by Natalie Gutenkauf | The cost of 100% grassfed ground beef—the beef served at the Bixby Knolls gastropub The Factory—has gone up 50% over the past two months. The lack of rain in California has drastically diminished grazing land, causing the restaurant’s rancher, Jay Shipman of J&J Grassfed Beef, a California operated small family business, to make dramatic changes to his business model in order to sustain probability.
“I would rather get another job doing something else, and raise livestock just for my family and friends at home, than make the sacrifices that go against my beliefs,” Shipman said.
The sacrifices that Shipman is talking about is either supplementing or finishing his grassfed cattle with corn or grains. Founded on the philosophy that, “food is intended to make our bodies flourish, feel good, be medicinal and help our systems run like the fine tuned machines God intended them to be,” Shipman will never compromise when it comes to his all natural grassfed beef raised free of antibiotics or growth hormones.
Back in February, Marin Sun Farms up in the Bay area made said sacrifices and switched their previously grassfed raised cattle over to corn. Without rain they had less grazing land for their cows to feed on resulting in lighter cows. Processing cows that weigh 200lbs lighter yielded Marin Sun Farms significantly less ready-to-eat beef, forcing them to make a tough decision in order to stay in business.
J&J Grassfed has chosen to process less cows rather than compromise quality. Other California ranchers are trucking their cattle out to greener pastures, to places like Colorado and Wyoming.
“Before the drought, we would process about 16 cows a month and now we are down to eight,” said Shipman. “But moving is just not an option for us. We are too small and can’t afford to truck our cows back and forth all over the country. We will pay the higher prices and keep doing what we have always done right here in California.”
The popularity of slow food here in California has also contributed to increased food cost.
“Our leases have sky rocked because we are now competing for land with all the new vegetable farmers entering the business. Water prices are up because of the drought. Processing costs are up because the increase in minimum wage and workers comp.”
J & J Grass is not The Factory’s only vendor to raise prices. While The Factory has seen some success after our episode of Diner’s, Drive-ins and Dives aired on the Food Network back at the beginning of August, their bottom line has stayed relatively flat because of price increases across the board from all our vendors.
“The Factory is the only wholesale account I have chosen to keep.” said Shipman who has streamlined his distribution, cutting out all accounts that require discounts including farmers markets. “They have been with me from the beginning. When I screwed up and didn’t have enough cows to process, they stuck with me and always came back. They care about my product and have chosen to take beef off your menu rather than serve a lesser product.”
While Shipman has tried to cut The Factory a wholesale discount, his prices are still high. Shipman has assured the gastropub that he understands if the financials force the restaurant to stop using his product. Operating increases has Shipman focusing on their core business, which is their online business. Apparently, 80% of Shipman’s business comes from folks who order his product online. Last year he started a program where he would set up a cooler box at participating gyms and stock it weekly with pre-paid beef orders.
“The gyms have people who are healthy, work out and care about what they put in their body and don’t mind paying accelerated prices for high quality 100% grass fed beef,” Shipman said.
So as a chef and business owner, I find myself at a crossroads. Alternatively, I can start looking for out-of-state ranchers that may be able to deliver me better prices. I’ve already looked into Newport Meat, a meat purveyor out of Irvine, with their own grassfed program, and quite frankly, their meat sucks. It’s slightly cheaper but they cut their ground with 30% fat. They take a product that is raised to be lean and cut it with fat. I think this sort of defeats the purpose. And where does that fat come from anyways? Of course they don’t know or choose not to tell.
Shipman, however, remains positive.
“I think the drought has reached its peak. It won’t get any worse. But you also won’t be seeing any new ranchers entering the market anytime soon so the demand for 100% grassfed beef will still be high. Prices should start coming down but prices will continue to be at the top of the market. We will get through this but I really don’t know how restaurants will be able to charge customers for ground beef products.”
Shipman that is precisely the question this chef is trying to figure out: how do you sell a golden cow in a brass market?
Natalie Gutenkauf is the owner and founder of The Factory Gastropub in Bixby Knolls, which won the Long Beach Post’s Best Burger in 2012. The Factory is located at 4020 Atlantic Avenue.