Customers ask Wendy’s, ‘Where’s the beef?’
If you order a hamburger online from a Wendy’s in the U.S., you have roughly a one-in-five chance of getting a message that your local restaurant is out-of-stock on that particular item, according to new research.
Stephens analyst James Rutherford said a study conducted by his firm found 18 percent of Wendy’s were affected by burger out-of-stocks. The shortages were not equally spread out as restaurants in some states appeared to have sufficient inventory on hand while others in Connecticut, New York, Michigan, Ohio and Tennessee had the biggest issues.
Wendy’s use of fresh beef, while a marketing strength, has proven to be a supply chain weakness in recent weeks as the chain is not able to stockpile patties in the same way as rivals that use frozen meat.
“It is widely known that beef suppliers across North America are currently facing production challenges,” Wendy’s spokeswoman Heidi Schauer said in a statement to CNBC. “We continue to supply hamburgers to all of our restaurants, with deliveries two or three times a week, which is consistent with normal delivery schedules. However, some of our menu items may be temporarily limited at some restaurants in this current environment.”
The production of beef and other meats has fallen in recent weeks as major processing plants have been forced to temporarily close down due to outbreaks of COVID-19. Cassandra Fish, a meat industry analyst, told The New York Times that production has dropped more than 35 percent from its normal volume after four consecutive weeks of declines.
Shortages have also led to a spike in prices.
“Over the last month, we’ve seen significant increases in beef, with the largest increase being realized over the most recent week,” said Shake Shack president and chief financial officer Tara Comonte on the chain’s first-quarter earnings call this week. “From a cost standpoint, we’re in a slightly more predictable position with chicken and pork due to locked in pricing agreements, albeit we’ll continue to monitor the broader environment closely.”
Recent meat processing plant closures have brought warnings in recent weeks from executives at Smithfield Foods and Tyson about supply chain disruptions. Most see these as temporary interruptions as companies become more adept at quickly disinfecting facilities where workers have tested positive for COVID-19 and enforcing social distancing policies to reduce the potential spread of the virus.
- Nearly a fifth of Wendy’s US restaurants are out of beef, analyst says – CNBC
- A Wendy’s With No Burgers as Meat Production Is Hit – The New York Times
- Shake Shack Inc. (SHAK) CEO Randy Garutti on Q1 2020 Results (Earnings Call Transcript) – Seeking Alpha
- Tyson Foods chair says ‘the food supply chain is breaking’ – RetailWire
- Is America’s food supply chain nearing its breaking point? – RetailWire
DISCUSSION QUESTIONS: Are consumers more likely now to stop patronizing a restaurant or grocery store due to out-of-stocks than they would have been before the coronavirus outbreak? Will the current experience change how large numbers of consumers react to out-of-stocks when life returns to some semblance of normalcy?