skinless breasts. On the beef side, a number of different lean-to-fat ratios for trimmings could be used. This example uses line run chicken breasts and 81 percent lean beef trimmings.
The price of line run chicken breasts was only 34 percent of the price of 81 percent beef trimmings in late August 2024. The only time in the last 15 years that chicken breasts approached a lower relative value compared to beef was in the Summer of 2020. The trend over the last couple of years has been for chicken breasts to decline in value relative to beef trimmings. Much of ground beef comes from culled cows and cow prices have increased dramatically as the cow herd has declined in number. Lower chicken prices create incentives to try some new chicken-based menu items.
Live cattle and meat prices are quoted in dollars per pound or cwt. But, a restaurant has to put together a meal, a plate, or a dinner that hits a price point that people want to buy. Cheaper chicken relative to beef creates opportunity for new items to help restaurants reduce their costs. Beef prices are likely to remain relatively more expensive than chicken for some time to come.
Anderson, David. “An Alternative Big Mac.” Southern Ag Today 4(43.2). October 22, 2024. Permalink
