Cheap Bacon Is About to Be Everywhere, Again

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Why Restaurants Are Banking on Bacon

Andy Wiederhorn wants to sell bacon to vegetarians.

That’s the idea, anyway, behind the Hypocrite Burger -- a veggie patty topped by two strips of bacon. Wiederhorn, chief executive officer of Beverly Hills, California-based Fatburger Corp., is pushing sales of the sandwich in his 200 fast-food restaurants to take advantage of wholesale prices that dropped about two-thirds from a year ago.

“We want to add bacon to everything we sell,” he said. “People like it.”

Fatburger's Hypocrite Burger, a veggie patty with bacon.
Fatburger's Hypocrite Burger, a veggie patty with bacon.
Source: Fatburger

Do they ever. At the risk of sounding like Forrest Gump’s shrimp-obsessed buddy Bubba, eateries are offering bacon milkshakes, bacon sauerkraut, bacon kale salad, bacon martinis and bacon peanut brittle. Last year, 68 percent of U.S. restaurants had bacon on the menu, up from 62 percent in 2005, according to market researcher Datassential. And that was when prices were a lot higher than they are today.

Bacon is having its moment. It’s always been popular, but now, driven by reduced cost, innovative concoctions, the protein-rich Paleo Diet and a worldly younger generation willing to try anything once, twice if they like it, that popularity has exploded. Last year, a piglet-killing virus shrank U.S. hog herds, sending futures prices to all-time highs, and farmers scrambled to capture those profits. Record U.S. pork production will surpass beef output for the first time as overseas demand slows, creating today’s glut and sending both retail and wholesale prices to deliciously low levels.

Supermarket Prices

At the supermarket, bacon has slumped 25 percent in the past year, to $4.12 a pound this week, according to U.S. Department of Agriculture data. Wholesale pork bellies, the cut of meat used to make bacon slices, touched a five-year low in April and now cost 46 percent less than a year ago.

Such discounts have brought out buyers in droves. Pre-cooked and raw bacon is flying off the slicers at Sugar Creek Packing Co., the Washington Court House, Ohio-based company that processes more than 2 billion rashers a year for grocery stores, restaurants and institutions like hospitals and schools.

“We don’t have any extra inventory,” said Chief Operating Officer Michael Richardson.

Sugar Creek’s sales will jump 15 percent in 2015 as its five packaging plants around the Midwest operate seven days some weeks to keep up with demand, Richardson said.

Processing bacon at Sugar Creek.
Processing bacon at Sugar Creek.
Source: Sugar Creek Packing Co.

Retail Price

Even though retail prices are down, consumers paid more than seven times the wholesale price for bacon last month, a record spread. Milwaukee-based supermarket chain Roundy’s Inc. expects prices to continue to tumble throughout 2015 as costs such as feed decline, Jim Hyland, a spokesman, said in an e-mail.

Part of the reason for the retail-wholesale mismatch is some higher-priced pork bellies from last year’s slaughter were frozen, and those inventories take time to work through, said Russell Barton, a market reporter for commodity researcher Urner Barry in Bayville, New Jersey. By now, cheaper bellies have worked their way to slicers, yet the higher store prices persist.

“It’s highway robbery,” said Dennis Smith, senior account executive at Archer Financial Services in Chicago. “Talk about a huge markup. They don’t lower prices because bacon demand is just that good.”

It’s about to get even better with warmer weather. Grillers top their burgers with bacon, and when fresh tomatoes come to market in summer, Americans gobble up bacon, lettuce and tomato sandwiches.

Bacon Kraut

As beef costs reach all-time highs, restaurants are adding bacon to more dishes because it “raises the flavor profile of an otherwise cheaper piece of meat,” Barton said.

Bacon choices offered at the Chicago White Sox's Cellular Field.
Bacon choices offered at the Chicago White Sox's Cellular Field.
Photographer: Clayton Hauck for Chicago White Sox

It’s also become a favorite of daring chefs. Burke’s Bacon Bar in Newark, New Jersey, makes reuben sandwiches with bacon kraut and, for dessert, peanut bacon brittle. Bar Bacon in New York offers bacon Caesar salad and tahini and bacon kale salad. And at U.S. Cellular Field, where the Chicago White Sox play baseball, fans can compare rashers of barbecue-spiced bacon, brown-sugar-glazed bacon, black-pepper bacon and jalapeno bacon by ordering a bacon flight.

Paleo Diet

One thing that may pull up bacon prices is high beef costs, said Altin Kalo, an analyst with Steiner Consulting Group in Manchester, New Hampshire. Wholesale beef is up 16 percent in the past year, touching a record $2.6474 a pound on May 14, USDA data show. Selling bacon at higher prices may help retailers offset thin profit margins on beef, Kalo said.

Some of bacon’s appeal has nothing to do with price or the season, said Darren Tristano, executive vice president at Chicago-based market researcher Technomic Inc.

“Today’s younger consumers are very adventurous and are willing to try new things,” he said. And then there’s the Paleo Diet, he said, which emphasizes animal fat and proteins that enthusiasts say the human body is genetically adapted to thrive on. “There are a number of people who are meatatarians, where bacon is an alternative to beef and pork and chicken and turkey.”

Meatatarians will have no problem finding bacon this year, said Urner Barry’s Barton.

“Bacon’s gotten more popular,” he said, “and bacon’s in everything.”

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