Get Adobe Flash player

$59M Investment to Strengthen Food Supply Chain, Rural Economies

The Biden-Harris Administration is investing $59 million across the country to increase independent meat and poultry processing capacity, expand market opportunities for farmers and create jobs in rural areas.

The investments support the Biden-Harris Administration’s Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain, which dedicates resources to expand independent processing capacity. As President Biden has highlighted, creating fairer markets and more opportunities for family farmers helps bring down prices at the grocery store.

“For too long, American farmers and ranchers have been asked to produce more to meet increasing demand across the country and around the world, while they and the rural communities they come from have struggled to see their fair share of the benefits,” U.S. Department of Agriculture Secretary Tom Vilsack said.

“The Biden-Harris Administration and USDA are taking action to advance a sustainable vision of agriculture that prioritizes the needs of our resilient producers and small businesses, strengthens our food supply chain and brings value back to rural people and places. Through investments like those I’m announcing today, USDA will continue to work tirelessly to give farmers and ranchers a fair chance to compete in the marketplace, which in turn helps lower food costs for the American people.”

Vilsack announced the new investments while touring a processing facility in Harrisonburg, Va., that will be expanded with the funding. Vilsack and Deputy Secretary Jewel Bronaugh visited with local producers and members of the community to discuss the importance of these investments to the region’s economy.

USDA is providing the $59 million in grants to five independent processors under the Meat and Poultry Processing Expansion Program. The funding will help build new processing plants, create hundreds of jobs, give local producers and entrepreneurs more options and business opportunities, and give consumers more options at the grocery store.

In Virginia, Shenandoah Valley Organic LLC is receiving a $3.6 million grant to expand its organic chicken processing facility in Harrisonburg to meet increasing demand. The grant will be used for equipment purchases, new conveyor lines, building and site modifications, and a new wastewater treatment system. The improvements will help the facility alleviate processing bottlenecks and nearly double its processing capacity to 630,000 birds per week. These investments will create 300 jobs and enable Shenandoah Valley to provide more processing options and choices for customers.

In Idaho, Riverbend Meats LLC is receiving a $25 million grant to help build an environmentally friendly beef processing plant in Idaho Falls. The funding also will be used for custom equipment and installation of nine miles of mainline gas pipe. The project is expected to double the plant’s capacity from 300 head per day to 600, increasing the price ranchers receive for their cattle and lowering costs for consumers.

In South Dakota, CNF Enterprises LLC is receiving a $3.3 million grant to help build a 30,000-square-foot processing facility in New Underwood. The facility will have the capacity to process 4,000 head per year, including beef, pork, lamb and buffalo. CNF Enterprises is a new company that was formed to help meet the increasing demand for high-quality, locally sourced meat products.
Through the American Rescue Plan, the Bipartisan Infrastructure Law, and the Inflation Reduction Act, the Biden-Harris Administration has made once-in-a-generation investments in rural America. These investments have provided USDA with an unprecedented amount of resources to invest in rural communities and transform our food system.

In November, USDA awarded $75 million to 22 projects under MPPEP. In January, USDA awarded an additional $12 million to three more MPPEP projects. The program is one of many actions that USDA is taking to expand processing capacity, create more revenue streams and market opportunities for producers, and transform the nation’s food system.

Additional information on all these programs is available at www.usda.gov/meat.

Under the Biden-Harris Administration, Rural Development provides loans, grants and loan guarantees to help expand economic opportunities, create jobs and improve the quality of life for millions of Americans in rural areas. This assistance supports infrastructure improvements; business development; housing; community facilities such as schools, public safety and health care; and high-speed internet access in rural, Tribal and high-poverty areas. For more information, visit www.rd.usda.gov.

For more news of interest to the meat and poultry industry, subscribe to Gourmet News.

Americans Think Grocery Store Profits, Inflation Higher than Reality

Americans believe that grocery store profits are at a 35.2 percent net profit margin, 14 times higher than grocers’ actual net profit margin average of 2.5 percent, and that food-at-home inflation is 24.3 percent, double the annual rate reported by the U.S. Bureau of Labor Statistics according to the latest dunnhumby Consumer Trends Tracker. The CTT is part of the dunnhumby Quarterly, a strategic market analysis of key retail themes, with the third edition being focused on navigating uncertainty.

n the third wave of the CTT, dunnhumby also found that despite perceived inflation reaching a new high, customers are coping a little better compared to the last wave of the report. Consumers who reported they would have difficulty covering an unexpected expense of $400 dropped from 64 peercent in July to 60 percent in November 2022. In addition, 48% of consumers reported they are getting the kind of food they want to eat compared to 43 percent in the second wave.

“In this latest wave of our CTT study, we found that retailers are in a precarious position with their brand perception, since customers are vastly over-estimating grocers’ store profit margins and inflation rates, while they themselves are battling food prices,” said Matt O’Grady, president of the Americas, dunnhumby. “Retailers need to show they are empathetic to customers through their prices, their rewards/loyalty offers, and with messaging to best support shoppers during these challenging financial times.”

Key findings from the study:

  • Inflation worries are driving customer sentiment. When consumers were asked as part of the survey, why customer sentiment is the lowest it has been in 50 years, consumers responded by a five to one margin that inflation was the cause, with covid coming in a distant second. When asked about 2023, only 22 percent of respondents predicted inflation and the state of the country will get better. Forty-seven percent of respondents predicted inflation and the state of the country would improve three years from now. Over a five-year period, 54 percent of consumers are optimistic that their own finances and the state of the country will improve.
  • Younger shoppers are most optimistic, but only in the short term. For 2023, 31 percent of consumers aged 18-34, believe their finances and the state of the country will get better, compared to just 13 percent of consumers over 65. Over a three and five-year timeframe however, there were no significant differences by age.
  • Food insecurity remains a problem. Thirty-one percent of households reported they have skipped or reduced the size of a meal for financial reasons. Thirty-nine percent of respondents under the age of 44 have skipped or reduced meal sizes. And households with children at home are 8 percent more likely than adult-only households to have skipped or reduced meal sizes. Consumers living in Idaho, Oklahoma, Arkansas, Tennessee, and West Virginia reported the highest numbers, where over 40 percent had skipped or reduced the size of a meal in the last year. Consumers living in Washington, Minnesota, Michigan, Massachusetts, and Maryland reported the lowest numbers, with approximately 20 percent having skipped or reduced the size of a meal in the last year.
  • While improving slightly, most consumers continue to struggle financially. No state is immune, but the states with the highest rate of financial insecurity (75 percent) are Oregon, Oklahoma, Louisiana, and West Virginia. The states with the lowest rates of financial insecurity (45 percent) are Minnesota, Wisconsin, Maryland and Delaware.
  • Consumers want easy to shop and more convenient eCommerce solutions. Eighty-one percent (up 4 percent) of consumers say easy to shop websites and apps are important to them and 78 percent (up 4 percent) want retailers to have more convenient delivery and pick up time slots. For consumers aged 55 and over, ease and convenience are even more important. In this age group, 84 percent say easy to shop websites and apps are important to them and 81 percent want convenient delivery/pick-up time slots available. Families are 16 percent more likely to interact with a store’s app and have a 10 percent greater need for the retailer to pick products as well as they would, compared to shoppers without children.
  • Consumers want retailers to help them make healthy choices. Forty-four percent of consumers reported it was very or extremely important for retailers to help them make healthy choices, an increase of 3 percent from the previous wave. In addition, 48 percent reported they choose healthy foods while shopping (up 2 percent), 40 percent read diet and nutrition information (up 2 percent) and 29 percent are buying products for a specific diet when they shop. The top five diets in the U.S. cited in the survey are 1) Keto, 2) Low carb, 3) Low sugar, 4) Vegetarian, and 5) Gluten free.

For this study, dunnhumby interviewed 6,012 consumers, representative of the U.S. grocery shopper nationwide. The online interviews for Wave 1 were conducted in April 2022, Wave 2 in July 2022, and Wave 3 in November 2022. Approximately 2000 individuals were interviewed for each Wave of the study.

The CTT study is designed to uncover shopper needs, perceptions and behavior over time, and to complement dunnhumby’s Retailer Preference Index which measures the strength of retailers’ customer value proposition. The dunnhumby Consumer Trends Tracker can be accessed today.

For more news of interest to the grocery industry, subscribe to Gourmet News.

Food Costs Lower Profits for NYC Restaurants, Report Shows

The 2023 “New York City State of Restaurants” Report released by TouchBistro reveals that restaurant sales in New York City, on average, have recovered to approximately 76 percent of pre-pandemic levels, which is on par with the national average. However, due to the rising food costs and other expenses, the profit margins of full service restaurants in New York City fell almost a point to 10.1 percent, which is .5 percent lower than the U.S. average of 10.6 percent.

“After contending with the worst of the pandemic, many restaurants had their sights set on a more successful recovery, but it’s been a mix of highs and lows,” says Samir Zabaneh, CEO of TouchBistro. “Now, as the restaurant industry enters another year characterized by economic instability and change, many restaurants are once again preparing to adjust the way they run their businesses. Restaurant guests are feeling the bite with higher menu prices, but restaurant owners are working hard to minimize the increases so it is not cost prohibitive for guests to continue to enjoy the dining venues and foods they love.”

The average menu price increase in New York City is 16 percent, which is just slightly above the national average.

New York City restaurants report spending 45 percent more on food costs on average compared to the year prior, which is about the same as the rest of the U.S. Across the nation, fresh fruits and vegetables have seen the biggest food costs increase, followed by meat and seafood.

Nearly all New York City restaurants (99 percent) say they are short staffed, with most operators saying they are short about six staff members on average. This is likely due to the city’s high turnover rate of 33 percent. Restaurants across the U.S. are experiencing a similar staff shortage issue (96 percent), though not quite as severe as in New York City.

The most in-demand roles in New York City are bartenders and managers, which is a bit of a shift from last year when servers and bartenders were the hardest to find. Bartenders continue to be hard to find across the rest of the U.S., but a shortage of line cooks has also become a problem.

Key New York City restaurant trends in the report:

Online ordering and delivery still going strong – Most New York City restaurants are doing more than a quarter (28 percent) of their business through online ordering. And while Uber Eats is the number one online ordering platform across the U.S., direct online ordering is the preferred solution for New York City restaurants.

Menu flexibility and modifications – Despite the rising cost of food, more than two-thirds of New York City restaurants have added items to their menus, including extended wine lists and adding more modification options.

Wages for staff increased – In addition to 55% offering higher wages, restaurants in New York City also spend $4,561 training each new employee, which is 15 percent higher than the national average.

Popularity of loyalty programs – New York City restaurants have embraced loyalty programs more than ever before. Now, more than two-thirds of the restaurants in the city offer a rewards program.

Social media engagement – Twitter and Facebook continue to be the most popular social media platforms for restaurant promotion. However, TikTok is on the rise as well and has actually overtaken Instagram in terms of popularity among restaurateurs.

The 2023 New York City State of Restaurants provides more in-depth insights that operators are using to succeed in this coming year. It can be downloaded for free at www.touchbistro.com/blog/nyc-state-of-restaurants-report. The national State of Restaurants report is also available for free download at touchbistro.com/blog/state-of-restaurants-report.

For more news of interest to the food and beverage industry, subscribe to Gourmet News.