25 February 2000

US producer caters to customer needs in restaurant trade

REACTING to customer needs and selling a uniform product is how one US beef producer has grown his business.

Jeff Heindel sells 42 beasts a week off his beef unit in Brogue, Pennsylvannia, to a packing organisation supplying caterers. Last year he sold 3000 head of cattle, but at half the profit of two years previously as the beef industry in the USA is facing the same economic pressures as the UK.

This year, Mr Heindel is reacting to market pressure and selling fewer animals, expecting to finish 2500 beasts, of which 80% will be steers and 20% heifers. All cattle are bought as 12-13 months old stores, costing 104p/kg-118p/kg.

Speaking at Keenans beef conference he said all his beef was bred from beef animals. "I buy nothing out of the dairy herd. I want medium-framed, uniform animals which I can sell to packers and when they are processed they will fit into boxes. I am looking for an animal to produce the desired end product."

For this trade, the end product is a beast weighing 545kg-590kg with a medium amount of backfat, and some marbling in the meat.

The packers brand, Prime Select, is used in restaurants, and marbling is essential for this trade. Catering is a massive market in the US, as more than half the meals eaten in North America are now eaten out of the home.

"Steak houses are everywhere. The scheme I supply requires marbling in the meat. They want marbled beef because it will be cooked and sold in restaurants."

Despite finishing 85-90% of beasts at the right grades and finish for processors, returns are not dramatically different from what beef units would expect in the UK. His average profit, excluding depreciation, is £42 a head.

This profit comes from feeding a beast for 150 days to a slaughter weight of 545-590kg, at a finished price of 158p/kg deadweight. But a 63% killing out percentage means his liveweight price is 99p/kg. Mr Heindels cost/kg of liveweight gain is 46p.

To keep ration costs down many of the ingredients are grown on farm, such as cereals and maize. The ration, fed through a mixer wagon, comprises maize, maize silage, cereals, soya, corn bi-products, potato waste, vitamins and minerals, and sometimes pineapples, which are a good appetiser, and which he is paid to use.

Besides trying to cut feed costs, Mr Heindel is also trying to motivate staff by introducing a bonus relating to the units profitability. This carrot had helped his men work as a team and profitably, he said.

But overall business strategy depended on knowing market-place trends, and being prepared to adjust accordingly, he said.

"In the UK, I gather customers like the taste of grass-fed beef. I think those who finish animals like this should work together and label their beef to take advantage of this."

Beef marbling is essential for the restaurant trade that Jeff Heindel supplies in the USA. More than half of US meals are eaten outside the home.