Demand for steak hasn’t fallen

As Americans prepare to fire up the grill for Independence Day, beef prices are facing record highs.

But despite sticker shock, demand for beef and steak remains.

Beef prices are soaring as years of drought, high feed costs and herd consolidation have shrunk the U.S. herd to its smallest size in decades. The resulting tight supply drove up the price of beef, which ultimately drove up the price of beef on grocery store and restaurant menus.

After hitting record highs in the spring, prices fell slightly in May, but consumers are still paying near-record prices for ground meat and steak. The average price of ground meat in May was $6.75 a pound, up nearly 13% from a year ago and just below April’s all-time high of $6.90, according to data from the U.S. Bureau of Labor Statistics. The average price of beefsteak was $12.80 per pound, up 16% from last year and the second highest price on record.

But for now, shoppers don’t seem ready to abandon their summer grilling traditions. This resilience offers another clue to consumer behavior at a time when investors are closely watching for signs of whether and where high prices are causing shoppers to retreat.

A Kroger spokesperson told CNBC that “customer demand for steak remains very high and we are seeing a shift toward higher-end, organic options.” “We also see a continued preference for beef during recent holidays, such as Easter and Memorial Day.”

Beef saw the biggest dollar increase of any food category ahead of Independence Day, with sales up about $352 million from a year ago, according to NielsenIQ data.

“Consumers are approaching this holiday with discipline and traveling more, but with a clear intention behind each trip,” the consumer research firm said in a June report.

As beef demand sustains, consumers are showing clear preferences within the segment.

NielsenIQ said consumers have come to view steak as the centerpiece of a special occasion, an “affordable luxury” that they are willing to pay for quality and experience while saving money elsewhere when shopping for groceries.

This data also suggests that consumers are not simply looking for the cheapest protein. Instead, many companies are focusing more on quality.

According to NielsenIQ, shoppers report increasing support for quality claims when purchasing meat, including USDA prime (42%), hormone-free (40%), grass-fed (37%) and antibiotic-free (36%).

“Shoppers are looking beyond the label to the story behind the meat,” the company said. “Claims related to quality and sourcing are becoming more prevalent as buyers seek trust.”

This demand is also benefiting other industries, like Omaha Steak. The industry told CNBC that consumers continue to prioritize steak gifts even as they eat less at other restaurants.

“Customers are still celebrating dads with premium protein, but they’re also thinking about value and versatility,” Omaha Steak President and CEO Nate Lempe said last month as Father’s Day approached.

The company said its USDA-certified tender top sirloin fillets, for which it recently introduced price reductions, continue to grow, with sales up 25% in the weeks leading up to Father’s Day this year compared to 2025.

Restaurants also report benefiting from this dynamic. More and more diners are ordering steak at places like Longhorn Steakhouse.

“When guests come to Longhorn, they know they’re going to get a high-quality steak,” said Rick Cardenas, CEO of the chain’s parent company. Darden Restaurants. “Beef is a very high value. It doesn’t matter that there is beef inflation in the market. So the relative value looks a little bit better.”

The key question for investors is how long this momentum will continue. Rebuilding the U.S. herd could eventually increase beef supplies and ease prices, but that process would take years without the help of imported supplies.