Real Cost of Hamburger

[cowzilla]

Not Where's The Beef But How Much Is The Beef : Just how much of the cost of a hamburger at a fast food joint is the ground beef :???: Buy 1 pound of regular ground beef at the store and make 12 patties and then buy 1 Dozen buns plus enough pickels, mustard, ketchup,cheese slices to complete. Which will cost more , the meat or the product it's hidden under? If the cost of ground beef was $1.00 more how much would that effect demand?

 

[Jason]

Not Where's The Beef But How Much Is The Beef : Just how much of the cost of a hamburger at a fast food joint is the ground beef :???: Buy 1 pound of regular ground beef at the store and make 12 patties and then buy 1 Dozen buns plus enough pickels, mustard, ketchup,cheese slices to complete. Which will cost more , the meat or the product it's hidden under? If the cost of ground beef was $1.00 more how much would that effect demand?

Most burgers are 1/4 pound or 1/3 pound before cooking.

1 pound would make 3 at 1/3 or 4 at 1/4 pound.

Then you have to add labor, utilities for the establishment, and all the other costs associated with running a business.

 

[pointrider]

Cowzilla, are you saying that beef prices should be higher, and that higher prices would not affect consumption because of all the other ingredients in a hamburger?

At this very moment I am sitting in a Burger King restaurant in Phoenix which just happens to be a wi-fi hot spot. And I can't resist trying out a hot spot with my laptop. Anyway, I just got through eating a Jr. Whopper and a salad, and the Jr. Whopper was very good. Guess how much it cost. If you guessed 99 cents plus tax you were right. Two Jr. Whoppers would be quite a bit of burger, and only 2 bucks.

At the same time I was eating my meal I was also reading the tray liner which I saved. It is all about Burger King's new "chicken fries." They are really promoting them just like the other restaurant chains are promoting chicken.

In another thread recently I mentioned that McDonald's just reported so-so profits that suffered because of "high beef prices." They also stated that their premium chicken sandwiches are doing very well, and they came to the rescue on their bottom line.

These restaurant chains are talking about high beef prices. At the same time they choose to compete with "value menus" that all include cheeseburgers. McDonald's dollar burger is a double cheeseburger. Even more beef than the others. This is a real problem for the beef industry in my opinion. High ingredient prices and low selling prices don't yield very good profits do they? There is some competition on the value menus with chicken sandwiches, but they are almost always the spicy chicken sandwich which most people don't want. (Why do you suppose they can sell the spicy ones for less money? Could it be they are using the "spicy" to cover up the low quality that lets them sell that sandwich for less?)

What is the best way for beef to compete with chicken? Ole McDonald had a farm, so you wouldn't be too surprised if there were a few chickens around on the place. Right? And Wendy is a Midwest farm girl, and everybody knows that the women in the Midwest have been in charge of the chickens and eggs. But something just doesn't sound right to me when it comes to the BURGER KING selling chicken fries. Should the beef industry fight for market share or continue to let per capita consumption continue to slide as we add one net person in the U.S. every 10 seconds and approach 300 million people at warp speed?

Don't get me wrong. I am not advocating lower beef prices. The cycle always takes care of that. The question is, what are the high points doing to consumption when they occur, and is the cycle becoming counter productive? The alternative would be a cost-plus system at both levels - producer to feeder/packer and packer to food service chain. At least a small portion of other commodities are sold cost-plus, and it seems to be gaining a little ground because the food service chains all want consistent costs so they can set their menus and know what their profit will be.

Once again, don't get me wrong. I am also not advocating cost-plus selling. Just throwing it out there to see what happens. Could it help to keep the chains from promoting chicken so much?

 

[pointrider]

Ps, cowzilla. Love that picture!

 

[Sandhusker]

Cowzilla brings up a good point - what is the %expense of raw beef compared to the rest of the burger?

The fast food joints are seeing their bottom line erode because of honest beef prices - that is why they are pushing the higher-margin chicken. Yet, consumers clearly are still eating the beef...

 

[Econ101]

Pointrider, I see that the higher beef prices did not stop Burger king from offering the 99 cent Jr. burgers. I like them too. I usually eat two of them. They have about an eighth of a pound of meat on them and with a dollar more per lb. of hamburger, that would come out to about a bit more per burger (a bit is 12.5 cents).

 

[pointrider]

Econ 101, what are you saying? That adding 12.5 cents more cost to a 99 cent burger is no big deal? You are a top notch economist, so I don't believe you are saying that. That would be a huge increase, percentage-wise, for a food service chain. They would gag on their own burgers. Now you don't want them doing that do you? Ha!

 

[pointrider]

Sandhusker, has per capita beef consumption in the U.S. gone down in the past 20 years?

 

[cowzilla]

So what are these so called Cheap ckicken meals selling for Down South ? Wendy's , Burger King, etc.etc.

 

[Sandhusker]

Sandhusker, has per capita beef consumption in the U.S. gone down in the past 20 years?

I believe it has - don't have the figures in front of me, though. Seems to me it has been declining steadily until the last few years where it has been picking up.

 

[RobertMac]

Sandhusker, has per capita beef consumption in the U.S. gone down in the past 20 years?

Per capita consumption has been flat for the past twenty years...barely keeping up with population growth. The problem with the fast food industry is they have taken the blame over those twenty years for the USA's health and obesity problem...ground beef being the target. Anyone that has studied the nutritional facts of beef knows that the vitamins, minerals, and essential fatty acids are in beef's fat. It is a lie that animal fats are the cause of health problems...our genes developed consuming these fats. Vegetable oils and grain products are the new ingredients in the USA diet and their increase in use parallels the increase in our chronic health problems. If we had a checkoff worth its salt, they would be pointing this FACT out and get the fast food to change their buns to whole wheat and use beef tallow for their fries( as McDonalds started out doing). The biggest problems with the current fast food meal is the drink and the vegetable oils. As goes ground beef, so goes the beef industry.

 

[Econ101]

Econ 101, what are you saying? That adding 12.5 cents more cost to a 99 cent burger is no big deal? You are a top notch economist, so I don't believe you are saying that. That would be a huge increase, percentage-wise, for a food service chain. They would gag on their own burgers. Now you don't want them doing that do you? Ha!

Poinitrider, I don't buy those chicken sandwiches, which are often higher than the hamburgers. A zero sales is worse than losing 12.5 cents on a sale. Burger places do not necessarily make their money on the burger. Some money, yes, but not most. Rice and beans are a lot cheaper than chicken so why aren't fast food places jumping on that bandwagon? Sure it has to be reasonable, but reasonable means that producers make money in producing the product. Should ranchers lose money just so a burger can cost less than chicken? That is not how it works. Have you looked at how much a chicken meal at Kentucky Fried Chicken costs? It is high and people still eat there. Live by price, die by price.

If your strategy is to be less in cost than chicken, you are picking a losing strategy. I don't buy hamburgers because they are less than chicken burgers, I buy them becuase I like them. Wendy's or Hardy's may make more money on my drink, and other items, but I go in to get a hamburger. If the cost of chicken more than a hamburger, 30% of the time my wife will get a chicken sandwich. The cost doesn't matter, it is still pretty cheap and we are going to eat. Hardy's was very successful with their angus thick burgers and those burgers cost a lot more. So was Steak and Shake, and so is Backyard Burger. Those all have big burgers and they are all doing well regardless of the fact that the price of meat has gone up. If any of those places increased their cost 25 cents a burger, it would not stop me from going there.

You can not outcompete chicken when the feed conversion is 2 to one or less in poultry compared to what, 6.5 to 7.0 in beef? Any feeders know the actual cost of feed per lb of cattle feed vs. chicken feed?

 

[Jason]

A zero sales is worse than losing 12.5 cents on a sale.

I can't believe you typed that.

Although you sort of clarifyed it with the drink and beans... that statement is false as written.

The burger chains might be willing to lose 12.5 cents ON THE BURGER BASED ON THE MAJORITY OF CUSTOMERS BUYING A DRINK THAT COVERS THE LOSS AND THE PROFIT NEEDED TO STAY OPEN.

You can not outcompete chicken when the feed conversion is 2 to one or less in poultry compared to what, 6.5 to 7.0 in beef? Any feeders know the actual cost of feed per lb of cattle feed vs. chicken feed?

Now with that paragraph you are starting to ask the right questions.

Its not just the feed conversion, as chickens need high quality feeds (grains) and cattle utilize roughage and other low cost feeds that cannot be used by humans, it is the 6-8 weeks of turn over the chickens have.

Good cattle are getting down to that 5 pounds of feed to 1 pound of gain, but most are that 6-7 yet. A finishing ration is usually 70% grain so the better cattle are converting 3.5 pounds of grain to a pound of gain.

The margin on chicken is slim, but the volume is where they make it up. Beef has always had a larger margin because of being the prefered meat. We need to keep that preference.

The number 1 served meal at food service in North America is still the burger. Competition for limited consumers dollars has led to the value meals, a sale with a small PROFIT (not a 12.5 cent loss) is better than no sale.

In Canada the value meals are priced at $1.39, costs in our dollars are higher.

The same competition exists between packers. Boxed beef prices fall to move more product just as burger prices fell to move more product. In a market where supplies are tight the margins shrink. Packers even run in the red for periods of time trying to fill the demand. They can't just raise boxed beef prices because their customers tell them what they will pay, and retail outlets (like the burger places) won't tolerate losses for long as they have no way to recoup those losses.

Any business that operates at a continued loss has no way to survive.

 

[Econ101]

A zero sales is worse than losing 12.5 cents on a sale.

I can't believe you typed that.

Although you sort of clarifyed it with the drink and beans... that statement is false as written.

The burger chains might be willing to lose 12.5 cents ON THE BURGER BASED ON THE MAJORITY OF CUSTOMERS BUYING A DRINK THAT COVERS THE LOSS AND THE PROFIT NEEDED TO STAY OPEN.

You can not outcompete chicken when the feed conversion is 2 to one or less in poultry compared to what, 6.5 to 7.0 in beef? Any feeders know the actual cost of feed per lb of cattle feed vs. chicken feed?

Now with that paragraph you are starting to ask the right questions.

Its not just the feed conversion, as chickens need high quality feeds (grains) and cattle utilize roughage and other low cost feeds that cannot be used by humans, it is the 6-8 weeks of turn over the chickens have.

Good cattle are getting down to that 5 pounds of feed to 1 pound of gain, but most are that 6-7 yet. A finishing ration is usually 70% grain so the better cattle are converting 3.5 pounds of grain to a pound of gain.

The margin on chicken is slim, but the volume is where they make it up. Beef has always had a larger margin because of being the prefered meat. We need to keep that preference.

The number 1 served meal at food service in North America is still the burger. Competition for limited consumers dollars has led to the value meals, a sale with a small PROFIT (not a 12.5 cent loss) is better than no sale.

In Canada the value meals are priced at $1.39, costs in our dollars are higher.

The same competition exists between packers. Boxed beef prices fall to move more product just as burger prices fell to move more product. In a market where supplies are tight the margins shrink. Packers even run in the red for periods of time trying to fill the demand. They can't just raise boxed beef prices because their customers tell them what they will pay, and retail outlets (like the burger places) won't tolerate losses for long as they have no way to recoup those losses.

Any business that operates at a continued loss has no way to survive.

Jason, how much stock in packing operations do you own? Packers don't have any qualms about the number of farms that have gone out of business because of low prices.

The burger joints can do anything they want to do to make a profit any way they want. They don't need you or I to tell them what their market is. If they have to pay 12.5 cents more to pay for hamburger that costs a dollar per lb. more to produce, then that is just what they have to do. Are you saying we need to keep the price of beef down so burger joints can make a buck? Talk about market management!!!

 

[mrj]

Sandhusker, has per capita beef consumption in the U.S. gone down in the past 20 years?

Per capita consumption has been flat for the past twenty years...barely keeping up with population growth. The problem with the fast food industry is they have taken the blame over those twenty years for the USA's health and obesity problem...ground beef being the target. Anyone that has studied the nutritional facts of beef knows that the vitamins, minerals, and essential fatty acids are in beef's fat. It is a lie that animal fats are the cause of health problems...our genes developed consuming these fats. Vegetable oils and grain products are the new ingredients in the USA diet and their increase in use parallels the increase in our chronic health problems. If we had a checkoff worth its salt, they would be pointing this FACT out and get the fast food to change their buns to whole wheat and use beef tallow for their fries( as McDonalds started out doing). The biggest problems with the current fast food meal is the drink and the vegetable oils. As goes ground beef, so goes the beef industry.

RobertMac, while I belive what you say about beef fat sounds reasonable, I would like to see the science to support your claims. How about posting a link?

Of course, you know that the Beef Checkoff CANNOT state things about nutrition of beef UNTIL there is solid science, peer reviewed, and all the legal stuff included.

MRJ

 

[Econ101]

Sandhusker, has per capita beef consumption in the U.S. gone down in the past 20 years?

Per capita consumption has been flat for the past twenty years...barely keeping up with population growth. The problem with the fast food industry is they have taken the blame over those twenty years for the USA's health and obesity problem...ground beef being the target. Anyone that has studied the nutritional facts of beef knows that the vitamins, minerals, and essential fatty acids are in beef's fat. It is a lie that animal fats are the cause of health problems...our genes developed consuming these fats. Vegetable oils and grain products are the new ingredients in the USA diet and their increase in use parallels the increase in our chronic health problems. If we had a checkoff worth its salt, they would be pointing this FACT out and get the fast food to change their buns to whole wheat and use beef tallow for their fries( as McDonalds started out doing). The biggest problems with the current fast food meal is the drink and the vegetable oils. As goes ground beef, so goes the beef industry.

RobertMac, while I belive what you say about beef fat sounds reasonable, I would like to see the science to support your claims. How about posting a link?

Of course, you know that the Beef Checkoff CANNOT state things about nutrition of beef UNTIL there is solid science, peer reviewed, and all the legal stuff included.

MRJ

And there are no such limitations on Tyson advertising. They are running circles around the Beef checkoff. All Tyson has to do is get some one sided studies that they fund and off they go. Arsenic in poultry feed a perfect example.

MRJ, As I stated before, if the Beef Checkoff is not captive to the packing interests at the USDA, then why can they not advertise against chicken on this issue.

 

[RobertMac]

RobertMac, while I belive what you say about beef fat sounds reasonable, I would like to see the science to support your claims. How about posting a link?

Of course, you know that the Beef Checkoff CANNOT state things about nutrition of beef UNTIL there is solid science, peer reviewed, and all the legal stuff included.

MRJ

I've given you links before...you obviously haven't read them.
Goggle Mary Enig and start reading.(She's a PhD in lipid science at U. of Maryland)
This is a pro-animal fat link Mike posted...read their sources
http://www.biblelife.org/beef.htm

Buy Sally Falon's "Nourishing Traditions" She has six pages(fine print) of peer reviewed, scientific research studies to back her positions. Dr. Enig co-authored the book.

There is more than enough "sound science" that has been done...CBB needs to grow some balls and fight for the cattleman!

 

[RobertMac]

And there are no such limitations on Tyson advertising. They are running circles around the Beef checkoff. All Tyson has to do is get some one sided studies that they fund and off they go. Arsenic in poultry feed a perfect example.

MRJ, As I stated before, if the Beef Checkoff is not captive to the packing interests at the USDA, then why can they not advertise against chicken on this issue.

And who is charge of the majority of OUR BEEF product...Tyson and friends.
And who is displacing hamburgers with chicken sandwiches...Tyson and friends.
Tyson and friends are going to do what is best for them, NOT CATTLEMEN!!!!!!!!!!!!

 

[mrj]

Per capita consumption has been flat for the past twenty years...barely keeping up with population growth. The problem with the fast food industry is they have taken the blame over those twenty years for the USA's health and obesity problem...ground beef being the target. Anyone that has studied the nutritional facts of beef knows that the vitamins, minerals, and essential fatty acids are in beef's fat. It is a lie that animal fats are the cause of health problems...our genes developed consuming these fats. Vegetable oils and grain products are the new ingredients in the USA diet and their increase in use parallels the increase in our chronic health problems. If we had a checkoff worth its salt, they would be pointing this FACT out and get the fast food to change their buns to whole wheat and use beef tallow for their fries( as McDonalds started out doing). The biggest problems with the current fast food meal is the drink and the vegetable oils. As goes ground beef, so goes the beef industry.

RobertMac, while I belive what you say about beef fat sounds reasonable, I would like to see the science to support your claims. How about posting a link?

Of course, you know that the Beef Checkoff CANNOT state things about nutrition of beef UNTIL there is solid science, peer reviewed, and all the legal stuff included.

MRJ

And there are no such limitations on Tyson advertising. They are running circles around the Beef checkoff. All Tyson has to do is get some one sided studies that they fund and off they go. Arsenic in poultry feed a perfect example.

MRJ, As I stated before, if the Beef Checkoff is not captive to the packing interests at the USDA, then why can they not advertise against chicken on this issue.

RobertMac, which catches more flies, vinegar, or honey?

Last time I looked, businesses were allowed to say anything they want in their ads, true or not.

Whether allowed to or not, I do not believe the Beef Checkoff leaders will lower themselves to say things that might or might not be proven about beef in our ads. I like that philosophy. When we have the proof, I want factual, non-judgemental statements of the superior nutritrition in beef, as is being done now with the nutrient profiles we have the research to back up.

I believe a positive advertising campaign sells beef better.

What do you mean by "on this issue"?

We have or do have ads contrasting the superiority of nutrients in beef over chicken. Have you seen any of them?

While you may be very sure the information you have on beef fat is accurate, don't you want to be certain there will be no future opportunity for someone to point out a lie by the Checkoff people if the "facts" favoring beef fat do not hold up to scrutiny?


BTW, the role of USDA in the Beef Checkoff is to assure adherence to the law and rules of the Act creating the checkoff. And I haven't yet seen any overzealousness on their part. Have you?

MRJ

 

[Jason]

It is a fact that too many calories compared to exertion makes you fat.

It is a fact that fat is calorie dense.

It is a fact people need fat in their diet for proper skin, hair and nails as well as thyroid function etc.

Experts agree about 30% of our daily calories should come from fat.

What does an average person need for calories? It depends on how active they are.

A person with a desk job that moves very little during the day and doesn't exercise only needs like 1600-2000 calories a day, or else they gain weight.

A double cheeseburger with medium fries and a drink has over 1100 calories.

A piece of chocolate cake with frosting has something like 400 calories.

See a problem? Who is content with that for a day?

Switch the same person to a manual labor type job and the calories needed jump too.

To advertise that fat doesn't make you fat is as untrue as saying it is the only thing that makes you fat. Too many calories from any source will make you fat.