April 21, 2014
US shrimp prices soar to a 14-year high
Spurred by a disease that isravaging the crustacean''s population, US shrimp prices have jumped to a 14-year high in recent months.
At Noodles & Co., a chain with locations across the country, it costs 29% more to add the shellfish to pastas this year, and shrimp-heavy dishes at places like the Cheesecake Factory are going up as well.
Restaurant chains, already struggling with shaky US consumer confidence, are taking a profit hit as prices climb. Even worse, the surge is happening during the season of Lent, when eateries rely on seafood to lure Christian diners who abstain from chicken, beef and pork on certain days.
In March, shrimp prices jumped 61% from a year earlier, according to the US Bureau of Labour Statistics. The climb is mainly due to a bacterial disease known as early mortality syndrome. While the ailment has no effect on humans, it''s wreaking havoc on young shrimp farmed in Southeast Asia, shrinking supplies.
The syndrome has taken a toll on both restaurants and supermarkets, affecting a food that Americans increasingly see as a healthy alternative to meat. While shrimp is relatively high in cholesterol, it''s low in fat and high in protein and omega-3 fatty acids. US consumption reached 3.8 pounds per person in 2012, twice the amount in 1984, according to the National Oceanic and Atmospheric Administration Fisheries.
At Noodles, it now costs US$3.34 to add the shellfish to a meal of pasta or pad thai, compared with US$2.59 last year.
Cases of early mortality syndrome, which destroys the digestive systems of young shrimp, were first reported in China in 2009, said Donald Lightner, a professor of animal and comparative biomedical sciences at University of Arizona in Tucson.
The disease, which kills about 90% of the shrimp it infects, travelled from China to Vietnam to Malaysia and then to Thailand, he said. Cases also were reported in Mexico last year, Lightner said.
Thailand was the US''s largest shrimp supplier until last year, when its exports to America shrank 38%. India took over last year as the US''s biggest source of shrimp.
Shrimp costs rose about 35% last quarter for Orlando, Florida-based Darden Restaurants, the company that owns Red Lobster. The climbing prices will add about US$30 million to Red Lobster''s expenses in fiscal 2014 versus the previous year, chief financial officer Bradford Richmond said.
Bubba Gump Shrimp Co., owned by Landry''s, hasn''t raised its menu prices yet because of the higher prices, said chief executive officer Tilman Fertitta. The company expects shrimp costs to climb about 20% this year.
At Cheesecake Factory, which sells shrimp scampi and shrimp-and-chicken gumbo, food inflation will be as much as 4% this year, driven primarily by increased shrimp and salmon prices. That will lower earnings by as much as US$0.10 a share in 2014, the company said in a filing.
Popeyes Louisiana Kitchen is bucking the trend. While the fast-food chain is seeing shrimp costs increase 40% and doesn''t expect them to return to normal until the fourth quarter, it isn''t raising prices.
Popeyes restaurants, which are benefiting from lower chicken costs, have been advertising popcorn and butterfly shrimp as part of its Seafood Mardi Gras. The chain has about 1,770 US stores, with 97% franchised.