CAPE TOWN - Stakes are high for food service businesses, as the rise in meat prices is singled out as the culprit behind the rise of food inflation.
According to the National Agricultural Marketing Council’s latest Food Price Monitor report (August 2021 edition), meat prices observed from mid-2020 have been rising at moderate pace, resulting in an inflation of 9.4% in meat products.
Comparing the latest Food Price Monitor report to the August 2020 edition, meat products such as lamb per kg went from 14.3% to 22.0%, corned beef 300g went from 14.7% to 18.4% and chicken portions went from 10.0% to 13.7%.
Senior agricultural economist at FNB Agri-Business Paul Makube said that the increase in meat prices has largely been a combination of supply tightness due to reduced slaughter and resilient consumer demand for meat despite the Covid-19 challenges.
“Favourable seasonal production conditions allowed farmers to withhold female cattle for herd rebuilding. The increased availability of feed (stubble) from the harvested maize lands also provided an opportunity for backgrounding there, reducing numbers for the slaughter market.This obviously resulted in cost pressures for restaurants and other establishments that serve meat and therefore either passed on to consumers or absorbed thereby thinning profit margins,” said Makube.
Meat sales manager Waheed Allie said that when it comes to the meat and poultry industry, apart from climate and infrastructure challenges, consumers overlook the time spent making the product from slaughtering to portioning, boxing and transport.
“Time spent at abattoirs including having carcasses boxed, which is then transported in a very strictly controlled temperature to maintain quality, freshness and shelf life. Portioning happens for customers that have special requests, for example restaurants and catering companies. These cuts are mainly fillets, sirloin, rump, and a few specialised cuts, and even when it comes to portioning, the negative aspect of portioning is always weight-loss with reference to blood, off-cuts and trimmings, this contributes to the fluctuating price of the product,” said Allie.
Spur Corporation spokesperson Heidi Geldenhuys said that managing industry challenges and costs without compromising the consistent quality offered to customers is vital to the company.
“During this year, the industry experienced a number of cost increases, including high feed costs for farmers which impacted the overall supply chain for red meat and chicken. Food inflation also ranged between 6-8%, with items like red meat from 10-12%. Oil prices increased by as much as 22%, which directly impacted the cost of transport and packaging materials.
“As a restaurant group, we had to carefully manage these rising costs to limit menu price increases and successfully kept increases below food price inflation through efficiencies, such as unlocking value from our supply chain and improving processes,” said Geldenhuys.
Urban Tshisananyama co-founder Aviwe Jacobs said that the challenge that arose with the meat is having to stock strictly halaal meat for the business.
“Our huge challenge is us having to stock strictly halaal meat which in our opinion has a slight difference in cost pricing than other red meat especially lamb and beef and affects our our spreadsheet in a way that we can’t buy meat for the same price every month because of the changes in prices nevertheless we haven’t really considered changing our selling price.”
“However, for a business that has recently started we are doing our utmost best to avoid changing menu prices because we still want our customers/clients or rather, regulars to be satisfied with our affordable prices and not them scare anyone away since tourists haven’t travelled much thus far so we are only dependent on them to keep operating,” said Jacobs.
South African National Halaal Authority (Sanha) spokesperson Ebi Lockhat said that there are a host of factors that contribute to halaal meat prices, which has been compounded by the lockdown.
“There are differences at retail level between independent butchers and national supermarket chain stores as the latter has enormous buying power and is also able to cross-subsidise the pricing with all their other product offerings.”
“To maintain the integrity of the halaal chain, restaurateurs source their meat supplies from independent halaal butchers who do not have the advantage of the national chains. We are aware that there are certifiers in the Western Cape that have granted certification to such outlets where instances of contamination have been recorded, and to avoid contamination between halaal and non-halaal products such as pork at retail level, Sanha does not certify such outlets.”
“Notwithstanding these challenges, halaal restaurant outlets in most instances absorb the additional cost with competitive pricing. This can be gauged with comparisons of the pricing of the same item from the menus of halaal and non-halaal outlets of national eateries,” said Lockhat.
Food blogger Tasneem Waggie said that from a customer's point of view, it’s all about getting the right portion size for your buck.
“People eat out for the experience and don’t mind paying a little extra when dining at a good restaurant. Personally I feel that we have to keep on adapting, however it does affect people in a way where they don’t go eat out as often as they would want to anymore due to the constant increases in pricing.”
“I feel like in order for a restaurant to stay open they have to find that balance between price, portion size, experience, customer service and quality of food. If a restaurant has that all sorted, I don’t mind paying,” said Waggie.
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