Thursday, November 7, 2013

Shrimp Prices Rising

First meat, now shrimp. Dealing with rising prices of products or rising prices on insurance and payroll taxes, It just seems to be the way of doing business in the 21st century. One way to deal with the issues is to continue on, with the assumption of how much worse can it get? I think we are beyond the how much worse can it get part. It just keeps getting worse......always something.

So this holiday season, the restaurant industry has to contend with skyrocketing prices on shrimp, a traditional holiday party favorite. The reason for the price increase is primarily due to a disease called Early Mortality Syndrome or EMS. The disease first came up during 2009 in Chinese shrimp farms and has now spread its way to Thailand and Vietnam (both major sources of the farm raised shrimp supply). With another punch to the gut, India also suffered major damage to their shrimp farms after a cyclone there in early October.

Due to the EMS disease, the U.S. Department of Commerce threatened higher duties on imported shrimp. The higher duties caused producers to back out of their contracts with the U.S. The result?  Higher prices on all types of shrimp. It's ECON 101, supply and demand.

Depending upon the type of shrimp, prices have increased 33-55% over this same time last year. Many shrimp supply experts predict that prices will remain this high for possibly one year or longer. Shrimp would normally go for $7-$8 pound and it's now crept up over $11 per pound. Again, the only thing for restauranteurs to do is to increase shrimp prices and hope that the average consumer understands the situation, although most won't.

The increase on shrimp prices also comes at a time when beef prices are usually increased to meet the demand of the holiday season. December traditionally is the best restaurant month for profit because of the sales generated from the numerous amount of businesses and families that have holiday Christmas parties. But many, including some of the more profitable chain restaurants, such as The Cheesecake Factory, are scaling back expectations for 2013.

It sounds like the rest of us should as well. Don't expect to dig into that nice bowl of shrimp cocktail that usually is the centerpiece of the appetizer table at your holiday gathering. It may not be affordable this holiday season!

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